Artificial intelligence (AI) and intelligent automation (IA) are no longer futuristic concepts in commercial real estate (CRE); they’re rapidly transforming how the industry operates, particularly in the realm of loan servicing. The Mortgage Bankers Association (MBA) Commercial/Multifamily Finance Servicing and Technology Conference, held May 19-22, 2024, highlighted this shift, featuring sessions that delved into the practical applications and transformative potential of these technologies. 

Smart Capital Center, a leading innovator in AI-powered commercial real estate (CRE) lending technology, was among the select speakers at the conference, sharing its expertise and insights on the transformative power of AI and Intelligent Automation in servicing operations. 

In this article, we’ll delve deeper into the key insights from the conference session titled “Transforming Servicing Operations – Leveraging AI & IA,” providing you with actionable takeaways to drive your own digital transformation journey. 

Key Highlights: 

• The growing importance of AI and IA in streamlining and optimizing CRE servicing operations. 

• Real-life examples of how automation is revolutionizing processes and enhancing efficiency. 

• The benefits and challenges of implementing AI and IA, and the importance of human oversight. 

• How Smart Capital Center AI-powered platform is helping lenders and servicers stay ahead of the curve. 

Expert Perspectives: A Deep Dive into AI and IA Impact on CRE Servicing 

The session, “Transforming Servicing Operations – Leveraging AI & IA,” featured a panel of industry leaders who shared their experiences and perspectives on the evolving role of technology in CRE servicing. 

Joining Smart Capital Center CEO Laura Krashakova were esteemed industry experts, including Jen Lindell of Northmarq, Meghan Czechowski, Senior Vice President, Head of Apprise by Walker & Dunlop, and Bob Wright, Managing Director of SS&C Technologies, Inc., who served as moderator. 

The panelists emphasized the growing importance of AI and IA in CRE servicing, highlighting the increasing reliance of the industry on these technologies to address operational challenges and unlock new efficiencies. 

As Jen Lindell pointed out, “A lot of the focus so far for commercial real estate servicing has been on those bite sizes of a process and not so much on automating end to end.”  

This indicates a significant opportunity for further automation and optimization in the industry. 

Laura Krashakova echoed this sentiment, observing a shift in the perception of the industry on AI and automation. “Previously, when people were thinking about AI and automation, they were looking for cost savings, they were looking to speed up their processes and increase productivity. But now what we’re hearing more and more is executives care more about being able to collect every bit of data through the process”. This concern highlights a growing recognition of the value of data and insights in driving business decisions and improving operational performance. 

The session set the stage for a deeper exploration of the practical applications, benefits, and challenges of implementing AI and IA in CRE servicing operations. 

Key Insights from the Session 

1. AI vs. IA: A Crucial Distinction 

A key takeaway from the session was the importance of differentiating between AI and IA. While often used interchangeably, these terms represent distinct technologies with different capabilities and applications. 

•  Intelligent Automation (IA): IA refers to the use of technology to automate repetitive, rule-based tasks. It’s essentially “if this, then that” logic applied at scale. IA excels at tasks such as data entry, report generation, and workflow management. 

•  Artificial Intelligence (AI): AI, on the other hand, encompasses technologies that enable machines to simulate human intelligence, such as learning from experience, understanding natural language, recognizing patterns, and making decisions. AI is often used for more complex tasks such as document analysis, risk assessment, and predictive modeling. 

Both AI and IA are being integrated into CRE servicing operations to varying degrees. IA is commonly used for automating routine tasks, freeing up staff to focus on higher-value activities. AI is increasingly being leveraged to analyze large datasets, extract insights, and improve decision-making processes. 

2. Real-Life Automation Success Stories in CRE Servicing 

The discussion moved on to real-world examples of how automation is reshaping CRE servicing operations. Panelists shared several compelling use cases: 

•  Data Extraction, Standardization, and Entry: A panelist highlighted their use of AI and Intelligent Automation to extract key data points from loan documents such as rent rolls, operating statements, appraisal reports, and informational memos, streamlining the process and reducing errors. 

In line with this approach, Smart Capital uses both AI and IA to automate the process of standardizing
data from documents, while still maintaining reliance on human expertise for final valuation decisions. 

•  Report generation, Covenant Monitoring, and Portfolio Insight: Laura Krashakova highlighted how Smart Capital leverages both AI and IA for automation of many workflows – from covenant tracking, to task management and alerts, to reporting, and real-time insights into loan portfolio performance. Leveraging automation not only saves time but also enhances accuracy and consistency in reporting.

By using Smart Capital to automate repetitive and time-consuming tasks, lenders and servicers can
improve efficiency, reduce errors, and gain deeper insights into their portfolios.  

However, it is important to note that these practical applications of AI and IA in servicing operations
demonstrate that automation is not about replacing human workers, but about augmenting their
capabilities and freeing them to focus on higher-value tasks. 

3. The Benefits of Automation in CRE 

The panelists were unanimous in their assessment of the positive impact of automation on CRE servicing. Some of the most significant benefits highlighted include: 

•  Enhanced Efficiency and Data Management: Automation eliminates the need for manual data entry, reducing errors and freeing up staff to focus on more strategic tasks. 

•  Improved Reporting and Decision-Making: By automating data collection and analysis, lenders and servicers can generate reports faster and with greater accuracy. This enables more informed decision-making, especially in areas such as risk assessment and portfolio management. Laura Krashakova emphasized the importance of “insight,” highlighting how real-time data access and analysis can empower lenders and servicers to proactively manage their portfolios. 

4. Challenges in Adopting AI and IA 

While the benefits of automation are undeniable, the panelists also acknowledged the challenges that organizations may face when implementing AI and IA solutions: 

•  Technical Challenges: Integrating new technologies into existing systems can be complex, requiring careful planning and expertise. Additionally, ensuring data quality and security is paramount when implementing AI and IA solutions. 

•  Operational Challenges: Change management is a critical aspect of successful automation. Organizations need to clearly define roles and responsibilities, establish effective communication channels, and provide adequate training to ensure smooth adoption of new processes. 

•  The Cost of Human Oversight: Human oversight is essential in areas requiring judgment, interpretation, or decision-making based on nuanced information. However, this also brings additional costs. 

On the other hand, Laura mentioned that today, AI offers reconciliation processes that reduce the need for expensive human oversight. In fact, properly built machines can sometimes check the work of other machines more effectively. For example, Smart Capital automatically reconciles data and flags errors for users, dramatically speeding up the process and improving data quality. 

5. Strategically Implementing AI and IA 

The panelists shared insights on how to strategically implement AI and IA to maximize benefits and overcome challenges: 

•  30x Productivity Gain: More than just cost savings, automation can drive significant productivity gains. By automating mundane tasks, employees can focus their energy on complex analysis, leading to higher quality output and increased overall productivity. 

•  Focus on Insight: Laura Krashakova emphasized the need to move beyond simple automation and focus on gaining valuable insights from data. “The real power is actually combining all of the technologies together.” she said, suggesting that integrating AI, IA, and even Generative AI can unlock new levels of understanding and decision-making capabilities. 

•  One-Click Report Generation: The ability to generate comprehensive reports with a single click was highlighted as a major advantage of automation. This not only saves time but also ensures consistency and accuracy in reporting. 

•  Workflow Automation: Automating workflows can streamline processes, reduce bottlenecks, and improve overall operational efficiency. This can be particularly beneficial in areas such as loan boarding and payoff processing, where manual tasks can be time-consuming and prone to errors. 

•  Quality of Data and Insight: Automation can significantly improve data quality by reducing manual errors and ensuring consistency. This, in turn, leads to more accurate and reliable insights, which are essential for effective decision-making.

These are just a few of the ways that AI is being leveraged to transform CRE servicing operations. All of these features, and more, are available in Smart Capital Center AI-powered platform. 

To learn more about how Gen AI is poised to transform CRE asset management and servicing, read our coverage of the Smart Capital Lunch and Learn session we hosted at the MBA conference.
This article delves deeper into the role of Generative AI in CRE loan servicing and asset management, and how it can automate tasks such as document analysis, risk assessment, and even customer service interactions.

10

8

9

11

Embracing the AI and IA Revolution in CRE Servicing 

The “Transforming Servicing Operations” session at the MBA Servicing Conference provided a comprehensive look at the current and future state of AI and IA in CRE servicing. The key takeaways underscore the importance of: 

•  Understanding the Difference: AI and IA are distinct yet complementary technologies that, when used together, can significantly optimize servicing operations. 

•  Starting Small, Thinking Big: Automation projects don’t have to be all-encompassing. Begin with smaller, manageable tasks and gradually scale up as you gain confidence and experience.

•  Prioritizing Data Quality: Accurate and reliable data is the foundation for successful AI and IA implementation. 

•  Focusing on Insight: Automation should be leveraged not just for efficiency gains but also for the valuable insights it can unlock from data. 

•  Embracing Change: The CRE industry is evolving rapidly, and those who adapt to new technologies such as AI and IA will be best positioned for success. 

Session

Session (2)

Session (6)

Session (5)

Session (4)

Session (3)

The impact of AI and IA on the future of CRE servicing is undeniable. By automating mundane tasks, enhancing data accuracy, and providing deeper insights, these technologies are empowering lenders and servicers to work smarter, not harder. They’re not just transforming operations; they’re redefining what’s possible in CRE servicing. 

If you’re ready to explore how AI can transform your CRE servicing operations, we invite you to learn more about Smart Capital Center AI-powered platform. Discover how our  solutions can help you streamline workflows, improve decision-making, and gain a competitive edge in the market. 

The future of CRE servicing is here. Connect with us today.