[David] Let’s get over to Allen Pollack. Alan, good to have you here with us today. And I want to talk about AI and I want to kick this off, Allen, because you and I are probably on opposite sides of this issue. And I’m, I really want this. I want everyone contributing on it, but over the weekend, I received an investor deck, Allen. Someone wanted me to invest in a business and the AI business started looking at the slide deck and some things leaped off the page to me. So, I started looking at, first of all, how many AI companies are coming to market right now? How many new companies are there? This AI startups are up over 4,000%. Allen, that’s staggering. When you start looking at the new companies, so which ones are going to survive when you start looking at investing money, it may sound like the best thing in the world I passed on that investment and for a number of reasons, but that particular one sounded good, but they said in there. We are going to eliminate jobs and when people hear that across the marketplace, it’s just, I’ve been doing this underwriting, I’ve been doing this processing, I’ve been doing whatever I do operationally forever, and you can’t replace me. I’ve been doing HR. This particular product that our company was going to be whacking 70% of HR jobs out of the place. Out of work, out of putting them out of business. So what do you do with that? So again, I talked about Alcova earlier. They have a policy that we have a saying here in Texas, dance with the one that brung you. Bad English, but it says everything. Continue to work with the people that got you to where you’re at. That’s what made great companies like Union Home, where Alice worked, so successful. Bill respects the people that were there. Alcova does that, other companies do that. So I think then when we look at automation, Allen, and we hear the potential again, I know you take an up a just a point of view, but in this thing, you’re opposite on this. You don’t think it’s going to happen. I really do believe there’s going to be a lot of job losses, a position company pump functional losses, but we need to retool our staff. And a good company is investing the time and money in getting their employees aware of it. How it in their employees. Up to speed on what is changing or could be changing and encouraging their employees to get up on AI, starting with Chat GPT. Do you have you personalized it and you have it working? Do you have all the tools that Microsoft would co pilot now that’s working? Do you even know what it is? Employees out there. So lenders, that’s my two cents on that. Let’s get Allen in. And with this tech update, Allen, I don’t know what I teed up there for you…
[Allen] But forget the tech update. Look, imagine you want to buy a puppy and you go to a place and there’s 50 puppies, right? It’s just too many to choose from. They all bark. They all wag their tail. They all want to run and jump on you. They all eat a treat if you throw it, that’s what AI is right now. It’s just a room full of puppies. So many puppies, that’s all you want to do is right. You want to pet them all. You want to take one home. You want to try it out there. There’s an app for that. There’s an AI for that, right there. It’s a real site. There’s an AI for that. There’s thousands. There’s hundreds that get added per day. There’s thousands of AI tools that will do automated marketing for you. There’s thousands. Anyways, where I’m going is it’s an oversaturated market. The mortgage industry is extremely precise and it’s extremely regulatory and compliant. We can’t just start throwing tools into the process. Now you can use tools, right? as anyone on the operation side, and there’s ways that you’re going to augment the roles. You’re not going to start firing people. You’re not going to start losing your job. Do people need to learn how to work with AI? Absolutely. Let me tell you, I have a startup right now and every day we spend a couple hours on the phone going through different things that we’re doing together because we’re a small team. We use GPT for everything. GPT gives us initial marketing ideas. We use GPT canvas to modify the text. We then normalize it. I’ve used GPT for spreadsheets to fill out data, to normalize data, to write formulas that you can add GPT to Excel. It is unbelievable, but it’s not going to replace your job. It’s going to make you faster, more efficient. It’s going to cut down on the time you lost for people hanging out at the water cooler and the food trucks downstairs. It’s going to provide more sensible information, meaning more thoughtfulness is going to come from people. Is it going to make a dumber? I think so. I already noticed it myself by the amount of things I do. I just now default to go to GPT because I no longer can think for myself because I know GPT is going to help me think better. So, my response and what I come out for is more thoughtful. So anyways, David, I don’t think people should be running for the hills and worried but let me just tell you a couple areas that AI will absolutely take over. And I know I completely went off the grid as far as content for today. I still have a couple of things. You asked a great question. AI is going to be a game changer in underwriting. Years ago, when I was one of the co-founders of LoanLogix, and our job was to figure out what was defective in every loan before that loan hit a human being. So, you’re spending your most expensive resources working on the files that have the most trouble. We now can leverage AI to be more complex and more thorough and looking at those loan files and finding defects and then reporting on the defects. That’s where AI is going to make a huge change, meaning that you can process more loans. Now, did you have too many underwriters? Honestly, you probably already reshuffled the deck chairs. If you haven’t and you still have a giant room full of underwriters or work at home folks. Then you’re late to the game. Second, customer service and borrower engagement. The ability to answer people with AI, respond to emails on behalf. Doesn’t always have to be a chatbot. AI absolutely takes over there. By the way, myself just implemented a company called CRISP, C R I S P, into one of my startups. It’s the coolest tool ever. It even connects on Instagram and Facebook chats. It automatically responds to people, creates knowledge bases. You can chat with it. That’s where big change is coming. I have two more, David, that are really important to mention. The second one that’s going to make such a big deal but not replace jobs. It’s probably going to make us busier. Honestly, it’s fraud and risk assessment. Think about everyone’s always talked about how you have to look out for X amount of defects on a file. You have to figure out who’s reproducing those defects. Your Fannie Mae moral audits had to be random and different types of discretionary selections that you’re making. Imagine a world where all you’re doing is understanding what was wrong. You’re going to find more problems, to be honest with you. The amount of data that we can bring into those AI tools and the AI algorithms that it uses that automation is going to be more plentiful and then finally, pricing and rate optimization and I didn’t mean to bring this up, but Optimal Blue’s got a huge announcement, which I’ll talk about in a moment. But pricing and rate optimization. The AI, the ability to look at pricing. Now, I also built a pricing engine, one of the more popular ones in the industry, one of the original ones, millions and millions of loops per millisecond that we had to create. I worked with Google and they created trillions of loops. What you have to do to properly price a loan and allow for a lender to have each different type of overlay. There’s no standard in our industry that says this is how you add your LLPAs to loan. This is how you implement SRPs. For those of you that still remember what SRPs are. So, where I’m going with this is the ability to now just communicate and chat with the data. Optimal Blue just made a big announcement. They were my arch rivalry for many years. I love what they do now. They’re finally. I don’t mean to say that in a negative way, but everyone’s moving to AI. So what their big announcement was, David, and then I’ll pause on this because I gave a lot of content. They made a big announcement last week at their inaugural summit in San Diego, so that’s probably where they had all their customers come, spend some time. They unveiled not one, not two, but seven major innovations developed directly from their client feedback. So, there’s a lot of great keywords in there. The best one was their client feedback, but anyways, here’s the one called ask OB and it allows you to query by chat, just ask questions to centralize hub of all of your data in Optimal Blue, and it’s using generative AI, and you can interact and have conversations to understand all of your data that drives your business around pricing, eligibility, capital markets, and all that great stuff. That’s where AI is coming in. We’re going to be so much better and smarter. We’re going to be like robots, but we’re not going to be cutting, slashing jobs.
[David] That is encouraging to hear. All right, Marc. I know you are big on AI. You use it. You’ve integrated it. Your thoughts on what Allen said, by the way, Allen, your comments are. I love it.
[Allen] Thank you.
[Marc] I think we ought to take AI and apply it to the credit reporting industry and fix that nightmare they call credit reporting.
[David] It is Marc. It is something. And you look at the cost structure while they keep going up and up in price. It’s a monopoly.
[Marc] I’m going to rant, I’m going to rant in just a minute about that. Every once in a while, you’ve got to have one of Marc’s rants on this podcast. So I’m going to rant a little bit, but I will tell you that I think that Allen is usually right on spot on this. It amazes me every day how I have application, why would I just think this is, why would I write a business plan without dictating my thoughts into an AI and let it work up a draft for me. Why do I want to spend three hours at a typewriter hunting and pecking when I can do that? I am 300% more productive in my day to day work now than I was a year ago and it’s all because of AI. I use it religiously. I do research on AI. I’m smart enough to know that not everything you read is 100% correct. So I double check things out and all that, but why not? And there’s so many good AIs. It’s not just ChatGPT. There’s so many good that yeah, complexity is really you with the wording you use that challenge you on things. I feel like I’ve learned so much more as a business professional because of chat and other AIs that have challenged me to look at things and look from a different perspective. So, you’re not going to find anybody in the world more pro AI than I am. However, I am worried about the databases. We put everything into how much they can be assessed by 3rd parties, how secure they are and I am certainly worried about databases overseas that might be more vulnerable than I am. So I’m cautioning everybody out there. If you’re dealing with confidential information, be real careful what you do. And I think you need to do that. I’m very concerned about that as I think we should be about any system venture, but I am very pro AI and if anybody wants to chat for 15 or 20 minutes and let me tell them some things I’ve done that have just been life saving in my life to allow me to be more productive, I’ll be more than glad to have a chat with them about it.
[David] It’s fun to see old guys like you and I were within a few months of apart from each other in age grasping it and using it. Marc, do you use perplexity? Cause that’s one that recent one that I’ve started using.
[Marc] I just started using that, David. I just started using that. Yep. Yeah. Yeah, I have somebody sent out something on the internet one time. It said AI cheats. It shows you all the different AIs for different things. I screened through that and looked at all of them and how long they had been around and tried them and things and I took probably a hundred different pieces of AI and I weeded it down to about six, seven that I use consistently, and I always, when I’m doing research on a project, I use multiple AIs to see if I’m getting different information and whatnot, and I compare that information to what’s regularly online and things I can find out about companies and processes and things like that. I wrote, I had to go to a briefing with an attorney on a piece of litigation recently, and I didn’t like the way the attorney was taking the conversation. So I did my own research on two things on embezzlement and on money laundering and three things in wire fraud and you would not believe I went to three different sources and I felt like when I got done, I was the attorney. I put together just a nice brief on each one of those and I kept in the call, I kept going to turn in and tell me why they’re not guilty of this. Tell me why they’re not guilty of this being the wording in that law and I got national and state laws in there and referencing them and he said, my God, how long do you spend researching this and I said, about an hour.
[Allen] Marc, you said a few things that I’d love to just make a quick comment on. If we have a few minutes, David. Please do. Yeah. Yeah, so the first is you’re absolutely right. It’s amazing the amount of lenders that actually do want to train their staff to do things like you mentioned, you could literally be in a meeting, an operational meeting and say, Hey, I need a report of the total amount of borrowers that we’ve not reached out to in the last six months to say congratulations on your closing and you should be able to whip that up and create a report. You can put the spreadsheet in GPT and tell it to write the whole report for you. It’s that type of usefulness that people should be considering. Now, I didn’t mean to say that you put PII in GPT. So for those of you listening, it’s just an example. But that’s what we can do. The second thing is there was a report and I’m going to save it for next week. I was using it today. It was a year ago. But the market hasn’t changed that much in a year. And it talks about lenders that Fannie Mae surveyed and how much money they do or don’t want to spend and do you know that credit reporting that you just mentioned a moment ago, credit reporting was the second highest tool tip for an LOS that you must have, which we all know and it was also the tool that had the most frustration and people want to see change. So, you were right about that as well. We need to figure out a way that we’re using AI and everything else. We need to find a way to use it in credit reporting and then the very last thing, David, I meant to say this earlier, I’ve mentioned on the podcast in the last couple of weeks, I have two startups. One of my startups is an AI video company in mortgage and we’re in beta with two clients right now. But what it does is it automatically based on different milestones of the loan sends videos and a summary leveraging the data and for example, if your status just changed, it’ll say, Hey, congratulations, Mr. Lykken. I just want to let you know, and it’s my face, David. I just want to let you know that your appraisal has been scheduled and I’m going to put one more task in the portal for you to upload that divorce decree because it was missing. That information is driven dynamically and thousands of those can be sent out per minute. That’s where things like that is where you should be looking to invest in immediately. That’s where AI is so helpful. So, I know I three things at you and Marc, two of them were in reply to what you said.
[Marc] Yeah, I’ve got one other thing to add there and then I want to rant, but one of the things. I’ll give you another one next week. I got two backed up here for you, buddy. But anyway, one of the things I wanted to point out, what we just talked about. It took me a while to figure this out. I don’t know why I was so dumb, but I had a whole bunch of articles on one particular topic, and I thought they were really good. and I’d already experimented on putting, when you do expert witness testimony, which I do a lot of, you got to read all this stuff. I found out now, subject to limitations, you can load all these proceedings and all into AI, and they can do your summaries for you and then I read and then make sure everything I wanted to put in was in the summary and then that gives me a guidance and a tool to make sure I covered everything in what I read and then what I do before I go do an expert witness case or something. I take the summary I put together from AI and from myself and go with the attorney and make sure I’ve hit all the spots he thought were important. I cannot tell you, I’ve saved them probably thousands of dollars on every case I’m doing. I’m not charging them all those hours, I just do a person. But let me mention where I’m going on this. I had a topic that was sensitive to me that I wanted to do one of my articles on Marc’s Musings, and I had three different opinions out there from different people I found research on. So, I took that research, I copied and pasted, I took a picture of the document, loaded it, became a PDF, loaded it into the AI, and I said, compare and contrast for me these three different opinions, looking for similarities. Contrasting where somebody’s radically different than the other and why you think that’s the case. Unbelievable what it did. Unbelievable and that gave me a whole new insight on what I was thinking about doing on my musings because it added somebody else helping me think about it. and I don’t know about you guys, but when I use certain types of AI, I feel like I’m dealing with a, just a genius person on the other end that’s given me information. I know it makes mistakes. I’m not a fool, but. I will tell you that it’s like AI can, after a period of time gets to understanding what you’re trying to accomplish. And that’s unbelievable to me. It’s got an understanding of what you’re doing. And it remembers you educated. Yes. Yeah. It’s Swiss. I feel like I’m been a science fiction movie from 25 years ago.
Allen Pollack
, Chief Operating Officer, Tech Consultant
Allen Pollack, a Mortgage & Financial Services Technology Advisor, is a subject matter expert in the mortgage origination process along with software product management and software development.
In today’s financial services push to all things Digital, Allen has been helping lenders and financial services solution providers align their digital transformation and technology strategies by removing the human element of risk, and automating processes that drive efficiencies and margins into profits.
Over the course of his career, Allen has co-created and developed technology business models that have birthed highly successful, innovative solutions and companies.
Allen co-founded and served as CTO of New York Loan Exchange (NYLX), a loan product eligibility and pricing engine (PPE) that made an immediate impact on the industry, scaling the company quickly and forming partnerships with multiple mortgage and financial lending companies. In 2012, Allen was a co-founder of a merger between NYLX and Aklero Risk Analytics that created LoanLogics, A Mortgage Loan Quality and Performance Analytics company. Allen served as CTO where he continued to bring new and innovative product solutions to the market that made a significant impact to mortgage lenders that reduced risk, scaled business channels, and grew profits in a very competitive and highly regulated market.
Allen is also is mortgage and finance technology contributor on a weekly live industry podcast, Lykken on Lending, and is launching a new podcast soon to be released, TechStack Radio, dedicated to technology and innovation in Financial Services.