Nonbank lenders face lighter regulatory oversight than traditional lenders, allowing them to take on more risk when it comes to AI. When used in the lending process, AI can speed up approvals and communications while personalizing service. The five largest US nonbank mortgage lenders use it throughout the application and approval process. But privacy concerns and a lack of regulatory certainty around AI have caused FIs to approach its implementation in mortgage underwriting more cautiously.

Regulatory clarity could be coming soon, opening opportunities for FIs to expand AI implementation. As guidance catches up to the technology and President Donald Trump dismantles existing restrictions on banks’ use of AI, FIs may feel more secure in implementing the tech. Those that have been piloting and researching solutions will have an early mover advantage against their peers.

But FIs must still exercise transparency when implementing AI. Almost 36% of banking customers don’t want their bank to use AI at all, per our October 2024 US Banking Consumer Habits Survey. To avoid alienating wary customers, traditional lenders must be transparent about how AI is used in the mortgage process. Educational campaigns could also make customers more comfortable with AI implementation.

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