AI Revolutionizes Non-Bank Mortgage Lending: Insights from HFS Research and Cognizant

Rhea-AI Summary

A joint study by HFS Research and Cognizant reveals transformative changes in non-bank mortgage lending driven by AI adoption. The research, based on insights from 257 non-bank lenders, highlights key findings: 74% of lenders are focusing on innovation while only 21% consider themselves industry leaders. Agentic AI is emerging as a game-changer, combining GenAI's reasoning with automation. Only 51% of lenders feel prepared for compliance risks, with some receiving up to 1,700 regulatory alerts in 2024. The study projects automation will reach 68% of mortgage operations by 2026, while full-service partnerships are expected to increase from 30% to 42%. The research emphasizes the need for lenders to prioritize technology with measurable outcomes and redefine outsourcing partnerships to stay competitive in the evolving mortgage landscape.

Positive

• Automation expected to reach 68% of mortgage operations by 2026, improving efficiency
• Full-service partnerships projected to increase from 30% to 42% by 2026
• 74% of non-bank lenders are focusing on innovation for differentiation
• Intelligent Document Processing (IDP) showing fast ROI in lending operations

Negative

• Only 21% of lenders consider themselves innovation leaders, indicating significant competitive gaps
• Only 51% of lenders feel fully prepared for compliance risk
• 58% of lenders cannot support real-time integration, limiting data agility
• High regulatory burden with up to 1,700 alerts in 2024, 25% with direct business impact

Insights

Technology & Financial Services Analyst

Cognizant positions itself strategically in the AI-driven mortgage technology market, showcasing thought leadership through research that could drive future revenue growth.

This joint research between Cognizant and HFS Research strategically positions Cognizant as a thought leader in the rapidly evolving AI-powered mortgage technology space. The study reveals critical insights that highlight significant market opportunities for Cognizant's technology solutions in the non-bank mortgage lending sector.

The research identifies a notable gap: while 74% of non-bank lenders believe innovation drives differentiation, only 21% consider themselves innovation leaders. This disconnect creates a substantial market opportunity for Cognizant to provide AI solutions to the 79% of lenders looking to catch up. The expected increase in full-service partnerships from 30% to 42% by 2026 directly benefits Cognizant's service model as lenders seek partners for platform modernization and AI deployment.

Particularly promising is the emphasis on technologies showing measurable ROI, such as Intelligent Document Processing (IDP), which aligns with Cognizant's existing solutions portfolio. The projection that automation will reach 68% of mortgage operations by 2026 represents a significant addressable market for Cognizant's AI and automation services.

The report's focus on compliance challenges is especially relevant, with lenders receiving up to 1,700 regulatory alerts annually and only 51% feeling prepared for compliance risk. This creates an urgent need for Cognizant's regulatory technology solutions. Additionally, the highlighted emergence of Agentic AI—combining generative AI with automation—presents an opportunity for Cognizant to develop and offer cutting-edge solutions in this nascent space.

From an investor perspective, this research publication demonstrates Cognizant's strategic foresight in identifying growth opportunities within financial services technology. By publishing forward-looking research rather than simply announcing a product, Cognizant is establishing deeper market credibility while subtly promoting its capabilities to address the identified challenges in the mortgage lending space.

New study highlights how 2025 will be a turning point as technology redefines experience, operations, and value across the mortgage lifecycle.

Key Findings:

• 74% of non-bank lenders are betting on innovation to drive differentiation, while only 21% believe they are leading the pack—revealing a significant gap and opportunity to innovate.
• Agentic AI is becoming the next big play, merging GenAI's cognitive reasoning with automation's precision—ushering in task-fulfilling "agents" that scale beyond efficiency into execution.
• Only 51% of lenders feel fully prepared for compliance risk, with some receiving up to 1,700 regulatory alerts in 2024—25% with direct business impact.
• Demonstrating ROI is critical. Intelligent Document Processing (IDP) is winning over lenders for its fast returns—especially where paper still rules.
• Outsourcing is being redefined. Full-service partnerships are expected to rise from 30% to 42% by 2026, measured by growth outcomes instead of simply on cost.
• Automation will reach 68% of mortgage operations by 2026, signaling a shift from task-level wins to blending technology, human expertise, and continuous improvement into an intuitive tech-to-ops cycle in mortgage operations.

NEW YORK, May 21, 2025 /PRNewswire/ -- In a rapidly evolving housing economy, non-bank mortgage lenders are facing a wake-up call. A new joint study by HFS Research and Cognizant, "Reinventing the Non-Bank Mortgage Lending Journey in the Age of AI," reveals an industry grappling with operational fatigue, regulatory pressure, and fast-moving tech disruptions—while a small but bold segment rewrites the mortgage playbook.

Drawing insights from 257 non-bank lenders and ecosystem partners, the report delivers a sobering yet hopeful look at the next chapter for mortgage lending. From the emergence of Agentic AI to the reconfiguration of outsourcing strategies, lenders are being challenged to trade reactive cost-cutting for purposeful innovation.

"The fundamentals of lending haven't changed—the loan is still a loan. What's changed is the speed, intelligence, and precision with which it's delivered. This is no longer just about access to capital—it's about how seamlessly, securely, and smartly capital flows through digital channels," says Saurabh Gupta, President, Research and Advisory Services, HFS Research. "The ones who go all-in—building digital-first, modular, and intelligent operations—will define the next era of mortgage lending. The rest? They risk being left behind."

Powerful Data-Driven Insights:

The research reveals that although 2025 is being eyed as a rebuild year, many lenders are stuck playing defense. As lending platforms modernize, access to mortgage capital is becoming faster, smarter, and more modular. Yet, only 21% of lenders consider themselves true innovators. The rest? They're either chasing parity or struggling to catch up.

Compliance is also hitting a breaking point. One executive shared they received over 1,700 regulatory alerts last year—nearly one in four with direct business consequences. The result: compliance is now a 24/7 operation, and tech investment is the only scalable solution.

Divya Iyer, Practice Leader, BFSI, HFS Research, adds, "We're seeing real momentum around Agentic AI—where GenAI meets the execution muscle of automation. But it's not the only force driving change. Technologies like IDP are bridging the gap in paper-heavy workflows, proving that meaningful transformation doesn't have to wait for full digital maturity."

What Lenders Need to Do Next:

• Move beyond legacy constraints. 58% of lenders still can't support real-time integration—limiting data agility and delaying decision-making.
• Prioritize technology with measurable outcomes. Tools like IDP, AI underwriting, and cybersecurity are driving rapid ROI, while GenAI is expanding into core operations.
• Redefine outsourcing partnerships. Lenders must move beyond tactical cost-cutting to leverage partners for platform modernization, AI deployment, and full-service scalability.
• Focus on value creation—not just efficiency. The winners will blend automation, data platforms, and talent into a cohesive tech-to-ops cycle.

"In the rapidly evolving landscape of non-bank mortgage lending, there is a critical need for innovation and agility," said Ajay Pandita, Senior Vice President and Financial Services, Fintech and Insurance Business Unit Leader, of Cognizant. "As we navigate through operational fatigue, regulatory pressures, and technological disruptions, it is imperative that we embrace purposeful innovation and redefine our strategies. The emergence of Agentic AI and IDP are just the beginning. By prioritizing technology with measurable outcomes and leveraging full-service partnerships, we can transform the mortgage lending journey and lead the industry into a new era of efficiency and value creation."

Download the full report: Reinventing the Non-Bank Mortgage Lending Journey in the Age of AI
Reinventing non-bank mortgage lending journey in the age of AI - HFS Research

About HFS Research
HFS Research is a leading global research and advisory firm that helps Fortune 500 companies navigate IT and business transformation with fearless insights and actionable strategies. With unrivaled access to Global 2000 executives, HFS empowers organizations to make confident technology and service decisions that drive competitive advantage. For more information, visit hfsresearch.com.

About Cognizant
Cognizant (Nasdaq: CTSH) engineers modern businesses. We help our clients modernize technology, reimagine processes and transform experiences so they can stay ahead in our fast-changing world. Together, we're improving everyday life. See how at www.cognizant.com or @cognizant.

Forward-Looking Statements

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the accuracy of which are necessarily subject to risks, uncertainties and assumptions as to future events that may not prove to be accurate. These statements include, but are not limited to, express or implied forward-looking statements relating to the adoption of generative and/or agentic artificial intelligence, the effects of such artificial intelligence on the mortgage lending industry and the competitive opportunities in the marketplace. These statements are neither promises nor guarantees but are the findings of the study discussed above and remain subject to a variety of risks and uncertainties, many of which are beyond Cognizant's control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause outcomes to differ materially from those expressed or implied include general economic conditions, the impact of technological development and competition, the competitive and rapidly changing nature of the markets Cognizant and its clients compete in, and the other factors discussed in Cognizant's most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

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SOURCE HFS Research

FAQ

What percentage of mortgage operations will be automated by 2026 according to the Cognizant study?

According to the study, automation is expected to reach 68% of mortgage operations by 2026, indicating a significant shift towards technology-driven operations.

How many non-bank lenders participated in the CTSH and HFS Research study?

The study included insights from 257 non-bank lenders and ecosystem partners.

What percentage of non-bank lenders feel prepared for compliance risk in 2025?

Only 51% of lenders reported feeling fully prepared for compliance risk, with some receiving up to 1,700 regulatory alerts in 2024.

How is outsourcing expected to change in non-bank mortgage lending by 2026?

Full-service partnerships are projected to increase from 30% to 42% by 2026, with a focus on growth outcomes rather than just cost reduction.

What percentage of non-bank lenders consider themselves innovation leaders in 2025?

Only 21% of non-bank lenders consider themselves true innovators in the industry, while the majority are either chasing parity or struggling to catch up.