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

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— 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.