Amazon can make a big splash in the mortgage business or wipe out

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The current state of the mortgage industry has left the door wide open for newcomers with major brand awareness. Customer experience remains poor — for millennials who hate to wait for anything, only getting an education takes longer than closing a mortgage.

Amazon, Google, Walmart and other brands that millennials use would have the greatest opportunity to quickly capture loan business. This is because trust has been built on the fulfillment side — it's easy and quick to buy what you want, the package definitely arrives on time, it's easy to return or cancel an order, etc.

But fulfillment of a shopping order does not guarantee that it will translate to a great experience in fulfilling a mortgage application. I don't think size of company matters, and I don't think that the fantastic logistics that Amazon has built will give it a leg up for mortgages. And if the customer experience doesn't significantly improve, then where is the ROI for the consumer?

However, let's not sell Amazon short, because we have seen time and again when the company has delivered cutting-edge technology to dominate markets. Who would have predicted 20 years ago that the "online bookseller" would grow to be arguably the most important business and consumer technology company in the world?

Amazon's technology innovations — particularly in the area of artificial intelligence could be focused on solving some of the bottlenecks that slow the mortgage approval process down and make it cumbersome for consumers. But solving this problem is not easy, so Amazon would need to gain the appropriate domain expertise, and also commit the muscle of its AI development teams to the mortgage process, because the right answer will not come about as a "skunkworks" project.

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Also, AI could present a significant number of data and data privacy issues that could be impacted by the evolving privacy regulations in the U.S. These issues have the effect of leveling the playing field, because everyone will have to play by the same rules. In addition, the amount of variations in mortgage documents from state to state presents a challenge. Amazon would have to have a large national database of documents in order to produce a streamlined, automated process.

At the same time, don't underestimate what the true experts are doing today. The largest mortgage lenders (Wells Fargo, Bank of America, Caliber Home Loans, Flagstar, Rocket Mortgage, among others) all have data science initiatives, strategic partnerships with tech providers, very large IT budgets, and access to limitless mortgage documents. This puts them in a great position to innovate with artificial intelligence that is equal or better than anything that Amazon can produce.

A final wild card to consider: If Amazon acquired a large independent mortgage company. Then there would be a true disruption in how and where most mortgages are originated.

In my opinion, it's far from a slam dunk that Amazon can take over the mortgage market. However, they will have to make the large investment required to build something very disruptive, because I don't see them being able to leverage much of what they have today in terms of data or infrastructure. The gorillas of the mortgage industry can blunt and win against the tech powerhouses, as they have far more of what is needed to create a disruptive solution. But will they move fast enough and be nimble enough to outsource for what they don't have in-house? Time will tell.

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Digital mortgages Artificial intelligence Mortgage technology Customer experience Amazon