**By Roger Gudobba**
***Personally I have been working with computers in one form or another for over 50 years. When I look back over the years I am amazed at the progress that has occurred in the computer industry but also disappointed because I don’t believe we have yet utilized all the tools at our disposal to maximize the opportunities that technology makes possible for our industry.
****Computers, in the broadest terms, consist of hardware and software. Hardware is the physical component and software is the instructions that make the hardware work. The job of the hardware is to collect data (through user input with the keyboard, mouse, or scanner), store data (on hard drives and servers), and output data (through monitor display and printers). The purpose of software is to provide an interface between users and hardware so that human will can be exercised in managing the data: cataloging it, defining its logical relationships, and using it appropriately in decisional processes. Hardware capabilities have grown exponentially over the years. Have software capabilities kept pace?
****Computer programs have plenty of capacity when we consider the metrics of speed and memory, but their capacity for logical data use is limited to the intellectual mechanisms that software engineers understand well enough to program into their software code.
****What does this have to do with artificial intelligence?
****Artificial intelligence, or AI, is the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence.
****The field was founded on the claim that a central property of humans, intelligence, can be so precisely described that it can be simulated by a machine.[i] Aspects of human intelligence of interest in the field of AI include speech recognition, deductive reasoning, inference, and the ability to learn from experience.
****Arthur R. Jensen, a leading researcher in human intelligence, suggests “as a heuristic hypothesis” that all normal humans have the same intellectual mechanisms and that differences in individual intelligence are related to “quantitative biochemical and physiological conditions”. I see these varying differences as differences in speed, short-term memory, and the ability to form accurate and retrievable long-term memories.
****Whenever people do better than computers on some task or computers use excessive computation to do as well as people, we may conclude that the program designers lacked understanding of the human intellectual mechanisms required to do the task efficiently.
****An extension of AI is in the development of expert systems. An expert system is software designed to make decisions or solve problems within a limited domain, like finance, using the knowledge and analytical rules set forth for its operation by its engineers. Automated Underwriting Systems (AUS) and credit score (FICO) are considered examples of such expert systems in the mortgage industry.
****Heuristic classification is another example of AI at work, allowing users to classify an unknown by matching its features against the features of those things that are known. Let’s say we ask an expert system for advice about whether to accept a proposed credit card purchase. The expert system can classify the decision to accept the credit purchase against what is known, such as the buyer’s record of credit card payment, the value of the item he is buying, and the establishment from which he is buying it, including the rate of previous credit card frauds at the location.
****Artificial intelligence was the genesis of creative computer programming. Let’s talk more about this next time.
Roger Gudobba is passionate about the importance of quality data and its role in improving the mortgage process. He is an industry thought leader and chief executive officer at PROGRESS in Lending Association. Roger has over 30 years of mortgage experience and an active participant in the Mortgage Industry Standards Maintenance Organization (MISMO) for 17 years. He was a Mortgage Banking Technology All-Star in 2005. He was the recipient of Mortgage Technology Magazine’s Steve Fraser Visionary Award in 2004 and the Lasting Impact Award in 2008. Roger can be reached at email@example.com.