Rocket Companies' second quarter earnings results highlight how enterprises can gain leverage from generative AI even when they play in a rough market.

CEO Varun Krishna said artificial intelligence and generative AI was driving process efficiencies and customer experiences behind marketing, product, operations and sales. "We're blazing new trails pioneering experiences that will redefine how consumers experience the homeownership journey now and into the future," said Krishna.

Indeed, Rocket Companies reported second-quarter net income of $178 million, or a penny a share, on revenue of $1.23 billion. Non-GAAP earnings were 6 cents a share to top Wall Street estimates. The company's data and AI strategy, which is built on Amazon Bedrock, model choices and a chat interface that speeds up mortgage and lending processes, was outlined in a recent Constellation Insights customer deep dive. See PDF version of this customer story.

The AI strategy appears to be paying off. Rocket Mortgage generated $24.7 billion in closed loan origination volume, up 10.4% from a year ago. Krishna said Rocket Companies is gaining share in a downturn and ready to grow when the market turns. Technology is a big reason for those share gains. Rocket Companies hired its first Chief Technology Officer, Shawn Malhotra, in May to oversee AI, data science, engineering and technology operations across the company.

Simply put, Rocket Companies is among the best enterprises in a bad neighborhood. Krishna set the scene:

"We're navigating through challenging times and unpredictability is the new normal. Despite some signs of gradual recovery in home listings and sales, affordability remains at historic lows due to persistently high mortgage rates and rising home prices. This past spring, the industry experienced a weak home buying activity with purchase applications dropping to their lowest levels in over 3 decades. Macro uncertainty and affordability issues are keeping potential buyers on the sidelines while consolidation continues with smaller players being acquired or exiting the market."

Mortgage employment has decreased 36% from its peak, noted Krishna. Rocket Companies' bet is simple: Innovate as rivals fail.

Here's a look the AI milestones being credited for Rocket Companies' second quarter results.

Rocket Logic Assistant. Krishna said Rocket Logic Assistant, an AI-powered live chat experience, is deployed across banking, home equity loans, mortgages and servicing. "We have expanded this interface throughout the client journey from early inquiries using tools like the mortgage calculator to live help with applications and servicing questions on escrow and payments," said Krishna. "Our live chat interface is so much more than just the communication tool. It's a strategic advantage that enhances engagement with deep personalization drives efficiency and ultimately improve outcomes for our clients and business at scale."

Krishna said the company's live chat is preferred by 80% of customers and it complements traditional phone interactions. "We can quickly gauge client intent and direct them to the best solutions, whether they need immediate answers or deeper discussions with the right expert team member. And by leveraging generative AI, we can deliver great client experiences at scale by handling more interactions and keeping more clients engaged with better automation," he said.

With chat across the customer journey, Rocket can cut manual tasks such as note taking and mortgage application data entry.

Automation. AI has also enabled Rocket to automate workflows and complete audits in half the time, streamline the first steps of loan onboarding and tag data for data lakes and model training. Rocket has been able to bypass human intervention on nearly 10% of appraisals in April to save 1,701 hours for collateral underwriting.

The data flywheel. With Rocket Logic Assistant generating 300,000 detailed transcripts every week, the company can be more efficient and extract insights and feedback loops. Krishna added that Rocket's servicing portfolio is leveraging the data from 2.6 million clients to build profiles and understand needs.

Automated valuation models. Rocket deployed an automated valuation model (AVM) for home equity loans. "We enhanced the speed and efficiency of our home equity loan process through the launch of an automated valuation model or AVM. AVM represents a major upgrade, providing a cost-efficient digital alternative to traditional in-person appraisals. This innovation allows us to deliver cash from home equity loans in as little as 7 days meeting our clients' needs with unprecedented speed and accuracy," said Krishna.

Retrieval Augmented Generation (RAG). Krishna said RAG is being used to add data to best practices, documents and data and present analytics using natural language. Rocket is using AWS, Anthropic and OpenAI models and plans to stay on the frontier as large language models (LLMs) evolve.

More from the buy side:

Business Research Themes

Data to Decisions, Next-Generation Customer Experience

Roles

Chief Analytics Officer, Chief Customer Officer, Chief Data Officer, Chief Information Officer, Chief Technology Officer

Tags

#GenerativeAI, #AI #CDO #CIO #Analytics #CX