Berkadia’s CIO On AI And Innovation In Commercial Real Estate

 

The commercial real estate industry has undergone significant shifts since the pandemic. Changes to how and where people live and work have presented their share of challenges. For commercial real estate firms, these changes have also ushered in a renewed focus on data and technology to help the industry adapt to changing behaviors and market conditions.

Berkadia CIO and Chief Innovation Officer Damu Bashyam

Berkadia

Berkadia, a privately held joint venture between Berkshire Hathaway and Jefferies Financial Group, offers commercial real estate services across mortgage banking, investment sales and loan servicing, Damu Bashyam, the company’s CIO and Chief Innovation Officer, oversees the company’s innovation unit, which focused on digital transformation, software engineering, IT, data strategy and product development, as well as the company’s BeEngaged startup accelerator program. He discussed why he thinks the commercial real estate industry is at an inflection point, the impact of generative AI and the importance of a collaborative culture in driving change.

How are data and technology changing Berkadia’s business and the industry at large? Where do you see things going in 2024?

Historically, CRE firms have had a reputation for being slow adapters to technology. The pandemic expedited the need for technology and accelerated both investment and adoption in things like proptech, fintech and data analytics, as well as AI and augmented reality. This has put the industry at an inflection point, and I believe the next three to five years will be transformative.

Berkadia is making long-term investments in people and technology. For example, we have our BeEngaged accelerator program for startups we think are destined to redefine the CRE industry. The program conducts market research, presents proofs of concept and provides mentorship to the startups. We may also choose to buy or integrate with these partners where it makes sense. The program led us to acquire BlueSuit, an AI technology platform company specializing in CRE, and we continue to be on the lookout for strategic opportunities.

We also entered a strategic alliance with Hyderabad-based T-Hub to foster growth and knowledge exchange in India’s startup ecosystem.

How is AI moving the needle across Berkadia’s business lines?

Data, and increasingly AI, serves as the cornerstone of the CRE industry. Our strategy is to continue to lead through data innovations that help our mortgage bankers, investment sales advisors and clients make informed decisions. Whether delivering insights on market trends, property performance or customer behavior, relevant data powers all of it.

Berkadia has a mature data practice that has been a huge differentiator for us. We aggregate data from dozens of data sources into a centralized cloud platform. Our master data management process generates standardized and enriched data sets that drive our AI and machine learning algorithms and analytics. Data insights are then fed directly into several employee- and client-facing tools to enable data-driven decisions and customized user experiences.

AI and machine learning play a pivotal role in our operations by uncovering leads and opportunities within our network. We can more efficiently monitor property performance against comparable properties and generate automated property valuations, which are key to identifying refinance and sale opportunities. In a recent initiative, we used AI and machine learning to identify relevant buyers for Berkadia listings. Those insights empower us to expand and target our property marketing efforts, and ultimately ensure maximum returns for clients. As we look across the landscape, we see so many opportunities to optimize our processes and drive growth.

Organizations need skilled teams and an innovation-focused culture to bring many of these solutions to life. What do you do to cultivate that culture inside Berkadia?

Organizations must be agile and willing to quickly embrace new products and solutions. Companies that don’t continue to evolve their offerings will find it harder and harder to keep up.

Innovation starts with people and culture. One of the drivers of our culture is an internal program we call the Berkadia Way. It emphasizes treating our colleagues with respect and focusing not on ourselves as individuals but on our teams and our shared objectives. This is key when it comes to driving any kind of change initiative. For big innovative ideas to be successful, we must engage key stakeholders from across the organization, from our business partners to our learning and development teams, to drive engagement and adoption. It’s about getting everyone involved in the story and creating a shared understanding about how technology is helping to drive the growth of the company.

As you look to the year ahead, what do you see as some of the biggest opportunities for Berkadia and the industry as a whole? Potential challenges?

Generative AI presents a number of opportunities for Berkadia and the CRE industry at large. We recently launched Berkie, an AI-based virtual assistant that provides an internal and secure platform for various tasks. Berkie can answer questions, summarize information, help producers conduct market analyses and facilitate property searches, among other uses.

This technology will be invaluable in streamlining processes and enhancing productivity. However, as we embrace generative AI, it’s important to be mindful of the potential risks it may pose. To ensure the responsible and ethical use of AI, we have dedicated resources to evaluate usage patterns and implement appropriate guardrails.

In addition to the opportunities presented by generative AI, internal surveys indicated that potential disruptions from inflationary pressures, high interest rates and a tightened credit environment may continue to impact the CRE industry in 2024. Concerns about the state of the economy will likely remain a primary factor in decision making during this period.

We recognize these challenges and are committed to continuing our investment in people and technology. By doing so, we aim to position ourselves to capture market share as the industry rebounds.