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From cash management to resident engagement, artificial intelligence (AI) can play a transformative role in commercial real estate.
That’s particularly true for treasury management, which is key to optimizing liquidity and helps drive strategic decisions. The increasing complexity and volume of financial data can challenge traditional treasury management approaches. By using advanced predictive algorithms and machine learning techniques, AI has the potential to help organizations swiftly analyze extensive amounts of information, identify trends and make data-driven decisions in real time.
But effectively leveraging AI’s power requires careful planning and close collaboration among commercial real estate professionals, data scientists, banks and technology experts. It’s also important to consider ethical implications, such as data privacy, algorithmic bias and potential job displacement.
Our team can help you find the right treasury and property management solutions for your business.
6 ways AI can improve commercial real estate treasury management
New generative tools like ChatGPT have gotten a lot of attention, but the world of AI is much broader. So are its potential applications. Here are six ways AI can play a role in commercial real estate organizations’ treasury management.
1. Cash forecasting
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AI-driven cash flow forecasting: Real estate AI algorithms can leverage historical cash flow data to predict future inflows and outflows. For instance, an AI-powered system may be able to anticipate seasonal fluctuations in rent payments, helping businesses allocate funds for property maintenance during peak seasons.
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Forecast accuracy: By analyzing vast amounts of data and learning from historical errors, AI has the potential to refine cash flow forecasts. For instance, a cash forecasting tool incorporating AI could adapt to changing resident payment patterns over time.
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Scenario analysis: AI can simulate different scenarios, such as varying market conditions and business strategies, and help organizations prepare accordingly.
2. Process automation
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Reconciliation and reporting: AI-powered accounting software may streamline bank reconciliation by connecting to bank accounts, analyzing financial data, matching transactions to bank statements and flagging discrepancies for human review. AI systems could reconcile bank transactions with resident payments recorded in property management software, helping with recordkeeping.
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Cash positioning optimization: AI systems that can analyze cash positions and transaction data may be able to recommend ways to reallocate funds to meet liquidity needs or capitalize on investment opportunities.
3. Liquidity management
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Predictive liquidity modeling: AI can analyze historical data, market trends and business cycles to forecast liquidity needs. For instance, an AI model may be able to predict the liquidity necessary for upcoming scheduled maintenance on a property.
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Real-time monitoring: By continuously monitoring cash balances, AI has the potential to alert treasury teams of deviations from typical patterns. That could help them proactively mitigate liquidity challenges.
4. Assessing risk
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Credit risk assessment: AI could use data from credit bureaus and financial statements to help assess residents’ creditworthiness.
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Market analysis: AI may be able monitor volatility in a commercial real estate market and assess its impact on property valuations. This could help inform business decisions.
5. Fraud prevention
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Anomaly detection: By analyzing vast amounts of transaction data, AI algorithms may be able to identify unusual transaction patterns that could indicate fraud.
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Behavioral biometrics: AI can analyze user behavior in an attempt to detect people trying to gain unauthorized access to systems. This could help businesses enhance security measures and prevent data breaches.
6. Resident engagement
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AI-powered chatbots: Chatbots can help handle resident inquiries, such as questions about rent payment procedures. Automating routine tasks may allow faster responses.
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Personalized communication: AI may be able to tailor its communication based on residents’ preferences and history, which could help improve resident retention and satisfaction.
A guide to implementing AI in CRE
Leveraging AI in commercial real estate treasury management can be a strategic move to help enhance efficiency, improve resident satisfaction and streamline operations. Implementing real estate AI tools successfully involves several steps, from understanding your needs and carefully evaluating options to integrating and scaling AI solutions. Here are tips to get started:
Identify areas within your operations where AI can help. Common applications include predictive maintenance, forecasting, transaction processing and automated customer service.
Look for AI tools and platforms that cater to the real estate industry. Focus on solutions that address your specific needs, whether that’s lease abstraction, contract summary, data-driven marketing insights, operational efficiencies or chatbots for customer service.
In addition to focusing on AI applications that align with your goals, consider tools that automate repetitive tasks and provide strategic decision-making insights. Make sure AI software integrates well with your existing systems and is scalable, secure and user-friendly.
AI systems require substantial data for training and accuracy. Gather historical data from your operations to train the systems. Depending on the applications you have in mind, this data can include information on residents’ payment preferences and patterns, as well as financial transactions and maintenance records.
Consider hiring AI specialists or working with AI firms and banks with commercial real estate experience. They can help guide the implementation process and ensure the technology aligns with your business goals.
Consider ethical concerns such as data privacy and algorithmic bias, which occurs when algorithms make decisions that are systematically unfair to certain groups. Establish clear policies to protect residents’ and prospective residents’ data and ensure all are treated fairly.
Train your team to use the new AI tools effectively. Team members should understand how to interpret and verify AI-generated insights and act based on those insights.
Start with a pilot program to test the AI solutions in a controlled environment. Monitor the results and gather feedback to make necessary adjustments.
Once the pilot program is successful, roll out the AI solutions across your operations. Continue to monitor performance and make improvements over time.
The field of AI is rapidly evolving. AI systems learn and improve over time, so regularly update your models with new data and keep track of new developments that can further enhance your business’s operations.
The bottom line: Given the diverse range of AI’s applications in commercial real estate, the best combination of AI solutions can differ from one business to the next. Following these steps can help you successfully integrate AI into your organization’s treasury operations and take advantage of its potential to help optimize operations and boost efficiency.
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JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.
