As it turns out, consumers want it both ways. They want hands-off, do-it-myself digital banking services – until they don't. Consumers want to choose how and when they go it alone and when they seek face-to-face interactions in the branch.
Those same expectations extend to mortgages. People want the convenience of applying online but also the ability to engage the lender via any channel they choose should a question arise.
Consumers seem willing to do things differently if it helps to expedite the loan process, according to the most recent quarterly consumer trends survey from Fiserv. The Expectations & Experiences: Borrowing and Wealth Management survey found that as much as half of recent home application tasks are being completed online, although using a mobile device to complete those same tasks is still relatively rare. Borrowers who applied for a loan in the past five years used online or mobile capabilities to electronically sign loan documents, photograph and upload loan materials and driver's licenses, and verify identities.
Borrowers want an Amazon-like experience, where the knowledge gained from their past activity with a financial institution is kept and incorporated into subsequent interactions, including mortgage applications.
How can your organization reach this new wave of borrowers and deliver the experience every consumer now expects? Here are four considerations for today's lender.
1. Know Your Borrower
Borrowers want an Amazon-like experience, where the knowledge gained from their past activity with a financial institution is kept and incorporated into subsequent interactions, including mortgage applications. You shouldn't make them start from scratch when applying for a mortgage. Use the data you already have to provide a better, more intelligent experience for your customers or members.
A borrower's current financial institution has the inside track at winning their business, but only if the bank or credit union can prove it has the breadth of lending services the borrower seeks. The real advantage comes if your financial institution is able to integrate essential services to create integrated, intuitive experiences that bring financial lending products under one umbrella as one experience and one branded version.
But partnering with multiple third parties can be difficult. Working with a single technology source can help ensure a complete, integrated lending ecosystem, which in turn delivers a better experience for consumers.
2. Decrease Risk With Automation
Financial institutions are well aware of the issues of compliance, regulation and risk associated with mortgages, but may not realize how digital capabilities can greatly simplify the process. Manual processes are cumbersome and prone to error and there are countless compliance rules to consider. Lenders and investors must be able to verify and validate that the loan they're about to service or create as an asset doesn't have risk attached to it. Technology automates many of those tasks, which not only streamlines processes but greatly diminishes the regulatory burden and associated risk.
3. Put the Squeeze On
Lenders are looking to reduce costs due to market compression and margin squeeze. For bigger lenders, the easy answer may be to cut staff. But then, how do they grow market share? Midmarket and smaller lenders face the same challenges but most don't have the option of cutting staff. They need to be more efficient, while also growing market share. But how?
Technology is the answer to both questions. Regardless of size, lenders that implement intuitive, immediate and inspired digital lending experiences can improve their ability to gain market share – and position their organizations to win by delivering a better digital borrower experience and decreased time to close.
According to Nerdwallet's 2018 Home Buyer Report, 82 percent of millennials say buying a home is a priority, compared with 75 percent of Generation X and 69 percent of baby boomers. The research found millennials aspire to buy a greater number of homes, on average, throughout their lifetime and are most likely to say they'd like to buy a home to rent out for extra income. Providing instantaneous, digital access is vital if lenders want to capture this tech-savvy generation of borrowers.
4. Look Ahead
Artificial intelligence (AI) will play a bigger role in everything we do, including the mortgage experience. As more data becomes available to lenders, more rules and automated workflows are created. That means repeatable intelligent decisions can be made based on all types of data and the variables, or the variable mix, of that data. When your organization starts to remove the human element from complex decisions, such as ensuring a borrower meets certain credit financial requirements, you can automate those transactions, including validating when those requirements have been met.
The interaction with the borrower and back-office staff continues to evolve, becoming more automated, factual and real time.
Machine learning will also play an important role in the future. Machine learning uses data to help identify trends and then feeds that data into business intelligence. That information is used to validate or display those trends, which can point to ways to improve the business process.
Machine learning also helps create a better borrower experience, adding automation for greater accuracy and speed. New digital interfaces are developed on top of automated workflows, digital data acquisition, and automated artificial intelligence and machine learning. The interaction with the borrower and back-office staff continues to evolve, becoming more automated, factual and real time.
In addition, blockchain is making large strides in changing the mortgage industry. With all of the touchpoints on a mortgage transaction, there is a need for a single source of accurate, verified data and blockchain provides that.
Data from a blockchain record is in chronological order and supports changes to information on liens, tax information, property assessment valuations, transfer of ownership, and other information. That makes it easier to verify and validate the owner of a property and its value, including the sale of assets on the secondary market. Blockchain also helps mitigate fraud and reduces time and cost during the real estate transaction, especially in the title search and insurance process.
The Digital Opportunity
The opportunity exists to provide a simpler, more profitable mortgage transaction, using digital technology and automation to reduce the cost of a loan throughout the life of a loan.
Digital mortgage capabilities can deliver an improved consumer borrowing experience and allow financial institutions to expand their footprints to places without a brick-and-mortar presence or where loan originators aren't available. This is an opportunity to make your online borrower experience easy and intuitive, and to deliver a differentiated experience quickly and accurately via any device the consumer chooses.