Driving Digital Transformation in Mortgage Banking

By leveraging many of the new mortgage technologies available and automating unneeded manual tasks, a mortgage lender will have the benefit of both reducing operating costs as well as providing a more efficient and enjoyable experience for the customer.As many probably read or laid witness to, the mortgage industry has been in the process of considerable and consistent change since the banking collapse of 2008. This has included everything from increased process complexity, a more thorough underwriting process, and additional regulations to thwart the kinds of practices that overwhelmed many of the biggest banks.As additional regulations have helped get the mortgage business back on track from a confidence standpoint, there are many technological changes that have assisted in this new banking evolution as well. While startups like Lenda and Sofi are doing their best to drive change from a consumer stance, others like D+H and BlendLabs are assisting with disrupting the actual origination and operational aspects of this business that in the end, will benefit all through both a cost and efficiency. Here are some of the factors driving these changes and how this will affect the bottom line for all.

Optimizing Customer Experience

If you’ve financed a home in the last few years, you’re probably aware that the process is very cumbersome. The many hoops to jump through, t’s to cross, and i’s to dot are staple of the complications that have traditionally made the mortgage process so scary and complicated for most buyers.On the other hand, the operational processes are still as complicated as ever with the number of hands that a loan must touch still numbering between 8 to 10 people, and an average closing time hovering around 50 days. With new technologies available, and the ability to run a near paperless operation, many mortgage providers are still not running as efficiently as they probably could be.A good place to begin would be to audit and assess the current customer and user experience of the origination process (both from a customer and originators perspective). From the customer side, the simplified design, well thought out communication process, and systemized application procedures have made the Quicken Loans Rocket Mortgage product a winner in many regards. Their homepage gives potential customers two clear options to begin with, refinance or purchase, both of which lead to an easy to follow, systematic process to filling out an application.On the flip side, you have some startups like Blend Labs trying to disrupt the operational process for the broker industry and middle market players, while others like Black Knight Financial Services offering data driven Loan Origination Systems that leverage big data to optimize enterprise level origination processes. PNC Bank, one of the more technologically minded large banks, recently signed an enterprise contract agreement with them in August.The point to this story though is that the customer experience is still quite a ways away from making the mortgage process very efficient. The more attention that this is given, the greater chance a lender will benefit from acquiring more informed and qualified leads as well as cost efficiencies in reducing internal steps and processes.

Taking Advantage of New Mortgage Technology

There are now more technology and alternative lending mortgage solutions than ever before. At one point Calyx Software was the hands down solution to handle all of application and lead flow processes. Now however, Fannie Mae has opened up its vendor integration list to over 30 different suppliers, many of the newer of which are technology focused. Companies like D+H are bringing about web-based dynamic and mobile Saas oriented LOS solutions while companies like MortgageDashboard are driving systemic mortgage automation. To survive, mortgage professionals and lenders are going to need to drive innovation take advantage of these new technologies, or else suffer the consequences of everyone moving past them relatively quickly.In addition to the process oriented technologies that have cropped up, there are now new and more sophisticated ways to drive business development as well. Gone are the days of buying massive amounts of paper leads and employing significant outbound sales efforts. The new means of building up your lead pipeline is through digital marketing.A recent study from the National Association of Realtors reported that the average length of time to make a purchase decision in the home buying process averaged around 10 weeks, with 92% or buyers using the internet and 50% of which also using a mobile device or application in the process.Additionally, digital engagement mechanisms can be introduced throughout the buying cycle to further educate the potential customer about their financial options thus allowing for an expedited decision and a more informed and delighted experience. Examples to these tactics could be implementing onsite home pricing tools, financial product guides, newsletters, and content guides that map out the home buying process, targeted social media and remarketing advertising. These different methods will allow the loan provider to understand who is in the market for a home as well as where they are in their buying process.To assess where you are in the current marketing technology environment, here are a few tips:

• Is your site currently mobile responsive, if not, why?
• Do you have a mobile app?
• Does your site integrate with a currently approved Fannie Mae or Freddie Mac technology vendor?
• What sorts of marketing are you currently employing vs. your competitors? Starting and optimizing PPC, remarketing, social media, content, and email is where the focus should be.
• Do you currently employ in house processing or are you taking advantage outsourced, more cost efficient and scalable methods?
• Are you currently using your customer and operations data to drive better decision making through cost and acquisition efficiencies?

Making Compliance More Efficient through Digital

New and continually changing regulations that have been implemented after the banking crash have made it challenging to keep up. Where as before, any adjustments to lending or pricing scenarios would result in the printing and redisclosing of new mortgage documentation, now technology is playing a critical role in allowing lenders to adhere to changing regulations and remain compliant without obstructing the customer experience.There are also new technologies that allow for the automatic generation and delivery of disclosures, triggered off of user downloaded and scanned docs. The ability to use e-signatures on documents now and systemic mortgage related CRM’s and dashboards allow for even greater efficiencies and time savings throughout the lending process than what some of the old LOS systems used to take credit for.

Time and Cost Savings for All

A March 2016 study stated that on average, it costs lenders around $8,000 per file to complete each mortgage. Most of these costs are driven by employees having to manually work through the origination process with these expenditures unfortunately being passed over to the buyer by way of processing and origination fees.By leveraging many of the new mortgage technologies available and automating unneeded manual tasks, a mortgage lender will have the benefit of both reducing operating costs as well as providing a more efficient and enjoyable experience for the customer. There’s still much to work on though in the mortgage tech field, but at the very least, the need to purchase those large stacks of legal paper will be behind us from now on.