The mortgage application process is vastly improved by the use of technology. Almost 100% of mortgage lenders agree that incorporating technology into procedures can simplify operations, save time, and reduce data entry.
The global COVID-19 pandemic has ultimately changed the world in many ways, especially how we work and use technology. ICE Mortgage Technology conducted a survey to find that many potential buyers or refinancers are actually looking for lenders who provide tools with the ability to complete applications online from their own homes.
Joe Tyrrell, president of ICE Mortgage Technology, pointed out how the industry was shaken by the events: “You not only had COVID, which required lenders to shift to virtual workforces, but you also had to continue to conduct business in a safe and socially distanced way with borrowers, all happening at the same time that we were experiencing a historical increase in loan volume.”
He added, “This caused many lenders to re-evaluate their technology partners, how they were leveraging technology, the systems that they employed, and the tools that they relied on. We heard many stories from our lenders across the country that had to completely and permanently shift the way they served borrowers.”
Here’s how the mortgage industry embraced tech and the innovations that came out of it…
Enhancing mortgage borrower experiences
The importance of digital solutions has been increasing for borrowers since 2020, with a substantial 58% of consumers making the availability of an online application a deciding factor when choosing a lender and a further 47% taking the availability of a mobile app into consideration – almost half, up from 40% in 2018. In-person interaction, unsurprisingly, decreased in importance in 2020 with 63% of buyers saying online access would be easier than face-to-face processes.
“From a borrower’s perspective, the pandemic has accelerated the demand for a consistent, digital-first borrowing experience. Signing documents electronically is quickly becoming the minimum, and borrowers expect a seamless experience from start to finish. In 2020, many lenders cobbled together different solutions to meet borrower demands, but that often led to a more confusing, fragmented process. COVID highlighted the need for a single consistent digital experience for consumers,” Tyrrell continued.
91% of lenders currently offer digital tools to their customers, in the way of online portals and application processes. A further 60.4% of these lenders say that more than half of all applications are submitted online, with more than 80% completing the process online in 2020.
Not only does providing online options for applicants offer a simplified process, increase the speed of sale closures, and require less back and forth interaction (leaving you time to work more efficiently and increase sales), it can actually improve the cost efficiency of your mortgage business.
Streamlining security and backend operations
Although technology provides a fantastic digital solution for mortgage applications, it is only designed to support the implementation of the loan. Lenders are quick to invest in customer service solutions but often forget about backend operations. This is a major oversight, considering that this is where you can find the most return on your investments.
You could provide the most advanced front-end technology to your borrowers, but if there is a constant backlog with underwriting, delays and missed deadlines, or errors that cause doubts around the security of documents, the consumer will eventually stop caring about the fancy front-end and will look at competitors who have considered the whole process.
Data collection, underwriting support, and communication all need to be top factors when piecing together a digital solution for your customers, and the process needs to be streamlined throughout. Borrowers want to be certain their data is secure with identity theft being a major threat with mortgage lending. Verification software, secure file sharing, and safe customer retention records all need to form a part of your setup.
The first-ever ‘Robo-Advisor’ launched
A mortgage firm based in Manchester, UK has taken digital solutions one step further in the mortgage industry by creating a ‘Robo-Advisor’. OpenMoney has launched a mortgage advice platform for first-time buyers online. The service has already been giving free automated money and debt advice with the ability to integrate human advice for an additional cost. Now, automated mortgage advice has been introduced, with 50 lenders on board to share their expertise.
The new addition to the service comes a year later than originally planned, due to the pandemic, but is now available to provide lender, surveyor, solicitor, and even insurance advice, generating recommendations and even digital tools to use in the application process. It should be noted that this is not a comparison site and is regulated very much in the same way a human mortgage advisor would be.
The service works on a commission basis, much like many independent mortgage brokers. Advice is free, but the chosen lenders provide OpenMoney with a commission on any products sold. In fact, OpenMoney’s co-founder, Anthony Marrow, stands strong on free advice, saying “Buying a property is expensive and we fundamentally disagree with mortgage providers that charge people for advice”.
“Our new service aims to simplify the process and guide customers through the whole home buying journey to ensure they understand the impact different mortgages will have on their finances and which products they need and where to find them.”
OpenMoney is not the first platform of its kind, with Mojo Mortgages and Strike also providing digital broker and estate agent services. Large companies are investing in these businesses as they pave the way for the mortgage industry to go in a more technology-led direction.
Mortgage Loan Officers do not seem to, or need to be, threatened by such revelations in the industry, since people still require human services with advice for complex or customized cases. The platform still has limitations and cannot fully comprehend all instances of a mortgage application. As such, self-employed people need not apply as the service cannot process this level of complexity just yet.
How do you feel about the digital mortgage advisor? There’s clearly a long way to go until we can all implement an AI advisor, but that doesn’t mean that there isn’t a place for other digital processes in your company now. Where could you integrate more digital solutions and where have you found success? Join the discussion below.
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