The mortgage industry relies on digitalization to bring home a number of powerful benefits ranging from better decisions and immersive customer journeys to efficiencies and cost savings. The pandemic has greatly accelerated this game plan. With Central banks, the world over, lowering interests to stimulate slumping economies, mortgage volumes hit record highs. Coupled with this was the homebody economy requiring families to work and school from home – which also triggered the need for larger living spaces and often a move to the suburbs. Providers with strong digital muscle clearly scored over their peers. Recent research indicates that mortgage firms that accelerated digital transformation by four times their previous pace are likely to see profits about 2.4 percentage points higher than the average.
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The Customer Remains at the Core of Their Efforts in the Mortgage Industry.
Progressive mortgage providers have always focused on improving customer experience and providing loan officers, real estate agents, and borrowers with technology and digital infrastructure that delivers an innovative, user-friendly experience on every platform and in every channel. Even before the pandemic, these companies had started their digital transformation, focusing on cloud technologies, to improve the mortgage experience for all its stakeholders. Today, changing consumer behavior and increasing openness to digital experiences have only served to spark a wave of digital innovations on this front that will continue even when the pandemic is nothing more than a bad memory. After all, electronic closing, remote online notarization, and tools to conveniently process customer information remotely are productivity boosters at all times.
A Closer Embrace of Automation Will Ensue in Mortgage Industry.
While most mortgage providers have embarked on their automation journey in some form, few are equipped with fully automated processes to manage the accurate and complete collection of customer data. This is usually a hybrid process. The absence of an end-to-end loan application process, for example, makes it tedious and cumbersome. This also results in longer loan processing times. On average, it took 49 days to close loan processing in June 2021. The research referenced earlier points to how companies that have less than 25% of the mortgage application process digitized likely saw their profits decline, while providers with 75% or more of the process digitized likely saw profits increase by more than 6% during the past year. Some of our clients are working to digitally transform their mortgage servicing by translating documents into data points and data points into usable information. Several others are looking to use AI/ML to automate various functions in the mortgage process.
Data, Analytics, and Connectedness Will Come to Be Powerful Differentiators.
Technologies like IoT to sensor-enabled and track property for optimal maintenance will allow servicers to sell properties at a better price. Data analytics will help them understand customers and even predict their needs, while natural language processing along with AI/ML will serve to automate routine tasks and drive greater efficiencies. Cloud investments are integral to these digital programs especially to revolutionize processes and reporting, connect to open banking systems with alternative payment options while expanding threat detection and fraud prevention. Our clients are in conversation with us to help them re-engineer their processes, with data and automation, to dynamically change the way they do business. Driving digital transformation within mortgage lending, they aim to provide the lowest cost in the market to put loans on the books, the highest level of efficiency in terms of loans per person, and the highest levels of customer satisfaction and engagement.
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In the next 24 months, the winners or losers will not be based on current market share but on how they approach technology and how quickly they can digitalize. The importance of digital acceleration at this point in the mortgage industry is evident: mortgage providers that don’t invest in digital transformation risk becoming irrelevant in the future.
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