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Wednesday, July 17, 2019

Beyond the Mortgage POS: The Era of the Digital Lending Platform is Here

By Justin Schuster
July 8, 2019

Topics:
Justin Schuster
Blend
Digital Lending

JustinSchusterJustin Schuster is Head of Marketing with Blend, San Francisco, a position he has held since January. Prior to Blend, he served as chief marketing officer with Acxiom Holdings Inc. and Liveramp Holdings Inc.

Digital mortgages have been a hot topic since the moment Quicken Loans invested in splashy Rocket Mortgage Super Bowl ads in 2016. Adoption of mortgage point-of-sale technology to provide digital application experiences has been fast and furious ever since--so much so that providing a digital, mobile-friendly application experience has become table stakes.

As a result, leading POS vendors have set their sights on even bigger goals, such as automating the full mortgage process from application to close. Some have even started to expand to other lending products, creating a single platform for managing lending experiences across products and channels.

The era of the mortgage POS is ending, and the era of the digital lending platform has begun. This new era promises substantial benefits over first generation POS systems for both consumers and lenders.

Digitizing the Entire Mortgage Process
Most mortgage POS platforms initially set out to create a digital 1003 application that could be completed anytime, anywhere and on any device. From there, many providers expanded into automating pre-approvals, initial disclosures and other steps in the mortgage origination process.

Industry leaders have been working to transition the mortgage business to a data-centric paradigm. The ideal end state replaces document uploads with direct connections to consumer financial data, uses artificial intelligence to manage conditions, and automates verification checks.

Some have also been working with GSE programs, such as Fannie Mae's Day 1 Certainty and Freddie Mac's Asset and Income Modeler to pilot new capabilities that will dramatically shorten close times. Finally, a select few have also started assembling an ecosystem that works together to streamline everything from services ordering for home insurance, appraisals and title, to powering an efficient e-Close.

Together, these process improvements are enabling lenders to close more loans at lower cost, improving customer experiences and freeing loan officers to focus more time on both generating referrals and serving as a trusted advisor to the consumer.

Unifying Customer Experience Across Channels and Products
Banks and credit unions are facing increasingly fierce competition from fintechs that offer compelling digital-first experiences for mortgages, home equity, deposit accounts, personal loans and more. In response, many traditional lenders have raced to implement digital transformation projects in a piecemeal fashion, one loan product and channel at a time. However, this approach can fragment the customer experience and create tremendous complexity for internal teams to manage.

Emerging DLPs have the opportunity to offer a compelling alternative: a single platform that brings the benefits of digital transformation to all consumer lending experiences in a unified fashion. The advantages of this approach go beyond offering a consistent experience for digital applications and automated approvals. Consumers also benefit from the ability to engage seamlessly across channels--for example, starting an application on a mobile device and completing the approval process in a branch, or vice versa.

In addition, lenders can benefit from a greater ability to deepen customer relationships. For example, with a single DLP lenders can integrate deposit account offers into a mortgage application flow, or use credit data from a HELOC application to automatically present a pre-approval offer for refinancing an auto loan at a better rate. We are at the very beginning of this new transformational moment.

Reimagining Lending Experiences Everywhere
While it may take some time before technology providers can fully deliver on this vision, the change is rapidly underway. The combination of Silicon Valley ingenuity, venture capital funding and innovative lenders seeking to create a competitive advantage is accelerating this transformation. This makes one thing very clear--while the mortgage POS was a great first step, it will be the DLP that delivers the biggest impact on the future of lending.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)

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