How Technology is Changing the Mortgage Industry
By Mike Sorohan
April 8, 2019
DALLAS--Technologies that have revolutionized other industry are--finally--revolutionizing the mortgage industry as well.
"Technology is changing everything we are doing, and we're finally seeing it in the mortgage industry," said Rick Hill, Vice President of Industry Technology with the Mortgage Bankers Association, speaking here at the MBA Technology Solutions Conference & Expo. "It's an exciting time to be in the industry."
"There are a number of forces at play that all lenders will have to engage in remain a force within the industry," said. Teresa Blake, Managing Director with KPMG LLP, Charlotte, N.C. "There's lot of M&A going on in the industry; there are a lot of disruptive factors...to stay ahead of the game, you have to achieve a balance in all of these factors."
Blake said that disruption extends to start-ups, which are developing rapidly. "We have hundreds of new mortgage technology providers, and we expect that trend to continue," she said.
So, why? "There are multiple benefits to a fully digital mortgage," Blake said. "We use technology to improve our business, but it starts and ends with the customer. So when you ask, ‘why digital,' it's all about improving the customer experience."
That customer experience, said John Cabell, Director of Financial Services in the Global Business Team with J.D. Power, Troy, Mich., is what it's all about. "Consumers do have a voice in what happens to their digital experience," he said. "Customers are clearly telling us they want shrinking timelines for funding. Younger customers in particular are looking at the reputation of the lender through reviews and the convenience of the online platform."
Lenders, Cabell said, should be looking at how they provide that experience to these customers. J.D. Power's research found that customer satisfaction remains highest when there is a human involvement, and least in an all-digital experience.
"We think the balance is somewhere in the middle," Cabell said. "We know that customers like a digital mortgage experience, but they still want human interaction. We have to continue to educate the consumer as to what a digital mortgage is."
There are five "universals" that guide the customer experience, Cabell said: Convenience; Recognition; Advice; Trust; and Value. "If you can get these right, then you create an optimal experience," he said. "When you implement technology, it has to address these universals. Technology for technology's sake isn't what works for the customer--at least, that's what they tell us."
Tammy Richards, Executive Vice President and Chief Operating Officer with loanDepot, Foothill Ranch, Calif., said as her company has brought the digital mortgage into its business operations, it has evolved for both the company and the consumer.
"We're using micro-services to break out of our LOS format," Richards said. "We're trying to create as many simultaneous processes as possible, instead of a linear process, so that we can close loans as quickly as possible. This gives us and our customers the ability to move more quickly to move the loan process along."
Aaron Perlis, Executive Vice President and Chief Technology Officer with Walker & Dunlop, Bethesda, Md., said the commercial/multifamily industry can learn much from these new processes.
"One of the challenges we have in the commercial/multifamily space is the lack of homogenous practices," Perlis said. "We don't rely on FICO scores, for example. We need to be able to connect the dots--financial data and other data points. We also need to improve our mobile capabilities."
Perlis said he expects the commercial/multifamily industry to get to where the residential industry is heading. "We should be able to ‘clear to close' in a day," he said. "It's not as complicated of a process that we're making it.
Cabell said companies must adopt the customer perspective. "Too many companies try to improve the process from the inside out," he said. "What we hear from consumers is they want simplicity and they want speed, and the mortgage industry is neither...customers aren't comparing Mortgage Lender ‘A' to Mortgage Lender ‘B'. They are taking their experiences with Amazon and Google and wondering why their lender can't to the same."
"Can we get ‘Alexa' to find us a mortgage?" Cabell added. "That seems to be where we are heading.
"Customers want us to be able to use the information we have available without sending reams of paper," Richards said. "Our customers don't even print out their tax returns anymore--it's all electronic. Getting them ‘clear to close' as soon as possible is the goal. And they also want to close where they are; they don't want to go to a closing office to complete documents that are thicker than a phone book."
Additionally, Richards said, "Customers are getting more savvy about their data, and they are going to want more control over how companies obtain and use those data."