Tuesday, April 23, 2019

Why Mortgage Lenders are Finally Turning to Technology

By Brandon Hoyles, Blend
February 4, 2019


Brandon Hoyles is Platform Expert at Blend, San Francisco.

Consumer lending's fast-moving landscape has the industry asking: What's my biggest competition, and how can I prepare myself?

Traditional lenders are unambiguous about who they perceive as their biggest threat to retail consumer lending: nine out of 10 say online competitors are poised to threaten their market share. While that may not be a shock to industry veterans, things get interesting when we break out which companies they worry about most.

To unpack lender anxieties, we asked the industry which companies posed a legitimate threat in the consumer loan market. Responses varied between long-standing competitors such as loanDepot to rumored players including Amazon. More than half--56 percent--of respondents pointed to Rocket Mortgage, a subsidiary of Quicken Loans, as their biggest competitor. Next was Amazon--a company yet to enter retail lending--which 43 percent of lenders considered a threat to brick-and-mortar banks.

It's remarkable how many lenders were concerned about a company that has yet to join their industry in a real way. Younger startups such as LendingClub and SoFi are also on lenders' radar. More than 40 percent of lenders pointed to LendingClub as a threat and 28 percent said they were concerned about SoFi. A lonely (and perhaps bold) seven percent of lenders said no online company poses a threat to the current market. We'll assume their digital strategies are well-baked.

The loan origination process was created decades before online banking--or even the Internet--became widespread. In that time, the technology landscape has fundamentally shifted. API-driven connectivity now makes it possible to access validated source data. With accessible data, lenders can freely redesign the lending process to be both more efficient and delightful for borrowers.

Embracing Innovation Through Partnership

Speaking of redesigning the lending process, it has finally started to become a widespread priority, likely because the mortgage workflow hasn't seen meaningful change in decades. Our expectations of the lending experience--a bar implicitly set by companies like Apple and Netflix--have risen greatly since then. It begs the question: what's taking lenders so long to catch up?

The word "disruption" gets thrown around a lot in tech, but for lenders, there's a real worry about technology disrupting productivity. We asked lenders to think of the last time they rolled out a new major technology solution. Was the process disruptive to them and their team? Nearly six in 10 lenders said yes.

57 percent of Lenders Said Adopting New Technology is Disruptive to Productivity

Not all lenders see adopting new tools as disruptive. Many of these innovators and early adopters are already exploring how technology can streamline their workflows and help them get more out of their current resources. The survey data also points to how much lenders value a hands-on, comprehensive rollout when adopting new technology. They don't want to be handed a user manual; they want a tailored approach designed to create sustained adoption.

Even though our survey respondents worry about disrupting productivity, they're overwhelmingly aware of new digital-first competitors like SoFi, as well as companies rumored to be entering home lending, like Amazon.

This is causing most lenders to highly prioritize getting the customer experience right with the help of technology--a trend that will only continue to grow in 2019.

(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; or Michael Tucker, editorial manager, at

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