Sandeep Hinduja of Wipro Gallagher Solutions on Trends in Digital Mortgage Originations
By MBA Insights Staff
September 23, 2019
Sandeep Hinduja is Head of Sales with Wipro Gallagher Solutions, a Wipro Limited company offering technology products and services for retail, wholesale, correspondent and consumer lenders. The company's website is https://www.wipro.com/banking/gallagher.
MBA INSIGHTS: What are some trends in digital mortgage originations that you're seeing?
SANDEEP HINDUJA, WIPRO GALLAGHER SOLUTIONS: With the industry constantly changing, lenders continue to focus their attention on several significant changes. In particular, automation is transforming the borrower experience, by offering faster turnaround times and better workflows.
Beyond just automating workflows, however, forward thinking technology companies are implementing robotic process automation wherever possible. Together with RPA, predictive analytics provide leverage to improve operations and predict the volume of inbound loan applications while proactively resolving borrowers' needs for appraisals, insurance and other products and services.
On the other hand, a vibrant regulatory environment draws attention to security and data privacy. As data breaches and security concerns become more widespread, the industry can anticipate regulatory changes to address these threats. Lenders would be wise to examine their operations closely and proactively adopt greater security and data privacy protocols.
The market fluctuations in interest rates have caused a recent refinance boom. We can anticipate further ups and downs to interest rates throughout the rest of the year, but lenders should anticipate a sustained increase in refinances and potentially second mortgage activity.
As Millennials continue to become active borrowers, lenders must examine their borrower experiences with the intent to remove as much friction as possible. This generation quickly became the second largest group of borrowers and will likely continue growing as affordability improves and interest rates stay low.
INSIGHTS: What new frontiers should lenders explore in automation and innovation?
HINDUJA: Within automation, lenders have an opportunity to build deeper relationships with their existing borrower base. Using artificial intelligence, they can identify opportunities to cross-sell products and services or upsell, without increasing their operational expenses significantly. By leaning on CRM driven enhancements and efficiencies in their production cycle, lenders can easily identify newer prospects based on their existing portfolios. As the industry continues to face greater operational costs, particularly as the labor market continues to contract, lenders should make strategic investments in AI technology.
INSIGHTS: What are some practical ways lenders can use automation to improve operations?
HINDUJA: For the lending industry, automation continues to be a key opportunity for change. One of the most common struggles lenders face is borrowers' behavior, particularly depending on them to provide documents and information in a timely manner. Lenders are challenged by the slow turnaround time on documents or key info, and often feel they have little control over this aspect of originations. Furthermore, lenders also have an opportunity to speed up originations when working with third-party service providers, such as when ordering appraisals and insurance.
One significant innovation can specifically address borrower dependency: optical character recognition technology. This technology uses AI engines to recognize common documents, such as income verification, extract the information and prepopulate application documents for loan officers. This technology also helps automate reactions to incorrect documents. One common borrower error that can slow down originations is when a borrower mistakenly uploads a spouse's paystubs instead of their own. OCR technology can recognize the error immediately and reject the document on the spot, prompting the borrower to upload the correct documents. When working with third-party providers, lenders can automate requests for appraisals and insurance, further streamlining the loan lifecycle.
INSIGHTS: What are the advantages of combining POS and LOS technology?
HINDUJA: Looking at the latest sales trend cycles, lenders clearly recognize the need for digital innovations. Throughout the evaluation cycle, lenders need to focus on delivering the digital side of digital mortgage originations. For many lenders, this means merely a functional dashboard; however, this is not nearly enough. Without automation processes enabling the LOS to feed into the POS, many other digital innovations are proving useless.
Lenders should look to invest in technology that has a fully digital front end, in which the LOS powers the POS and vice versa. Furthermore, this technology improves a lender's security and data privacy, while remaining fully compliant.
INSIGHTS: How can lenders prioritize better customer experiences?
HINDUJA: Lenders should carefully consider their potential areas of improvement, which generally fall into three categories: technology, processes and people.
Previous responses have identified the advantages of investing in automation and how innovations in OCR and LOS/POS integration can transform lenders' operations. Strategic investment in technology is nearly always the correct choice for lenders looking to improve customer experiences.
Taking a critical view of a lender's origination practices can help improve their borrowers' experiences in the long run. Leaders looking to improve efficiency and reduce the number of frustrated borrowers should look at a typical loan throughout its life cycle and try to eliminate any points of redundancy.
In the current labor market, finding talented staff can be extremely challenging and expensive, but should be a priority for lenders. Loan officers with the right mix of technical training and soft skills in managing borrowers are worth the investment, particularly if a lender needs to overcome a reputation for unhelpful staff.
Most lenders find one or more of these aspects of customer service challenging and should focus on whichever area is weakest. The right mix of technology, processes and people will reduce the number of frustrated borrowers and ultimately improve the speed of originations.
(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 firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)