Mortgage Industry Still ‘Late to the Game' in Adopting Technology
Mike Sorohan email@example.com
It's 2018. Is this the year the mortgage industry finally bridges the Digital Divide?
According to J.D. Power, Westlake Village, Calif., the answer is, not quite but it's getting there. In a new paper, the company says the mortgage industry has been late to the game in adopting new technology, but that this will begin to change as the demand for self-service technology and greater competition put pressure on existing business models.
In the paper, Will 2018 Be the Year the Mortgage Industry Finally Bridges the Digital Divide?, J.D. Power mortgage practice lead Craig Martin noted attendees at the recent Mortgage Bankers Association National Mortgage Servicing Conference & Expo overwhelmingly selected technology and innovation when asked what their priorities were for 2018, which he called a positive sign.
"We are seeing a clear trend toward heavy tech development in the mortgage space," Martin said. "Though the jury's still out on whether lenders will get the formula right, our data does show that many leaders are focusing on the key issues."
Key findings of the report:
--Both refinance and purchase customers cite online/website as the most frequent method of submitting a mortgage application
--The percentage of people applying digitally went from 28% in 2016 to 43% in 2017
--People are choosing mortgage originators based on more than price; trust is also key
--High levels of trust are associated with higher levels of satisfaction
"The mortgage industry has been notoriously late to the game on technology, the study said. "Chalk it up to a combination of strict regulation, a decade of easy money and entrenched business models, but, when compared to the rest of the financial services landscape, the mortgage business has not been winning the innovation race. Rising consumer demand for self-service technology and a more competitive overall marketplace are conspiring to buck that trend."
In mortgage origination, J.D. Power said, the traditional view is customers choose their lender primarily based on price/rate. The reality, the study said, is that the choice is more nuanced and in many cases the lowest price choice isn't what customers select but rather it is a combination of trust in the brand and reasonable price. It's also not necessarily the offering with the most options or the bright shiny new technology.
"The great equalizer in the mortgage business is achieving a balance between convenience, recognition, advice, trust, and value," the study said. "Building this formula into new technology will be a critical area of focus for the mortgage industry in 2018."
The study said lenders will have to adapt more quickly to technological changes, particularly as younger consumers use technology as an essential part of their lives.
"Lenders are certainly focused on this shift, but it remains to be seen whether they will get the formula right," the paper said. "Across a virtually all service industries tracked by J.D. Power, business are struggling with the balance between full delivering fully automated, digital self-service customer support and live, human support. Those who do get it right will clearly be at an advantage."