Of all the places experienced during a lifetime, a home is probably the most cherished one. A home is a place where a person and their loved ones feel safe and secure. Buying a home means not only a lot of financial commitment but also a great deal of thought and effort. And lenders have a responsibility to make the process as seamless and pleasant for the buyer as possible.

A wave of technology in the mortgage industry is slowly making all points of contact digital. Many businesses are now adapting to this changing social reality and using the latest technology to interact with their customers.

Joe Tyrell, EVP, Ellie Mae, quoted in a recent article in MReport, explained that 79 million potential millennial customers are entering the housing market for the first time, and disrupting the industry with a new set of demands for the mortgage lending process. The article further talked about a global consumer survey on digital banking by Deloitte, where the growing millennial customer base is compelling lenders to introduce technology inventions in the loan origination process – such as person-to-person payments, personal financing managing tools, virtual assistants and chatbots. And lenders will face serious competition from new technology giants, like Amazon. ‘Digital-only’ mortgage banks are now getting increasingly popular.

But as more lenders adopt technology, we must ask ourselves one question – is technology able to replace human emotions? There is no doubt that technology improves customer experience, but human interaction still remains irreplaceable. This is especially true for the industry like mortgage where, for most customers, it is the single biggest financial decision of their lifetime.

The 2019 Borrower Insights Survey by Ellie Mae underlines customers’ preference for human interaction while requesting a home loan. Here are some of the results of the survey which show how mortgage applicants interact with digital technologies:

1. Reasons for not using an online application:

The survey looked at borrowers who had the choice of using either online applications or traditional physical ones. Among borrowers who were offered online applications, but chose not to use them, 47% said they would prefer to work directly with a person, 41% preferred to work with physical paper, and 28% still thought an online application would be too difficult. It would seem that the advantages of an online application process (quicker time to close, simpler processes, greater flexibility of time and pace) were outweighed by the security and reassurance of having someone help customers during the application process.

2. Reasons for abandoning online applications:

60% of potential borrowers said that they abandoned their online mortgage application because they feel it was taking too long. More than 60% reported that they required multiple sessions while using online applications because they had missing information and documents which they had not realized they would need.
Unfortunately, one out of five borrowers (20%) of those who abandoned their online apps ended up choosing a different lender altogether. This implies lenders must identify and follow-up when borrowers face issues with their application, or they will lose customers to the competition. For many borrowers, online applications can get too complicated.

Reasons for abandoning online applications
2019 Borrower Insights Survey by Ellie Mae

3. Preference for personal interaction and Gen X:

The research assessed buyer preference towards in-person communication across three generations of borrowers – millennial, Gen X and baby boomers. In a surprising outcome, 79% of millennial borrowers reported frequently meeting in person with their lenders during the mortgage process, as did 78% of Gen Xers. In comparison, only 61% of baby boomers reported meeting their lenders frequently.

Preference for personal interaction and Gen X
2019 Borrower Insights Survey by Ellie Mae

These findings may indicate that younger borrowers, despite being completely at ease with technology, prefer frequent face-to-face interaction with their lenders to support and guide them through what is likely their first home buying experience.

4. Level of lender outreach during the loan process:

The study also measured the number of times lenders reached out to their borrowers.

Level of lender outreach during loan process
2019 Borrower Insights Survey by Ellie Mae

Lender outreach for most borrowers was either 1-5 times or 6-10 times. Very few borrowers were contacted more than 11 times. Lenders increasingly believe that providing technological interventions across the origination process limits the need for them to reach out to their customers. But when polled, as we saw earlier, borrowers obviously prefer having frequent interactions with their lenders.

5. Satisfaction with lender outreach:

This parameter checked how satisfied borrowers were with lender outreach. Surprisingly, despite the higher amount of contact with their lenders, millennial borrowers were still six times more likely than their baby boomer counterparts to feel that there was not enough lender outreach. It would seem that direct communication with a lender is especially important to younger borrowers – possibly to have their questions answered and feel reassured that the loan process is on track.

Satisfaction with lender outreach
2019 Borrower Insights Survey by Ellie Mae

The numbers in the survey indicate that mortgage customers have a strong need for in-person communication. This is true even of processes like loan application, which can be completed by the borrower online without human intervention. Of course, the use of technology has important advantages too. Leveraging technology at certain points of the process ensures faster delivery and enhanced customer experience, and lower cost of the overall transaction.

Here are some technologies that improve productivity, enhance customer satisfaction, and make origination processes quicker and less error-prone:

  • OCR (optical character recognition) and ICR (intelligent character recognition) can be used to efficiently process and manage large volumes of documents needed for origination.
  • Automated mortgage calculators can help customers keep track of their finances prior to taking a loan, during closing and over the life of the loan, including paying it off.
  • Real-time notifications and messaging can reduce miscommunication and inefficiency, keep borrowers updated, and reduce cycle time.
  • E-closing to reduce errors and cost
  • Automated loan origination checklists for upfront identification of loan-level deficiencies. This automation saves time that is typically wasted when lenders and customers go back-and-forth because of missing documents.
  • AI or machine learning applications can evaluate risk, identify deficiencies, and explore non-credit bureau data to enhance prediction of loan performance
  • Search tools and chatbots to help borrowers through the application process
  • Platforms that provide analytics with actionable insights can help lenders in prioritization based on criticality, and timely remediation of areas that have the highest impact on closing delays.

The main advantages of technology – reduction in operational time-frames and improvement in efficiency – not only boost customer satisfaction levels but also bring down operational costs. This benefit is, in turn, passed on to borrowers in the form of reduced fees and lower processing charges to further augment customer satisfaction.

To effectively take advantage of all that digitization has to offer, mortgage lenders must constantly innovate and integrate newer technologies. But this has to be achieved without compromising on lender outreach. The bottom line is that lenders must provide customers with a combination of in-person lender communication and online application offerings, to offer the best possible customer experience.

For further information on mortgage solutions that are designed keeping in mind trending technology needs and the importance of effective borrower communication, please visit SLK Global at http://bit.ly/2W0eLof.

 

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