Historically, mortgages have offered banks and lending institutions steady and profitable business. That’s why many traditional financial institutions have not been overly concerned with the customer experience for mortgages.
However, in these economic times, things are changing.
Borrowers have more options than ever, thanks to lenders and Fintech startups investing in automated lending processes that make it easier for customers to apply for and close on home mortgages.
While more options can be better for borrowers, the wide availability of lenders is detrimental for traditional lenders still using old-school mortgage application processes. Today’s borrowers are stressed with high home prices and higher interest rates. They expect an Amazon-like buying experience. Anything that looks obsolete will encourage them to click the “close” button quickly.
The days of being bogged down by paperwork are over. Now is the time for traditional banks and lenders to develop innovative ways to improve the customer experience for mortgage borrowers.
Fortunately, there are several technological tools available to do just that.
Staying Competitive in the Current Lending Market
Today’s housing market looks vastly different than it did a few years ago. The pandemic has disrupted the supply chain, resulting in limited resources that have stalled new home growth. In addition, soaring interest rates are colliding with a shrinking supply of available homes.
Still, many people need to buy homes, even in an uncertain housing market. For example, they may be looking to upgrade or downsize their homes as their household dynamics change. Or they might be moving to a new city for personal or professional reasons.
Regardless of why they are moving into a new home, when homebuyers are ready to get a mortgage, they don’t want it to take more time than it needs to or be more complicated than necessary.
That’s why today’s mortgage borrowers have become reliant on digital tools to speed up the mortgage lending process. The pandemic has accelerated digital tool adoption across sectors, including finance. As a result, today’s consumers have become accustomed to completing transactions online quickly and efficiently.
For example, recent studies show that 50 percent of consumers interact with their bank using a website or mobile app at least once a week, compared with just 32 percent in 2018. Consumers who already have the habit of interacting with their bank for their checking, savings, or other accounts will expect a similar experience when applying for a mortgage.
That’s why mortgage lenders need to update their mortgage lending processes to provide a seamless digital experience for new and existing mortgage customers.
How Lenders Can Use Technology to Improve the Customer Experience
There’s no question that digital experiences are vital for consumer happiness. Here are some ways modern mortgage lenders can leverage technology to improve the customer experience for their existing customers and simultaneously attract new customers.
Mimic an online shopping experience
A recent report found that 40 percent of consumers said they would leave their financial institution for a digital banking experience comparable to an online shopping experience. This aligns with a Salesforce survey, which found that 66 percent of customers expect companies to understand their specific needs and expectations.
The pandemic forced consumers to shop online instead of in-store, with many turning to Amazon for their comfort and business needs. The e-commerce giant offers customers a hyper-personalized experience based on their shopping behaviors and previous purchases.
As a result, consumers expect a seamless experience with every business they interact with, not just e-commerce websites or online stores. This may require updating the interface of a financial institution’s app and website to offer a seamless user experience.
Add self-service tools
Today’s tech-savvy consumers don’t want to rely on another person to help them find information. Instead, they want access to available information when they are, which is often outside traditional banking hours.
Self-service tools like chatbots can help consumers get quick answers to their questions without taking time away from human resources. Today’s chatbots utilize natural language processing (NLP) to create a personalized experience that answers common questions or solves common problems, such as updating payment bank details or changing payment due dates.
More complex questions can be routed to a human who now has more time available to dive into the details and deliver a “wow” customer experience.
Use eClosing to expedite the funding process
The evolution of e-signatures has all but eliminated the need for homebuyers to meet with mortgage lenders in person to sign paperwork. eClosing can speed up the funding process and minimize or eliminate closing delays. Signing can take place virtually, allowing all parties to connect without needing to meet in the same physical location.
Leverage Artificial Intelligence and Machine Learning to predict outcomes
Mortgage lending has historically been a manual process that required people to painstakingly review applications to determine whether or not a consumer qualified for a loan.
Today, artificial intelligence (AI) and machine learning (ML) tools are available to speed up the loan approval process. Tools such as Candor act as digital underwriters, analyzing consumer data such as creditworthiness to predict the loan applicant’s behavior.
There are also tools that can identify fraud, leading to significant time and cost savings for lending institutions.
One study from Deloitte found that 70 percent of banking customers say that having a consistent customer experience across all channels was extremely important to them. So, banks and lenders need to have internal processes in place that ensure customers will get the same experience whether they visit a branch in person, use a mobile app, or visit their website.
Keep digital and in-person experiences consistent
It’s essential to keep digital experiences consistent with in-person experiences. For example, offers advertised on a financial institution’s website or mobile app should also be available in person and vice versa.
One study from Deloitte found that 70 percent of banking customers say that having a consistent customer experience across all channels was extremely important to them. So, banks and lenders need to have internal processes that ensure customers will get the same experience whether they visit a branch in person, use a mobile app, or visit their website.
Use mortgage automation tools to streamline the entire mortgage process
Mortgage automation can speed up the mortgage lending process for both consumers and lenders without sacrificing quality.
Mortgage automation speeds up the lending application process, accelerates the application approval process, and helps financial institutions build stronger relationships with their customers.
Several tools are available to help with mortgage automation, including microservices that offer flexible solutions for the evolving financial industry.
Contact LendArch for More Ideas on How to Use Technology to Improve the Customer Experience
Mortgage lenders no longer have the luxury of waiting until later to use technology to improve the customer experience. Today’s borrowers expect a digital experience to help them manage their end-to-end mortgage experience.
To learn more about how your lending institution can leverage digital tools, contact the LendArch experts. We are here to answer all your questions about digital mortgage tools so you can uncover the best solutions to help your customers and grow your business.
As Chief Executive Officer, Tammy Richards brings over 35 years experience in Mortgage Banking, EClose/EMortgage, Robotics/AI/OCR/ICR implementation and more. She has been an executive and has led Nationally at Bank of America, Caliber Home Loans and most recently served as Chief Operating Officer for Loan Depot. She is passionate about and is an expert in the mortgage industry's ongoing tech transformation.
