Over the last decade, production cost per home loan has nearly doubled, while net profitability per home loan has dropped by 70%, according to mortgage industry data.

Simultaneously origination volume fluctuates dramatically, challenging lenders to manage capacity. Lenders want to meet borrowers’ expectation of a fast and digital mortgage experience, but there are roadblocks. Mortgage industry relies on manual processes which negatively effect the borrower experience.

Now that FinTech companies have introduced new ways of banking with the extensive use of technology, mortgage industry is under huge pressure to adhere to the same modern way of banking with an omnichannel approach to enjoy customer and process success.

In fact, according to a recent industry survey, 80 percent of the potential borrowers have expressed preference for an entirely online loan application process. Digitization will improve customer experience, asset quality, risk mitigation, and regulatory compliance efficiency. The lenders that ignore or fail to respond will risk irrelevancy.

However, mortgage industry is already struggling with:

  1. Lack of transparency
  2. High operational rates
  3. Cumbersome processes

How would Mortgage overcome these challenges and add value? Answer is by going digital.

Journey from Traditional to Digital – Targeted Digital Solutions for Mortgage Industry

The industry is edging closer to a completely electronic mortgage experience, from origination to close. Technology holds the promise of improved service levels, reduced costs and higher levels of regulatory compliance. Leveraging technologies such as Data Analytics, Artificial Intelligence (AI), Robotic Process Automation (RPA), Machine Learning (ML), Blockchain can power the digital transformation of mortgage industry from a cumbersome and time-consuming affair to delightful and seamless experience.

Let’s look at some of the most compelling ways in which digitization can turn the mortgage industry around for the better.

1. Robots-as-a-Service for Reduced Costs & Customer Success

According to a Juniper study, the use of chatbots will save banks up to $7.3 billion worldwide by 2023. This represents a time saving of almost half a man-million years of work.

Email Bots & Chatbots not only allow customers to manage requests in a faster and more efficient way, but they also act as a listening channel from which financial institutions can better understand our customers. Improving the efficiency of customer service, minimizing human error and resolving customer queries quicker, will in turn have a major impact on operational costs.

Leveraging bots as a service, lending organizations can automate repeatable operations such as ordering services from third parties and requests for property appraisals. It can also help to deliver a modern, streamlined customer experience and scales seamlessly to address any volume of work, improving speed and accuracy.

2. Artificial Intelligence for Operational Efficiency

Anyone who has ever applied for a home loan is aware how document-intensive the process is. This is one area where AI can improve operational efficiency by organizing and analyzing all the paperwork. Unlike a traditional lending model where ability to repay the loan is analysed by assessing the credit history of borrowers, AI/ML can do a far better job and enhance this evaluation by considering hundreds of data variables and finding hidden correlation. This can open up loans for a wider population which was previously ignored due to lack of credit history information.

3. Mobile Apps for Field Service

Most Field Services companies require their inspectors to go out into the field, perform the inspection work and return to the office to submit their results/reports through a standard web-based application. Technological advances, such as mobile applications, can enable them to submit reports directly from the field and avoid spending time on re-entering data from back office.

Imagine inspectors taking photos of the property to substantiate their observations, and the “before and after” condition to substantiate their work. Photos taken with a smartphone can help the field agent to capture data and update backend systems quickly.

This can reduce turn-around time and costs, as well as improve field agent’s productivity. If properly utilized, these mobile apps can provide users across the field services value chain with a suite of comprehensive features that streamline and accelerate business processes otherwise performed manually.

4. Cybersecurity for Consumer Data Privacy

One of the most critical topics for lenders in 2020 has been cybersecurity and the related regulatory pressure. Many firms are struggling with where they should invest to best reduce their overall cybersecurity risk and avoid additional regulatory scrutiny and fines due to a cybersecurity incident. Additionally, customers are choosing to go with the option they like best.

To fight cyber threats, lenders must adopt a comprehensive email hygiene solution that detects threats such as malware. Applying a multi-layered cybersecurity approach can help with reducing liability through adherence to compliance and reduction of fraud.

5. RPA to Accelerate Mortgage Process

Currently, it typically takes 50-53 days to close a mortgage loan. In order to stay relevant to its clients and survive in the market, mortgage companies need to reorient themselves and look at ways to accelerate the mortgage process, thereby significantly decreasing mortgage turnaround time. By adopting Robotic Process Automation (RPA), mortgage lenders can replicate/automate routine tasks that a human being does as a part of lending process. Such software robots can help mortgage lenders by:

  1. Analyzing the risk propensity of the loans being processed and reducing chances of frauds.
  2. Facilitating seamless underwriting like collecting customer documents, income assessment, tax return checks, credit reports, MERS verification, etc.
  3. Drastically reducing the loan closure time and workload.

How Digitization Benefits Mortgage Lenders

  • Digitization allows lenders to automate compliance processes and limit manual interference. For instance, enhanced digitization of the compliance processes will more effectively automate the review, leading to lower error rates with fewer resources.
  • A self-service tool is the key to the customer experience the younger generation is looking for.
  • Digitization typically improves asset quality. With fewer errors and additional cost containment, asset quality will only get better. A comprehensively digitized mortgage process leads to automation of underwriting, processing, and closing processes.

The Path Ahead – Modernization of Mortgage

It goes without saying that infusion of digital technologies will forever change the way Mortgage industry used to operate. Successful transformations will enhance revenue growth and achieve significant cost savings for mortgage entities. Whereas for its customers, it would lead to highly personalized & user-friendly experiences.

Evoke Technologies focuses on helping banks and financial institutions better engage with customers and users to deliver mission-critical software solutions so you can drive your business forward competitively. By leveraging our decades of expertise on technology, track record of satisfied clients across the world, and our global delivery model, you can evolve into a next-generation financial institution.

Have a project in mind? Get in touch.

Please follow and share

Leave a comment