Achieving the True Digital Mortgage – What is next?

Digitally powered and connected, financial institutions can create the proper customer interactions, power their enterprise and their employees to provide the right experiences and solutions to their customers.

What are some of the Digital disconnects?

• Front-and-back-end mortgage innovation for distinction, efficiency, and profitability. 
• Lenders are still facing a slow increase in loan origination costs.
• Lenders must do more to complement and optimize the value of the digital front-end by engaging the entire lifecycle.
• People are often left out of the change. It is people who determine how changes are adopted and deployed. 
• Staff to make the best use of new capabilities in doing different work and working more productively and better-serving customers.

What does Digital Lending Mean?

• We have seen many businesses that have a ‘digital mullet’ – they look digital in the front but have a lot of labor-intensive work happening on the back end.
• Digital lending takes many shapes and forms – from automating small pieces to a fully digital lending process, from acquisition to renewal.
• Digital lending is the process of offering loans that are applied for, disbursed, and managed through digital channels, in which lenders use digitized data to inform credit decisions and build intelligent customer engagement.

What the mortgage business wants – Perspectives

Customer demand:  Customers want the same level of digital sophistication that their retail, banking, hospitality, travel, and entertainment providers demonstrate.

 The lender’s perspective: The goals of lenders are clear. They want to process more loans, do it faster, and reduce costs leading to increased revenues. They are equally keen to reduce the burden on their staff, who cannot keep pace with complex paperwork and regulatory requirements. Lenders’ top asks from digital mortgage include:

The borrower’s perspective: Borrowers are confused by the complex language used by lenders, the massive amount of time required to fill forms, and the lack of transparency across the mortgage lifecycle. They want convenience, dependable answers to their questions, and a quick turnaround.

 Digital Readiness is not Digital Lending.

• Digital readiness is not sufficient on its own to constitute digital lending – what is required instead is a comprehensive organizational transformation to the point that a Financial Service Provider (FSP) is using these tools to create an integrated digital product that offers an improved customer experience.
• A well-designed digital product provides quicker access to credit from the customer perspective, reduced physical documentation, convenient channels for disbursement and repayment, and a more personalized and customized interaction with the FSP.
• Digital Lending implies an end-to-end process of developing and delivering data-driven financial products that are applied for, disbursed, and managed through digital channels.
• There is a gap between the vision of fully integrated digital lending and the realities that traditional lenders must effectively navigate to complete their institutional transformation.

 What steps must you take now?

Design from the consumer perspective - Many providers build a digital version of their core-system-based account opening process. But those systems were designed for bankers by bankers, not customers. And many are decades old. Financial institutions should think about digital strategies from the consumer’s perspective and design to their needs and what is easy for them. Focus on convenience and efficiency in account-opening and onboarding experiences.

Generate and nurture leads - Collect essential information such as first name, last name, email, and phone number as the first four fields in an application. Then, if the customer abandons the application process, nurture them as leads using that data. If someone abandons their application, it does not necessarily mean they are not interested. Perhaps they ran out of time, got distracted, were missing information, lost their internet connection, or ran out of juice on their device.

Reiterate the offer - Be sure to reiterate that offer/key benefit when they begin applying for that product; remind them why they are applying and reassure them that this is the correct application for that product.

Be Omni-Channel - It is essential to support channel cross-over, especially branch to digital. A customer might begin an application for a product in the branch – but might not have the time or information to complete it. Allow them to start in a branch and then finish at home or in their office if that is what they need to do. Please do not ask them to come back to the branch again. That is inconvenient.

Benchmark Your Digital Transformation Journey - To plan your digital transformation journey, you need to understand where you are today—a process that involves assessing your digital maturity (including cataloging the digital initiatives you already have underway), as well as benchmarking yourself against your market peers.

These three transformation areas overlap and are inextricably connected—and will become even more interlocked as your organization becomes increasingly digital. Having a solid baseline understanding of how you rank in each area can help you identify and bridge critical gaps and move you closer to achieving your vision.

• Digital Business is focused on creating new value, market differentiation, and revenue in the digital economy.
• Digital Process focuses on operational reinvention by optimizing end-to-end process performance and improving efficiency.
• Digital Backbone is the foundation on which all digital initiatives are built, centering on addressing or remove the IT complexities, risks, and barriers to innovation, to meet business and evolving market demands.

 What is next?

• Take a broader view of achieving a true digital mortgage and becoming a mortgage leader with operational efficiency and digital strategy.
• Define the strategy, an integral first step in developing the roadmap and identifying potential challenges. There are many things to consider and decide on during this journey —from a clear aspiration to eliminate back-office manual work to funding sources for the change.
• Evaluate the digital solutions that will help drive profitability and eliminate back-office manual work. Determine where you can best apply digital solutions in the back office to enable the strategy and achieve performance aims.
• Shift to an integrated and connected ecosystem. Carefully investigate all options to simplify your ecosystem for less re-work and enable agility to implement new capabilities today and for the future.
• Transform the workforce. Create a culture that values technology and makes the most out of your chosen digital solutions. Begin the analysis early and understand the organizational changes that accompany each technology change.
• Continuously evaluate the roadmap as customers and technology evolve. As the mortgage technology landscape constantly changes, so must lenders’ digital strategic roadmap. Treat it as a living artifact and adjust it accordingly.