*Note: this piece originally appeared in HousingWire on May 12, 2017.
There’s been a huge amount of discussion recently about how consumer lending is quickly going digital. In fact, a recent report from PwC found that the vast majority of consumers, including the youngest all the way through the Baby Boomer generation, are completing almost all loan tasks digitally. The appetite we’re seeing in the market for digital solutions has grown significantly in the past couple of years and will only continue to increase.
At the same time, there’s been a lot of talk about obstacles to the adoption of digital tools by lending organizations, including digital mortgages.
If you take one thing away from this blog, it should be this: it doesn’t have to be so complicated!
There are a few best practices that can take some of the complexity out of getting a digital platform in place, and could end up saving your organization a huge amount of time and money in the long-run.
1. Know what you really need
Many mortgage lenders have spent years working hard to establish a brand and content that’s memorable. The trust that it takes for a consumer to engage on such a meaningful transaction is significant. A digital mortgage solution touches your customers and needs to represent your brand well.
However, that doesn’t mean you need to start from scratch. Many of the underlying components – mobile capabilities, data connections, and collaboration tools – are readily available and provide a great baseline to integrate into your workflow.
Starting with those existing common capabilities can get you out of the gate faster and at a lower cost, but can also represent your brand well by starting with a high bar. A recent piece in Harvard Business Review discusses avenues by which lenders can keep up and/or compete with startup technology, and highlights the importance of taking advantage of different parts of the ecosystem to make the biggest impact.
Many of these technologies have you and your brand in mind and know the importance of representing your organization well to your customer. They’ll offer the flexibility you need to make it your own without needing to build everything from scratch, which can help you reach your goals better and faster.
2. Integration is the name of the game
The average enterprise uses at least six cloud applications – and think about how many on-prem or homegrown systems most banks and lenders have in addition to cloud services. Because of the wide variety of software and systems within most of today’s organizations, it’s not feasible to rip out the entire system to implement a digital strategy.
That’s why digital mortgage technology must be able to integrate with whatever systems banks and lenders have in place. Most mortgage lenders have at least some sort of cloud or on-prem database, a CRM like Velocify or Salesforce, an email client like Outlook, a loan origination system like Encompass, Empower, or PCLender, a GSE system like Desktop Underwriter or Loan Prospector, and countless additional applications employers may be using with or without the approval of IT. If you find a digital platform that can hook up with all these systems without a huge amount of custom development, that is worth investigating.
When digital tools start to become selective about which other tools they’re willing to integrate with, that can make things a whole lot more complicated for both lenders and borrowers.
3. Data is at the center of it all
When you have a digital solution that bases everything on data, that removes a lot of complexity from any process, including mortgages. This means as soon as the digital system is installed, loan officers can stop requesting all borrower docs, like proof of assets and pay stubs, manually and allow borrowers to connect to these assets all within the initial workflow.
Efficiency in data gathering is where the digital mortgage stands to provide some of the greatest process improvements. As digital platforms become more ubiquitous and integrated with existing source data providers, we can expect to see additional operational efficiency gains by removing manual verification of documentation from the process.
What’s more, when all mortgage data is machine-readable, rather than living on a piece of paper or in a scanned PDF, it’s much easier to evaluate this information and the risk associated with it. This takes any guesswork and/or unconscious bias out of the process altogether, which is a huge step forward as we look back at the 2008 financial crisis.
Though there are many organizations that have jumped on board with digitizing the mortgage experience, and the larger consumer lending space, there’s still a lot of work to be done. This is why mindfully working with the existing ecosystem can take much of the complexity out of going digital.
To quote AOL Co-founder Steve Case’s talk at the Mortgage Bankers Association’s 2017 tech conference, “This process [digitization] will lead to the transformation of some of the industries that are vital to our daily lives, which will make the barriers to success higher and the need to form partnerships much more central as a way of building credibility, opening doors and getting past industry gatekeepers.”
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