Residential Magazine

Deliver the Prime Option

With The Amazons Of The World Setting The Bar, Digital Mortgage Experiences Must Improve

By Devin Haran

The typical candidate for a mortgage also is an Amazon customer. This means most mortgage borrowers have been conditioned to expect a seamless, fully digital experience — akin to the one Amazon provides — from all businesses with which they interact, including lenders. Frankly, most lenders can’t meet those expectations. At least, not yet.

Substantial capital, data, tools and know-how are required to deliver an outstanding digital lending platform. Nevertheless, lenders must find ways to overcome these hurdles and meet consumer demands.

Mortgage originators should look to partner with lenders that deliver the best experience for borrowers, from applying for a loan to fulfillment and even servicing. The lenders that can’t deliver an exceptional digital offering risk losing market share to those that can.

Leverage data

Lenders must leverage all the data and technology at their disposal if they are to create digital experiences that meet consumer expectations. Lenders already have some of this data and technology, or they can easily build it. Much of it, however, will have to be sourced from third parties, especially financial-technology companies that focus on specific niches that matter to both lenders and borrowers.

Homeownership is one such niche. There is a considerable amount of data available on residential properties and homeowners. Some of it is already available to lenders that have existing relationships with a critical mass of households. Much, if not most of the relevant data tied to homeownership, however, is being aggregated and normalized by smaller niche players in the financial-technology space, and is not currently captured by lenders.

Partnering with fintechs like these can make a lot of sense. They have the capacity to focus on more isolated areas that matter to existing and potential clients. They also have the desire to develop expertise in these areas, as well as the ability to aggregate relevant data and build tailored solutions for specific subsets of consumers.

In doing so, they also acquire the attention of these consumers more efficiently than a lender could, while also earning their trust. In turn, lenders have the ability to provide fintech partners with increased visi- bility and better distribution. Partnerships between these two complementary players can be highly logical and mutually beneficial. It stands to reason that they will become more frequent.

Personalized experience

A functional website and mobile app have become staples in mortgage lending. Once a consumer engages a lender via digital channels, they expect their specific goals to be promptly identified and addressed.

This means minimizing the number of questions asked and eliminating from view any superfluous content or products. The consumer should know right away that the lender understands their goals and can provide relevant solutions. Quickly determining a consumer’s primary goal is therefore essential.

In order to achieve this, lenders must make use of all available information, be it internally generated or sourced from third parties. Armed with the right information, lenders can determine a consumer’s goal early, engage with them in a timely and strategic fashion, and customize the products and services offered. The result is a more personalized, fully digital experience for the consumer, as well as a more targeted and effective marketing spend for the lender. Overall, consumer engagement and satisfaction increase while loan origination costs decline.

That being said, measuring consumer intent is a formidable challenge for lenders. Relatively speaking, lenders engage with their clients infrequently. Consumers often only engage with lenders in advance of major life events, such as the purchase of a home.

More regular interaction with consumers would afford more opportunities to glean valuable information about their most pressing concerns. Providing unique content, analytics and tools is a sensible solution. Digital channels equipped with these offerings give consumers a reason to stay and remain engaged.

While engaged, the consumer reveals clues to their intentions, and a timely and accurate gauge of a consumer’s intent provides a lender

with a considerable competitive advantage. Consumers with high intent represent high-quality leads whom a lender can engage more efficiently by presenting customized marketing materials that solely reference relevant products and services.

Traditional approaches to origination are rapidly growing stale. Major banks understand this and are best equipped to adapt to this new reality.

Digital transition

Better understanding the priorities of consumers is of paramount importance, but it isn’t the only thing required of lenders that want to maintain or grow market share going forward. Engaging with borrowers in an optimal manner also is crucial. Traditional approaches to origination are rapidly growing stale. Major banks understand this and are best equipped to adapt to this new reality.

Large banks are transitioning clients over to digital sales channels at a rate four times higher than smaller lenders, according to a recent study by management consultant Bain & Company. Moreover, the average variable cost of a digital interaction is only 10 cents compared with $4 to interact with tellers or call agents. The rationale for a rapid transition to a digital platform is therefore clear.

The transition to digital is a major focal point for large banks and commands commensurate resources. Twenty-five percent of all products sold by Bank of America were originated digitally in second-quarter 2019 and more than 37 million clients now interact digitally with the bank.

For JPMorgan Chase, about 50 million clients interact digitally with the bank and 80% of its consumer transactions are now completed via self-service channels. Chase’s digital mortgage platform was launched in 2017 in partnership with Roostify.

This allowed clients to start, track and complete an application entirely online, via desktop or mobile platforms. Since then, Chase has further digitized its mortgage application and fulfillment processes. It also recently released its Chase MyHome experience, which offers prefilled home loan applications, automatic verification of income, on-time closing guarantees and the ability to sign, upload and store documents digitally.

About 40% of the bank’s funded home loan applications in fourth quarter 2018 used Chase MyHome. A digital mortgage dashboard also was recently released as part of the Chase MyHome experience. It allows homeowners to easily monitor mortgage balances, make payments and evaluate refinancing options.

Chase is at the forefront when it comes to digitizing the home loan experience. It’s therefore no surprise that Wells Fargo hired Chase’s former head of home loan origination technology this past May to spearhead its own technological transformation within consumer lending.

And Wells Fargo is right to take action. It recently lost its spot as the nation’s largest direct-to-consumer mortgage lender to Quicken Loans — an upstart offering a simpler, fully digital experience. Quicken Loans grew its market share from an immaterial level to about 6% over the past 10 years on the back of a simple and seamless digital origination platform.

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Smaller, more nimble upstarts have access to unique data and the ability to build customized digital solutions. They also can be more efficient at capturing the attention and earning the trust of clients within narrow but highly valuable vertical markets. Partnering with companies like these is often the best way for lenders to access the considerable data and technology required to create a competitive digital offering for consumers.

Lenders that delay taking action run the risk of agile new entrants establishing beachheads in important product lines as Quicken Loans has done. Major banks also are moving forward quickly, building and buying technology, and actively partnering with fintechs to create digital offerings of the caliber consumers have come to expect. The good news is, for all motivated lenders, sufficient data and technology is available. Originators need to work with the lenders who can access and leverage these so they can maintain and grow their market share.


  • Devin Haran

    Devin Haran is president and chief operating officer of Kukun. Previously, Haran served as managing partner at Somerset Hills Capital and as a research analyst at ARX Investment Management and the Royal Bank of Canada. Kukun partners with top-tier providers in the lending, insurance, retail, real estate and wealth-management sectors to aid homeowners’ financial needs. Kukun’s solutions are available on a white-label basis via trusted partners such as Chase and SoFi.

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