This article is part of a series excerpted from a KPMG white paper, Winning customers over requires innovative thinking.
Let’s be honest. As an industry, lenders have done a terrific job of confusing and frustrating borrowers. In seven short years, the process has gone from one extreme to another, approving loans with little to no down payment, income or assets, while allowing credit quality to erode.
Then came a total reversal in which only the pristine borrower with strong credit, verifiable assets and income could get financed. Consumers report that getting a mortgage or dealing with their mortgage servicer is one of the most frustrating experiences they face. Should lenders be surprised?
As the mortgage lending industry continues to work through a myriad of challenges, one truth is emerging clearly. The consumer will be won or lost based on how easy lenders make it to engage with them.
What do borrowers really want? As complicated as mortgage bankers make this business, it comes back to three basic things: helping borrowers understand the process, not wasting their time and keeping the commitments that have been made. The lenders winning over today’s borrower understand that effective processes for managing customer engagement are critical to winning and retaining clients.
Whether the process takes 15 days or 60 days to complete, managing borrower expectations up-front should be job one. It starts by simplifying the application process. This also includes interpreting the underwriting guidelines to remove some of the mystery behind the process. No one likes surprises (that often come in the form of what they perceive as bad news) when getting a mortgage.
Even worse is the communication “black hole” that exists throughout the approval process – and that borrowers would argue continues throughout the life of their mortgage. Borrowers should have a transparent view into all of their loan’s processes.
Don’t Waste The Customer's Time
A common complaint from borrowers is about lenders wasting their time. From providing the same documentation more than once to answering the same question over and over, borrowers want a process that is transparent and well organized. From the first point of contact through making a repayment arrangement, customer satisfaction doesn’t happen unless they think they’re being treated respectfully.
A recent J.D. Power & Associates study on mortgage servicer satisfaction shows interesting trends in this area. Servicer satisfaction is on the rise based on improvements in the digital interface available to borrowers. However, these scores may be a misnomer in that they simply reflect how low the bar is set. Going from “just awful” to “less awful than it used to be,” gives us little to cheer for. There is little indication borrowers are truly satisfied.
Let’s remember that customers are being trained through their experiences in other industries. What they are learning is they can be at the center of it all and those expectations carry over to mortgages as well. Almost every other aspect of their lives is becoming faster and easier — from depositing a picture of a check to shopping for a home.
Meeting the commitments made to borrowers — doing what we say when we say — is going the last mile. Since the early days of the industry, lenders have functioned in an operational “feast or famine” mode. If they aren’t hiring staff to keep up with demand, they are trimming staff to manage volume downturns or increased production costs. Whether it’s funding a loan on time or sending a payoff statement, there are some customers who think mortgage lenders and servicers are not good at keeping their promises.
A Stanford study on consumer happiness found that selling timeliness of service could be more effective in winning customers than selling price. In other words, make a promise to the customer and keep it. That’s the key to driving customer satisfaction.
It’s evident that the fundamental business model used for mortgage banking for decades just isn’t adequate any more. In fact, the delta between what it can do and what consumers, investors, regulators — all stakeholders really — require is getting wider and wider. In the coming weeks, this series will discuss what’s being overlooked, and what could be done to finally make mortgage customers truly happy.
To find out more about how KPMG can help you transform your customers' experience, see the white paper here.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG LLP.