Mortgage lenders are moving as quickly as possible toward the digital mortgage. For the new generation of homebuyers, digital lending means ease of use and digital communication methods. To the industry, it means all of that and more, including electronic closing, filing and document recording. The result is a new virtual land rush that we wrote about in a new white paper that is available now.
We assert that the institutions that stake their claim first in the mind of the consumer will have first mover advantage in the new mortgage market. Digital lending is the new requirement, but there’s a fast pass available to lenders who want to get there now.
The valuable benefits of making the digital transformation
Accenture research indicates 87% of consumers begin their home buying experience online and expect their lender to deliver on digital expectations seen across other areas of their consumers lives. With companies like Uber, Spotify, NETFLIX and Amazon setting the standard for the customer’s online experience, lenders are driven to meet that standard.
Lenders also benefit from the transformation because digital will finally put cross-sell objectives within reach. Most banks achieve only 10-20% cross sell of a mortgage product to their retail bank customer base. A digital process gives lenders access to first- and third-party data that will make prospecting and cross selling easier.
In addition, the digital mortgage will bring down costs. Accenture has found that a digital interaction model can cut costs by 30%, while reducing human errors and risk.
Getting past what’s holding most lenders back
There are a number of hurdles still in the path of the lender, some of which will require outside support to clear. Perhaps chief among these is technology, which is changing fast and remains very expensive. Most firms do not have the internal Information Technology resources to capitalize on the promise of digital lending.
The digital mortgage transformation will also require the lender to build and maintain connections directly to outside platforms. Payroll providers, credit repositories and third-party analytical engines will be required to return pre-approvals quickly and meet customer expectations.
Another hurdle is trained staff. While the industry is calling the new online, consumer-friendly lending process the digital mortgage, and while much of the data involved is gathered, stored and processed electronically, in most cases there are still a great many humans behind the scenes doing work that consumers assume is automated.
Why as-a-Service is the best option for most lenders
It is possible to get end-to-end digital lending as a service using the same model many firms have been using to meet their software needs for many years. The transition to digital will require a new breed of as-a-Service, offering:
The right people
The digital lending process of today -- and likely tomorrow -- will still require expert human resources to operate it. Even with the best technology, the machine cannot be expected to run itself in a business as complicated as home finance.
The right process
That digital lending process itself will also be part of the offering, as technology alone cannot warrant the lender will meet the high expectations of borrowers and regulators. A proven process will be required that can meet the highest standards for digital commerce, while still achieving full regulatory and investor compliance.
Focus on the technology
No part of the modern mortgage lending enterprise functions well without good technology and this offering will be no different. It will include software, to be sure, but unlike the past, that software may not come from just one company. It will more likely be a collection of best-of-breed tools that when combined will enable the required processes.
Focus on compliance assurance
The final result must come with a warranty of full compliance, from a company with a balance sheet that can back it up.
This new as-a-Service offering is available now and offers lenders a single solution, the delivery of a digital mortgage. The service takes the lender’s customer from application to close and the mortgage asset on to the secondary market.
Industry leaders must make the digital transformation to remain relevant to home loan borrowers, but they must do so quickly with limited resources and a very low tolerance for risk. Accenture’s Mortgage & Compliance-as-a-Service, is as-a-Service reimagined for a digital world.