It’s a tough time for lenders. Origination costs are up, pricing is challenging and volumes are moderating.
Fannie Mae’s 2018 Mortgage Lender Sentiment Survey found most lenders view increased competition as the biggest reason for margin compression. As the market continues to fragment, one key to margin expansion and beating the competition lies in improving the borrower journey.
Compared with other consumer-focused industries, mortgage origination ranks near the bottom in customer satisfaction. One 2018 survey found that only 39% of borrowers felt satisfied with their mortgage lender. Industry leaders must recognize that an exceptional borrower experience is non-negotiable to meet the modern borrower’s expectation for speed and convenience.
Rethinking your borrower journey is a cost-effective way to regain your competitive edge and boost your margins. Global consulting firm McKinsey & Company examined 14 different industries and found improving the customer journey can lift revenue by 15% while lowering service costs by as much as 20%. Here’s how to start:
Step 1: Understand what your borrowers want
Discerning what borrowers want isn’t easy. Identifying drivers of positive borrower behavior and translating them to operational improvements demands deep customer insight, reliable analytics and accurate journey-mapping, along with cross-functional collaboration.
Satisfaction metrics like Net Promoter Scores should be linked to operational metrics to understand which customers are the most profitable and why to inform how to address customer needs to create the most value.
Then, take borrower satisfaction metrics beyond NPS. Voice-of-the-customer surveys are a good way to hear straight from borrowers about their expectations and how to best improve their journey. You can link that feedback to operational key performance indicators as you reimagine the journey.
Step 2: Redesign the journey
Next, take charge of the experience within your shop. Assemble a cross-functional team to dissect the journey from the borrower’s perspective. With customer feedback and operational data at the ready, map the borrower journey against your internal processes. Identify the
“wow” moments and highlight the pain points, like processing delays or breakdowns in communication.
Tackle pain points, prioritizing those that most dramatically impact borrower satisfaction. For example, a significant pain point we often hear from borrowers is being contacted by multiple people throughout the loan process.
A PWC study found that four out of five borrowers prefer working with just one dedicated loan officer; borrowers named this the biggest highlight of the mortgage process.
As you strategize, remember that balancing digital mortgage tools with human relationship can be an impactful way to soothe frustrations for borrowers. A 2019 survey by Boston Consulting Group found that 81% of borrowers prefer online loan solutions, and 87% believe that digital options are faster than traditional processes.
Be thoughtful as you infuse the customer journey with digital tools; find technology to reduce admin work, facilitate better communications, and extend your team’s ability so loan officers can focus on building relationships with borrowers and referral partners.
Step 3: Implement and improve
Finally, incrementally roll out your journey improvements. Pilot the changes with customers and regularly measure the impact of your efforts by reporting on customer satisfaction metrics linked to larger KPIs.
The best borrower satisfaction initiatives are those that you can control yourself and don’t require lengthy rollouts. Sequence your roadmap to ensure initiatives don’t dwindle at the expense of your latest financial goal.
Find quick wins that yield tangible value early to validate your efforts. For example, having loan officers personalize the initial needs list to the customer, rather than sending a generic list. This shows your organization sought to deliver a tailored service.
Above all, trust that your customer-centric efforts will pay off. J.D. Power’s 2018 Primary Mortgage Origination Satisfaction study showed that originators with a higher-quality customer experience than competitors were acquiring customers faster, obtaining greater wallet and mind share, retaining more customers, and reducing the cost-to-serve.
Outdated processes are increasingly a liability for industry veterans banking on their experience and brand recognition to maintain market share. In this lending environment, tried-and-true won’t cut it anymore.
As Millennials flood the market and an intuitive, digital lending experience becomes the new status quo, re-working your borrower journey is the quickest way to edge out competition and shore up your bottom line with a modest investment.