Today’s consumers are accustomed to making instant banking transactions and home searches from the palms of their hands, and they expect this kind of ease of use across industries. Automation and digital mortgages are the newest technologies disrupting the mortgage industry. In a 2016 JD Powers study, 62% of respondents under 35 who bought a home stated that they had used a mobile app to complete a mortgage application, if the option was available from their lender. The “Rocket Mortgage” experience of applying for a loan with the touch of a button is the expectation, not the “wow” factor for new consumers.

Time and cost efficiencies are another critical improvement area for mortgages for both business processes and consumer satisfaction. And ultimately, the best lenders are those who will bring greater transparency to the borrower, which often requires the adoption of new technology as it comes available. As quoted often by Kristin Messerli, a co-author of this blog, in speaking about reaching more Millennial buyers, “Transparency beats honesty.” Honesty -- or the act of sharing when asked -- is not enough in today’s marketplace. Lenders must be ahead of the consumer in providing them with information and a transparent transaction.

When these options for a more efficient, transparent experience are not available, consumers meet the occasion with confusion and frustration, and entrepreneurs and tech innovators take the opportunity to create solutions. Although there are huge gains to be realized, mortgage companies have generally been hesitant to invest in technology that can, over time, improve employee productivity and increase profit margins. Yet again, some mortgage companies are enthusiastic about the possibilities of technology and simply don’t know where to begin, fearful of taking an expensive misstep.

It’s overwhelming to think about the various areas that need to be modernized, know which tech is important and should be prioritized, and then to choose which technology company to use in each category. Once you’ve finally gotten to that point, you have to actually get your loan officers to use the tech -- which is sometimes more daunting than finding the perfect tech solution.

That’s why we’re trying to make this a little easier by breaking down the areas of technology that companies should be looking at and if not currently implementing, then making a plan for implementation. We outlined the following categories of technology every lender should be using and key considerations in choosing and adopting the right vendor. 

Loan origination system (LOS):

The LOS manages the transaction and disclosures. When choosing an LOS, lenders consider price, user needs (i.e. are loan officers involved or only processors?), ability to automate, and ability to integrate with other technologies.

Product pricing engine (PPE):

The PPE is designed to help a lender manage a lot of different products and pricing options and give the end user (an LO) a simple interface to see all the eligible pricing options. The most important consideration in choosing a PPE is its ability integrate with the LOS. 

Business intelligence (BI):

Business intelligence platforms allow lenders to consolidate disparate data sources like LOS, pricing engine, accounting data, and CRM data, and run business analytics to gain business intelligence and run better engines. The majority of lenders are doing this but most are just analyzing the LOS data and using it to drive milestones and understand the ranking of their LOs, quality of applications, etc. Next level application of BI is to see which LOs are the most profitable by pulling accounting data as well.

Mobile/digital app platform:

This is a really new space, but an important one. There are two functions to consider:

  1. Digitally apply -- whether the family logs in from a desktop, Android or iOS, they get the best, simplest application process. Consider the design and interface, as well as the data matchup -- what is the least amount of information they can give and submit the most complete application, such as connecting a bank account, etc.
  2. The transaction functions that make applying and closing as simple as possible. Recent tech disruptors have proven what people want. They want transparency, convenience, and transactional simplicity, such as all their receipts in one place -- they want to “uberize” the experience.

One important feature we should mention specifically is functionality that enables the phone’s camera to take a picture of something (instead of scanning) -- a great way to make the transaction easier.

Customer relationship management (CRM):

The primary role of a loan officer is to generate leads, convert leads, and incubate those leads over time into long-term customers and referral sources. A CRM enables an LO to run a sales process that includes 1) turning a borrower into a customer for life, and 2) managing referral partners. The CRM should manage the perfect loan process and the perfect sales process for referral partners.

Lead management:

Lead management systems fit under the umbrella of the CRM because they are part of the sales process, but this is an entirely separate category that lenders should be careful to consider in order to optimize their sales process. When a lead comes in, the first person to talk to the family wins the deal. Lenders should ensure that they choose a system that works best for their team, integrates well with their CRM, and is most efficient and simple for users.

Reputation management:

Consumers rely heavily on customer review sites such as Yelp and Zillow to make decisions about who they choose to work with. Research shows that 88% of consumers trust online reviews as much as personal referrals. That’s why lenders are turning to reputation management software to help them aggregate customer reviews or automate the process of requesting reviews after closings. This is a fairly simple and low-cost tool to implement into your tech stack if it’s not already there.

Social media management:

Lenders should consider their social media strategy and what tools and technology are available to help them manage this effectively and compliantly. Loan officers are using social media, so the more support and control companies can hold on their performance on these platforms, the safer and more effective they will be as a company.

Realtor partnering technology

More lenders are investing in apps and solutions to provide value to Realtors and make partnering simpler. An MLS app such as Home Buyer Marketing is an example of lenders using MLS data as a competitive partnering strategy. There are other apps such as My Nest that allow lenders to better partner with Realtors in facilitating a quality transaction for the consumer.

Learning management system (LMS) and training:

Employee training is possibly one of the most missed opportunities in the mortgage industry. Training is critical to getting loan officers to adopt new technology, modernize their business practices, and remain compliant. Not choosing a quality LMS or training programs are killing loan officers and lenders in today’s competitive marketplace. An LMS is important because it is important for lenders to direct all training and information through one unified portal.

As we hope to bring greater leadership in the area of technology adoption, we are asking industry providers to add to these insights. Along with several mortgage leaders and advisors in the mortgage industry, we created a survey to bring insight into which technologies are used by top lenders and where companies struggle to make the adoption.

Please complete the anonymous survey here to gain a greater understanding of available vendors in each category of technology, and we will publish the industry-wide results in the coming months.