The past few months have been extremely challenging for mortgage lenders. Wealth (and debt) levels of individuals have been impacted due to widespread job losses, illness, and business disruptions. While refi borrowers have stampeded MLOs to take advantage of rock-bottom rates, less fortunate borrowers struggle to make mortgage payments. If mortgage debt outpaces the new refi business, it could negatively affect lenders’ bottom line or, worst case, their ability to stay solvent. Since mortgages are high-priority assets for lenders, these far-reaching changes in the economic landscape are putting immense pressure on lenders to transform their loan origination and settlement processes.

Responding to the spikes in volume, while managing business risk and positioning themselves for recovery, requires mortgage lenders to ride the “digital wave.” In market terms, traditional MLOs need to catch up with their Fintech competitors. And it won’t happen by digitizing a process here and there. Adopting modern digital platforms can allow lenders to maintain their position in the mortgage market while ensuring they can quickly recuperate and prosper.

Digital Mortgage – The Answer to All Mortgage Challenges

As mortgage lenders and Fintech companies assess the gains and losses of the past 18 months, executives are asking just one question - where to go from here? What steps do we take to reimagine and reshape the mortgage lending ecosystem? Do we continue using “digital sidecars” to deliver on-demand services to online borrowers? Or do we cobble together a bunch of features, apps, and 3rd party solutions as a temporary fix to what was already a band-aid solution?

Whatever the plan, for mortgage lenders looking to transform their business models and enhance their business operations, siloed solutions are DOA. Instead, they need to work in tandem with Fintech innovators and other third parties to build unified and modern digital mortgage solutions that increase client satisfaction, reduce costs, and improve their market positions. They need modern solutions that eliminate the complexity of managing multiple siloed systems, streamline the lending process from origination to underwriting, and deliver intuitive and automated workflows that lead to rapid ROI.

Riding the Digital Wave

A report by KPMG estimated that 20-30% in top-line growth and 30-50% in sustainable cost savings are achievable with digital mortgage solutions.^[1] Although banks and other lenders are working around the clock to provide clients with more personalized offerings and experiences to meet their mortgage needs, they need to implement a true end-to-end digital operating model to connect front- and back offices throughout the entire loan lifecycle. This level of digital transformation will help MLOs keep pace with rising customer expectations, market dynamics, and evolving compliance and quality standards, while continuously innovating with new/emerging technologies.

Here are some tips on how one can successfully ride the digital wave:

1. Leverage Modern Tech Products: Lenders looking to build an engaging and consistent digital borrower experience can leverage modern tech products to automate as many borrower steps and LO tasks as possible with minimal human interaction. By integrating smart technologies (AI/ML, APIs) from application processing through disbursement and support, these scalable, robust, and future-ready “events” can help lenders deliver a range of innovative products and services to meet each borrower’s expectations and stay ahead of the competition. 

2. Ensure Deep Integration: Mortgage lenders who want to enable seamless digital loan experiences also need to ensure deep integration across their technology ecosystem ― from accounting systems to ERPs – to extend reach, improve service delivery, and increase profitability. Using APIs and frameworks to “knit together” MLO systems and platforms can allow lenders to provide multi-channel lending experiences while sustaining continuous digital transformation.

3. Enable Comprehensive Risk Management: Given how susceptible mortgage lenders are to risk, enabling comprehensive risk management is vital. By integrating intelligent risk and compliance solutions across AML, KYC, and sanctions, lenders can automatically apply the necessary policies, procedures, checklists, and risk assessments to help safeguard the business against fraud and risk, while ensuring compliance with evolving regulations.

4. Become Data-driven: Another great way for mortgage lenders to ride the digital wave is by becoming a data-driven enterprise. AI and analytics can empower lenders to learn from the past, model the present, and prepare for the future – while vastly improving the speed, availability, and accuracy of insights used for business decision-making. By embracing data management, predictive analytics, data science, and emerging technology solutions, lenders can more successfully acquire and retain customers--and competitive advantage—while providing great user experiences. 

5. Offer Products with Modern UI/UX: Mortgage lenders who want to better meet the needs of digital-savvy customers also need to offer products with modern and intuitive UI/UX. By carrying out research with ISVs and other Fintech that build end-to-end digital loan platforms, lenders can meet the growing needs of multi-channel and multi-device users. Comprehensive user research can help in uncovering opportunities to increase customer satisfaction and loyalty, upsell and cross-sell products, and respond to changing borrower needs and preferences. 

6. Automate and Accelerate: Mortgage lenders are quickly realizing that just allowing customers to apply for loans online is not enough; they need to automate and streamline the entire origination through the closing process to deliver an end-to-end digital mortgage experience.

By embracing these 6 Digital Mortgage pillars, lenders of all stripes can improve the borrower experience and boost profit margins with the power of “disruptive innovation.”

To discuss how Xoriant supports Mortgage Lenders with technology expertise and in-depth industry knowledge to embrace Digital Mortgage pillars, write to PE@xoriant.com

References

1. KPMG Digital Mortgage Whitepaper