Insight | 27 October 2021

5 ways change is coming to the mortgage industry

James Bloor 800

James Bloor

Chief Strategy Officer

Tags: Digital Transformation | Technology

5 ways change is coming to the mortgage industry hero

Every day we see headlines of new fintech start-ups popping up left and right to disrupt the status quo. These companies promise to be the source of change, with their innovative experiences and latest technology to provide a newer, more attractive service to their customers.

In the finance industry, mortgage companies have been slower than their counterparts to integrate new technology. However, the COVID-19 pandemic shook the industry causing fintech to gain a foothold in the mortgage industry.

Mortgage companies have always known how important it is to integrate technology into their service. After all, we do almost everything online now. When we say tech, it doesn’t just mean having a fancy website (although that’s nice too) but also integrating tech into every aspect of the mortgage process.

But many mortgage companies, and in particular brokers, often talk about the importance of personal relationships, trust and reputation. Traits that many worry will be lost when integrating technology.

Tech is changing the way mortgages are being delivered, and there’s no stopping it. Here are some ways that it’s changing the way people are applying and approving mortgages.

1. Empowering the consumer through self-service

We can attribute the shift of the shopping experience online to what we can sum up as consumers having easier access to products and services. The banking and finance industry is following suit through apps and online access to make it easier for consumers. However, as a mortgage company, how do you make it easy for your customers to make a decision?

Make all information available at their fingertips

Millennials, who account for the most significant proportion of homebuyers, often turn to the internet before making their decisions on anything, including mortgages and re-mortgages.

Whether millennials or not, first-time homebuyers often feel nervous about taking out their first mortgage. Having their questions answered online without having the added stress of meeting a broker and talking to a ‘real person’ (no matter how nice they are) certainly takes out a lot of anxiety.

The same goes with re-mortgaging or switching from one mortgage provider to another. If customers can look up the possible providers online and have their questions answered, this gives them more choices and confidence that they are choosing the right provider for their specific needs. This is something we’ve been working on with our friends at Podium.

With this in mind, make sure all information is easily found and accessible on the website.

Enable seamless onboarding with easy navigation

Getting a mortgage or re-mortgage and filling out the paperwork behind it is never easy. This is true no matter how easy it is to navigate through your site.

A good site provides customers a simple and well-designed user journey that reduces cognitive load and makes things as easy as possible for the user. This ease will make for a pleasant customer experience that will certainly keep your customers coming back for more.

Get the conversation going with AI

Chatbots are conversational Artificial Intelligence (AI) built to answer user questions. You can think of a chatbot as a colleague that never gets tired answering your customer’s questions no matter what time it is.

Implemented well, chatbots are a great addition to your website. They serve as a great lead generation tool for the vendor, and provide the customer with a less frustrating option than picking up the phone and being put on hold.

If you think of adding a chatbot option to your fintech website, make sure that it has helpful and realistic responses. These are key to making sure you get the most out of this tech.

Msm loan

Give consumers everything they need at their fingertips.

2. Saving customers money

One of the selling points of any fintech company online is it saves the customer money. Customers love this because saving money is always a big plus for any consumer. But how is fintech helping the mortgage industry help their customers save money?

Cutting out the middleman

Fintech websites like Mojo don’t charge customers a fee to use their service. Instead, they pay brokers to bring customers. Doing so frees up the traditional setup of the customer paying the lender to give them a mortgage. In this way, the customer doesn’t incur the cost. As an added benefit, this type of setup serves as an extra incentive for lenders to make sure that the customers get their mortgage.

Providing customers with multiple financial options

Most companies are moving towards SaaS (Software as a Service) and adapting their subscription model because this offers their customers more flexibility and options for payments. This model makes it easy for the customer to choose the best type of payment to suit their financial capability and ensures an income for the company.

The mortgage industry is taking baby steps and is adapting the popular tiered model of the SaaS. US mortgage company SoFi offers its borrowers several fixed payment plans at different rates – as they claim on their website “Whether you're buying a home or refinancing an existing mortgage, SoFi makes the process as quick and painless as possible”.

Some new companies even go above and beyond just offering their customers options for payment and even help come up with a deposit for their house.

Mortgage fintechs like Tembo help people develop alternatives to free up their finances to have the liquidity to purchase their first home. Curious about how they do this? Visit their easy-to-use website and check out their products on how they do this.

3. Getting the answers right away saves time

In the digital world, people want things done yesterday. The mortgage industry recognises this culture and is slowly transitioning to adapt to this culture with the help of modern financial technology.

Technology enables easy-to-use self-service like a real-time questionnaire on the website or app that qualifies customers. This questionnaire establishes whether a customer is in the correct position to take the loan or not. It gives the customer an instant answer if they should proceed with the transaction, and frees up the lender’s time to spend with paying customers.

Most mortgage fintechs offer this type of service, allowing customers to determine whether they are ready to take their mortgage journey into the next step or wait a while until they’re ready.

Yes? No? Maybe? Online verification tools cut to the chase

From a lender’s perspective, tools that can help qualify whether a buyer is qualified to take a loan goes a long way in helping speed up the mortgage process.

Establishing whether someone is qualified to take a mortgage loan takes a mountain of paperwork. Documents need to be verified and re-verified before a lender can determine the borrower’s ability to qualify for a loan.

US-based Fannie Mae uses tools from their website to help mortgage companies like yours make this process easier. With these tools, you can now verify customer details with no complicated paperwork. The method of qualification is faster.

The technology is moving so fast that in countries like China, borrowing apps like CashBUS use a combination of big data and tech to qualify borrowers. The entire process takes only three minutes from start to finish. We are not there yet, but the process of change is already starting.

Woman looking at phone

Verification tools help the lender and consumer alike.

4. Automating the future

Tech is not just changing customer experience. It’s also changing the way we do things in the office. We’ve talked about websites making things more accessible by providing instant answers and helping with qualification and underwriting. However, there is more to a mortgage than just this.

There are details like document processing, storage, data verification, and remote authorisation/notarisation. There is also a need to secure data and make sure it complies with regulations.

Automation is an easier, faster and more reliable way to do this.

5. Mortgages on the go

With apps, getting a mortgage has never been easier. All it takes is to download an app to our smartphones or tablets and we can submit mortgage requirements anywhere, anytime. Phone calls, sharing of documents, digital identification, property appraisal photos, and even signatures can be performed from the smartphone. We are no longer tied to our desktop, and this ease dramatically cuts time delays and mortgage processing time.

Change is here to stay

Tech has slowly but surely found its way to finance, as evidenced by the booming fintech sector. More and more people are turning online for banking, finance, investing, managing their money, and getting a mortgage.

Getting a mortgage is slowly being done online. Technology has even developed to a point where you can look at houses you want to buy through virtual reality. Although it’s not as good as viewing the property in person, it’s the next best thing.

Tech is here to stay, and the question is, are you doing what it takes to make it easier for your customer to find your company and take out a mortgage with you?

For help integrating technology in your company, get in touch and we'll show you how.