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   ARTICLE   |   From Scotsman Guide Residential Edition   |   April 2017

Online Lending Is the Future

Those who don’t look forward risk falling behind the competition

Online Lending Is the Future

Whether you like it or not, almost everything today is about doing it faster, better, slicker. Even Olympians keep shattering records. You thought Carl Lewis was phenomenal. Enter Usain Bolt.

The same applies to technology. If you think the technology you’re using now is keeping your customers happy, you may be on a steady path to extinction. Customers expect more and more each year from the companies they do business with. This is no time to rest on your laurels.

According to a recent Gartner survey, 89 percent of marketers expect customer experience to be their primary differentiator this year. They know they can’t take the customer experience for granted. It must be improved.

What does that mean? In the world of mortgage lending, improving the customer experience boils down to making the process of obtaining a loan smoother, quicker, more appealing and less cumbersome. For mortgage loan originators and branch managers, that means partnering with forward-looking lenders who can deliver a quality online lending experience.

The good news is there’s proven return on investment, or ROI, to investing in customer experience. A customer-experience ROI study by Watermark Consulting showed that a truly excellent and differentiated customer experience is worth a great deal to the company that provides it. Watermark analyzed eight years of stock market returns for companies that led in customer experience versus those that lagged.

Leaders in the study far outperformed the broader market, generating a total return that was 35 points higher than the S&P 500 Index. Laggards trailed far behind, posting a total return that was 45 points below the broader market. So the quality of the customer experience can make an 80-point difference in market success. Not an insignificant number.

Build a better experience

Clearly, companies should make differentiating their customer experience a top priority. In the mortgage business, one way to do that is to provide an excellent online experience for borrowers. After all, today’s consumers — especially those in the millennial generation — count on doing business online.

Knowing that, you would expect that mortgage companies would be among the first to offer cutting-edge online tools for their customers. Surprisingly, for the most part, they are not. But mortgage lenders who have created state-of-the-art online platforms for borrowers are seeing tremendous growth. Just think of some of the fastest-growing lenders in the country, and you’ll see they all have one thing in common: an up-to-the-minute online offering that makes things quick and easy for their borrowers.

So what is required of an online lending platform to meet the demands of today’s consumer? Here are some basic concepts that make a difference:

  • Offer a platform that lets borrowers do it their way. A good platform makes borrowers comfortable getting their mortgage online, but also gives them multiple options on how and when to do so. Some people might only be comfortable applying online, while others might be more comfortable applying manually but are fine with electronic updates. It’s important that a lender’s online tools make it easy for the borrower to work with the company.
  • Keep the originator involved. Most borrowers will have questions during the mortgage process, so it is important that borrowers can reach originators online whenever they need help. Online tools should complement originators, not replace them.
  • Empower borrowers from application through closing. The lending platform should enable borrowers to monitor the process online, from start to finish. This is why a stand-alone POS (point of sale) will be history soon. It just doesn’t give borrowers a complete experience.
  • Include interactive tools. These tools should include a short inquiry form with 10 to 30 fields — sort of a lead-capture tool — so you can follow up with applicants; a long form, or complete application, to collect all of the information and documentation needed to make a lending decision; and a borrower portal to continue the applicant’s online experience. The portal enables effective communication and collaboration, and provides updates after the application has been submitted.

Execution is key

Keep in mind it’s not just what you do, but how you do it that matters, too. An online lending platform can have state-of-the-art technology, but if it looks outdated, borrowers will flee. To appeal to the current generation of borrowers, your platform must be mobile-friendly so the application will size and scroll accordingly when borrowers use their lap-tops, tablets or smartphones. A single glitch can cause borrowers, and especially millennials, to lose confidence.

In addition, forms should dynamically support different application scenarios and only ask for information that pertains to a specific applicant. If the borrower is a veteran, for example, the system will ask about years of service. If the applicant is purchasing a home, it would ask questions about the house, but a refinance applicant would get a different set of questions. This keeps the number of questions to a minimum depending on the type of loan and each scenario.

A dynamic portal also can present options and features based on the requirements and status of the loan. The portal should be built on a rules-based engine as opposed to templates, and require only the information specific to that applicant. Different information would be required from a self-employed applicant, for example, versus one who is salaried.

Finally, online tools must be 100 percent integrated into your loan origination system, or LOS. This ensures that two-way updates are synchronized, consents are properly managed and, of course, disclosures, tasks and file documentation are effortlessly coordinated.

Remember GSEs and vendors

It’s critical that an online platform integrates the latest technology from Fannie Mae and Freddie Mac. Lenders that don’t accommodate the government-sponsored enterprises’ (GSEs) latest enhancements — such as Fannie Mae’s Day 1 Certainty — into their online strategies are making a big mistake. Why? Because their newest automatic underwriting system (AUS) options streamline the approval and workflow processes by supporting automated-asset, income and employment verifications. This is a game changer for everyone.

A lender’s online platform also should support the vendors approved by Fannie Mae and Freddie Mac and provide AUS findings based on those approved vendors. Doing so will streamline the process and save time.

Speaking of vendors, an important — make that vitally important — consideration for lenders is determining who will coordinate the multiple vendors needed for an online strategy. It’s probable that a lender could have separate vendors for marketing; identity verification; credit, income and asset verification; AUS; pricing; imaging and so on.

This is a critical part of the strategy that lenders must address to give originators confidence in the system. The best-case scenario is finding a single vendor that can pull it all together with a cohesive plan and strategy for vendor coordination. Typically this would be the LOS provider.

•  •  •

Looking for the features and tools described here in lender digital platforms will help originators ensure that they are providing an excellent online borrower experience. This in turn will drive sales and boost referrals among borrowers and Realtors alike.

In the sales world, there’s an expression that says, “He who gets there first wins.” A well-designed online lending platform will almost always get you there first because you will consistently be available to applicants and customers around the clock. And being accessible to borrowers can make the difference between a so-so originator and a great one. Take the first step. Choose the right partner to put together and manage your online platform, and you’ll quickly see results. 


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