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The Mortgage Lending Process Is Changing Fast. Are You Keeping Up?

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Consumers are demanding better, more transparent mortgage solutions. Use your data to make that happen.

Applying for a mortgage can be one of the most frustrating and time-consuming things you’ll ever have to do. From origination through to processing, it’s been done the same way for so long that it can be hard to even imagine a different, better way.

Yet there are dramatic changes afoot and the mortgage of the future is going to look a lot less antiquated in a very short space of time. Change is happening both in customer-facing and back-end processes to transform a sector of the economy that has been stuck in the past for too long.

Smaller, tech-focused companies are shaking up the industry and finding receptive consumers who are digital-first and unafraid to break the mold. There is a digital transformation underway. It is undeniable and sooner or later, every lender is going to have to adapt.

So what will a mortgage look like in the future?

A brand new ebook sponsored by AI Foundry, entitled The Mortgage Lending Process Of The Future, takes a deep dive into what the mortgage industry could look like in the next few years.

The study contains valuable insights and proposes real solutions to some of the problems that are slowing down transformation.

Let’s take a look at some of the key ideas discussed.

The Digital Mortgage

Image Source: Unsplash

Lenders are keenly aware of the fact that they need to deliver a better, simpler solution. After all, lenders are borrowers too, so they’ve experienced the way that the industry works from both sides of the coin. At the recent SourceMedia Digital Mortgage Conference, there was broad consensus that technology can offer the solution that everyone is looking for.

Six in ten delegates claimed they were working on a digital mortgage while a further 3 in 10 said they were planning to do so shortly. However the study also registered a fair amount of disagreement about what a digital mortgage should look like. “But their inability to reach a consensus on the definition of the digital mortgage is not stopping lenders from working toward this goal,” explains Elina Tarkazakis on National Mortgage News.

Widespread Adoption of Digital

In previous eras, change was often driven by the bigger banks and mortgage lenders as they had the resources and the reach to implement innovation. That is no longer the case. Smaller, more nimble players are using the power of big data, mobile technology, and the cloud to produce compelling, targeted products that are reaching new consumers entering the market.

In many cases, the bigger banks are playing catch-up.

The Secret Ingredient is Data

The quality of the new initiatives that are being put in place is extremely reliant on the quality of the data. Not only the accuracy and completeness, but on how that data is gathered and stored, and how accessible it is for analysis and insight.

According to the new ebook “lenders need to capitalize on the information they have, but if they do not include all of the data they own, including unstructured data, these initiatives cannot offer everything the lender is seeking, and their costs can be high.”

So a complete data solution that aligns neatly with the technology that partners are using is a must-have as the mortgage lending industry looks towards the future. Hand-in-hand with that goes improved data security to combat data breaches and cyber attacks.

Digitizing the Back Office

The digital transformations that have made the biggest differences so far are in the customer-facing applications. Many consumers are experiencing faster, more personalized communication with their lenders and they have been pleasantly surprised by the new online tools that give them more flexibility and transparency.

These advances are most welcome, but there’s no denying that a lot of the real work still has to happen. Integrating software and processing data behind-the-scenes is the next big frontier. “Few, if any, of the fintech startups entering the mortgage arena have focused on the work that happens after a loan file reaches the hands of an underwriter, largely because it’s the hardest part of the process to address. But it’s where the biggest efficiency gains can be made,” explains National Mortgage News editor-in-chief Austin Kilgore.

So what will a solution look like? In a word, agile.

That means that key processes will be automated to remove human error and speed up processing. That means no more ‘stare-and-compare’ while trying to validate key data. It also means that customers will be integrated into the process to improve accuracy and improve customer satisfaction and, ultimately, the quality of the loans.

An agile mortgage solution is the perfect response to a generation used to working with technology that is fast and inclusive and that can offer flexible solutions.

Characteristics of an Agile Mortgage:

  • Accept loan file documents from a variety of digital and paper sources

  • Automated document classification and data extraction
  • Streamlined back-office loan origination process
  • Better customer onboarding
  • Better synergy between the front and back offices

AI Foundry understands that in the internet age, speed, information and customer experience is the Holy Grail. Financial services firms that do not provide the experience that consumers demand will find it very difficult to compete with the agile mortgage lending process of the future.

Download the complete ebook today for more detail and solutions that could profoundly improve your digitization process.