The latest tech disrupting the mortgage industry
The changing consumer landscape has disrupted multiple industries, even the mortgage industry. As modern borrowers get more tech-savvy, lenders must become more open to providing the complete digital experience that consumers now demand.
New tools like cloud-based platforms and machine learning are changing how the sales approach and process work in the mortgage industry, making it easier for lenders to guide borrowers through the origination process and discover additional opportunities within the data they collect from loan applicants.
Customer Relationship Management Systems (CRMs)
Even though many borrowers might not agree, the key to being a successful mortgage lender is prioritizing the customer experience. Creating a positive experience helps a business grow and expand, and luckily CRM can help lenders achieve that.
CRM is a technology that allows you to manage your company’s relationships and interactions with current and potential customers. They help build better business relationships, streamline processes, and improve profitability. Mortgage CRM software is tailored to the complexities of the mortgage industry and has the overarching goal of easing the daily activities and responsibilities of loan officers.
With the fast adoption of CRMs across industries, there have been some remarkable improvements and new versions of that software offering state of the art technology. Many CRMs will come equipped with automation to will help with communication and marketing to borrowers. Some mortgage CRM solutions even provide real-time lending industry intelligence or offer reputation management functionality.
When picking a provider, it’s important that lenders make sure that they ensure that activity is SOC compliant, that they have the ability to work with industry giants like Zillow or Realtor.com and that the software integrates with their loan origination software.
While blockchain often gets associated with cryptocurrencies such as Bitcoin, the technology has a lot of applications outside of money. In the mortgage industry, it can help improve efficiency and making the process more affordable.
In the simplest of terms, blockchain technology is a digital, decentralized, and distributed ledger or database. It’s made up of three parts: the record, the block, and the chain. The record is any transaction, containing details of the transaction and the digital signatures of each person involved. A record must be then be verified as a legitimate transaction before becoming a part of the blockchain. The verified record then gets stored in a block with other records.
Complete blocks receive a unique code and get the code of the block that comes before it in the chain. Newly completed blocks join the chain where it connects to the previous block thanks to that code. The key feature that sets the blockchain apart is its decentralization.
With blockchain, there isn’t a bank or credit card company that acts as the central hub. Each computer in the blockchain network has a copy of the ledger and can add to it. All records in the blockchain are publicly available even if the identities of those involved are not.
When it comes to the mortgage industry specifically, blockchain can help speed up the approval process. When every party is working off the blockchain, mortgage approval and loan settling can take days rather than at least a month. There are a number of other benefits of using blockchain in the mortgage process for parties on both sides.
Artificial Intelligence and Machine Learning
Mortgage lending is a data-heavy industry. Borrowers often need to hand over multiple documents such as tax returns, W-2s, bank statements, copies of identification, and many other forms of documentation. As much of a burden as that can be for borrowers, it requires a great deal of time and effort on the lender’s side as well.
That’s why the industry is set to explode with its adoption of artificial intelligence (AI) and machine learning (ML). Both will help with the assimilation, sorting, and evaluation of all the information a borrower sends in.
A recent study showed that while only 27 percent of businesses were taking advantage of AI/ML software last year, 58% of lenders are expected to be using AI/ML within the next two years. With Alexa and Siri in our homes and pockets and the boom of consumer AI, it can be easy to see those numbers and think that they’re lower than expected.
While the industry is set to see a rise in adoption, the low numbers make sense since there is more at stake for both lenders and borrowers. AI and ML systems will need to be effective and transparent about how they are making decisions about applicants and mortgage rates.
What Technology Means for Mortgages
With digital mortgage platforms, the rise of AI and data, and the potential of the blockchain, the question might be asked what does it mean for brokers? Technology doesn’t mean that they will be phased out.
Mortgages are big and serious decisions, and people will still need a guiding hand to help them manage the homebuying process. Brokers will need to redefine their roles to work technology into their processes and help give borrowers the digital experiences they seek.
Written by: Holly Welles, BOSS Contributor
Holly Welles is a real estate writer who covers the latest market trends in everything from residential to commercial spaces. She is the editor behind her own blog, The Estate Update, and curates more advice on Twitter.