Last week I attended the Mid–Atlantic MBA conference and had many discussions about what the future of the mortgage industry will look like. It reminded me of a recent New York Times article on a three-day competition called “Hackomotive.” Sponsored by Edmonds, a car-buying website that provides automotive industry research, the event challenged teams to present better ways to sell cars to consumers.
Edmonds hosted the competition because the company believes consumers no longer depend on the auto dealer to learn about cars and automakers are trying to sell more directly to consumers—despite the varying restrictions in most states on manufacturers owning or operating car dealerships. Tesla is an example of a car manufacturer who wants to sell directly to the consumer without a dealership network. Both issues are having a significant impact on the auto industry’s results.
Further, Edmunds CEO, Avi Steinlauf claims that the car-buying process is ripe for change because of a number of factors including the availability of information on a vehicle’s price and history and the automation of financing.
All “Hackomotive” competitors agreed that the old ways of visiting a dealership, browsing cars and then choosing one is a story of the past especially in a world where smart phones enable instant data retrieval. The winner of the competition was a Seattle, Wash.-based company that allows car shoppers to communicate by text message with dealers through an app that the dealership can also use to respond to inquiries.
As the mortgage industry moves into a new “normal” of purchase money, isn’t it time to think about how the loan selling process can match the high-tech communication styles preferred by younger customers? One mortgage executive said, “lenders need to provide the consumer with a variety of ways to make contact.” Another executive claimed that the real issue is that today’s sales force structure doesn’t deliver a consistent brand message to the consumer. The commission structure is dead in his view.
Regardless whether you view the future as requiring a change in technology or compensation, it is clear that both the auto industry and the mortgage industry have a smarter consumer who has fundamentally changed the buying process.
Isn’t it time for the mortgage industry to be addressing these issues? There is a tremendous opportunity for lenders to provide a buying process that works for today’s consumers.