Why a Convenient Loan Process Matters More Than Ever

On September 2, 2020, Quicken Loans announced its first earning results as a publicly traded company. While the lending giant’s performance was terrific, there were a few things that I think were especially noteworthy: their gain on sale was a whopping 519 bps; and they are serious about obtaining 25% market share.

It was no surprise that Quicken’s volume doubled, which is the case with many lenders in 2020, but the firm’s gain on sale was out of this world vs. the competition. In a fragmented mortgage lending landscape, if a lender achieves 1% to 5% market share, that is a big deal. Quicken’s senior executives believe that the industry is ripe for consolidation and have raised the capital to achieve a 25% market share and reduce their costs.

During the current refinance boom, mortgage lenders are achieving success without really trying. But going forward, it is clear that lenders that have not invested in improving marketing and technology will have a difficult time competing against Quicken.

In my view, Quicken has excelled at targeting borrowers who value convenience. While price and product are the typical ways most lenders attempt to differentiate themselves, Quicken has prioritized making the mortgage process easy for the consumer. By transforming the often complicated process of securing a home loan, Quicken is winning new customers and earning referral business.

Convenience has always been important in the marketplace but Covid-19 restrictions have made it more imperative as consumers become accustomed to conducting daily tasks virtually, from grocery shopping to telemedicine appointments and everything in between.

The mortgage loan process is often perceived as arduous by home loan prospects. It seems every homeowner has a story to share of resending documents over and over again or having to chase down an originator to find out the loan application status. Quicken has changed this narrative by making the loan process more efficient for customers.

A recent Wall Street Journal article, “2020 Retail Industry Outlook: Convenience is King,” discusses Deloitte’s report on how marketing and selling is changing. According to Deloitte’s report, convenience is “a human-centered experience that provides customers with a feeling of ease.” The report states that consumers perceive convenience in a number of ways including a product that saves them time; a platform that meets all their needs in one place; and special access to valuable services.

Deloitte also remarks that brands must seek to weave convenience throughout the fabric of the entire organization. Otherwise, it can become a marketing gimmick that doesn’t improve profits. The company suggests the following steps to deliver on the promise of convenience to customers:

  1. It is important to carefully define what convenience is and what it is not. It might be more important to define what is not convenient for a consumer.
  2. Brands must answer the hard question: Is customer convenience deployed in every department and line of business?
  3. It is critical to align the investment needed to achieve convenience with what consumers really value.
  4. Convenience is the new normal. Match the promise that you are delivering vs. what makes a consumer’s life easier.
  5. Achieving convenience is not an overnight undertaking. It requires senior management commitment every day 24/7.

With seemingly unlimited choices in today’s marketplace, consumers are looking for something that will set one lender apart from the next.  With 83% of consumers saying that “convenience when making a purchase” is more important now than it was five years ago, providing a seamless loan transaction could be key. Quicken has raised the stakes in what customers expect from lenders. It isn’t just a price and product game anymore. Is your team delivering a convenient home loan process to your borrowers?