One of the most talked about topics in mortgage banking is whether the industry will evolve into a self-service business. Many managers are speculating whether purchasing a home loan will become a fully automated, point-and-click business similar to booking an airline flight or obtaining concert tickets. A number of high-level executives believe that digital is the way of the future and that financial companies who do not offer online solutions will be left behind.
While technological innovations have been arriving in a fast and furious manner, digital products have focused mainly on back-office processes. From transforming documents into PDFs to paperless underwriting, the advances have been swift and impactful.
However, according to a recent PwC article, “Digital Lending Must Go Beyond Eliminating Paper,” the problem is that lenders have made their online experiences follow the same work flow as their offline experiences which means they have simply duplicated inefficient processes online vs. developing an innovative workflow. But data mining, web analytics, artificial intelligence and other developments have opened the door for companies to engage earlier in the buyer’s journey.
Banks and mortgage companies are now recognizing that the lending industry must apply digital innovation to drive the customer experience. It is no longer enough to upload and scan documents or streamline the documentation process. Lenders must deliver personalized products and service that match their customer’s specific stage in the journey of life.
We are already there with black box pricing models from investors and mortgage insurance vendors. So, what is next in digital innovation and are we far from not needing a human interface or an originator in mortgage lending? While it is not clear if the originator will be completely removed from the transaction, PwC has noted that customers still value personal advice and want a person to answer questions they might have. But, that doesn’t mean that it must be a face-to-face interaction or a phone call. It can be done electronically.
PwC commented that historically lenders viewed the digital channel as an alternative to offline personal collaborative channels. They contend that guidance and support can be delivered through video tools which do not require a face-to-face meeting. These digital tools are becoming more sophisticated and life-like and we are not far from digitally augmented human support and AI-powered virtual assistants and chatbots. Just see how popular SIRI is today. So, if these new technologies can deliver scalable consumer support, do we need to have originators involved with these loan processing functions? Probably not. What will an originator be tasked with in the future?
In my opinion, originators will fulfill the role of creating loan demand. During the refinance market boom, creating loan demand took a back seat but it is now becoming an essential component for producers.
Creating loan demand starts with building awareness, selling value and influencing a customer in their decision process. This means that once the interest has been sparked and information has been generated whether by voice or virtual reality, the originator should no longer be involved with moving the transaction through the process. The digital tools will take over and handle it to completion. Obviously, we are currently not there today but in the not too distant future we will be. As a result, we won’t need individuals to handle product exceptions. We will have advanced programs performing this function. If Amazon can make personalized recommendations based on your buying history, shouldn’t mortgage lenders’ systems be able to review product guidelines to make the a best choice for a consumer?
Having these technologies doesn’t mean that we don’t need someone who can start the customer’s journey. We still need individuals who can sell and help someone become interested in buying a home. We still need producers to serve as trusted advisors to persuade consumers about the value of homeownership.