New digital technology is rapidly changing how we borrow money, with the ability to compare and choose loans at the click of a button, any time of day. For lenders to keep up in a constantly evolving environment they must choose transformation, says Karthik Kumar, Global Head Mortgage Practice, Tata Consultancy Services, while speaking at the 11th Annual Australian Mortgage Innovation Summit in Sydney.
Customers have more power than ever and they’re driving ongoing innovation in today’s lending market. For mortgage providers, embracing change by choosing transformation is the “secret sauce” to keeping customers highly satisfied and staying ahead of competitors in the market.
Transformation takes time, but with a clear strategy it can be accomplished. These 5 key tech trends will help you plan your journey.
1. Customers are driving disruption
No matter what the online activity is, customer satisfaction is intimately tied to instant gratification. Customers demand Accessibility, Transparency and Relevancy in every transaction.
Innovation is making it easier, faster and more secure to obtain loans. Customers expect to be able to access information and get approvals at the touch of a keyboard, 24-hours-a-day and from the convenience of any device, whether desktop or mobile.
The mobility of content is increasing lenders’ capacity to get customers what they want, when they want it and how they want. But at the heart of all this is understanding exactly how lenders can improve their experiences by adding real value to the customers.
Who are they? What do they need? What makes them happy? What will they want in future?
Better informed customers feel empowered and they’re the ones whose loyalty and recommendations will ricochet around the market.
2. Machine First Delivery Model (MFDM™)
Secondly, lending is about people and trusted relationships. But you can make processes easier using digital technology.
Part of this is accepting that computers can never replace the special role of humans in lending. Customers turn to lenders for trusted advice and they feel comfortable when someone empathises with their needs as they are making the biggest financial commitment of their lives.
But that doesn’t mean humans can’t work alongside better technology to improve what’s delivered.
Machines are a perfect first port of call to perform a whole range of functions. If there’s a question with a standard answer, a digital solution can provide this quickly. Think of how much time this could free up people to deal with more complex issues.
Automation is one technique and, used in the right way, it can make lending more convenient and faster while providing the added benefit of being able to make sense of all the data that is collected about customers. How much easier could life be for lenders and customers if compliance with regulation and forms such as property evaluations and titles, banking and personal income statements were automated online?
3. Freedom! Build your LOS however you want with microservices
Lending is a cumbersome process that is still paper intensive and requires a lot of arduous manual screening, from the original application to when customers actually receive funds.
Digital technology is introducing warp speed, reducing operations that used to take weeks to a matter of hours.
Finding the best technology requires the best advice. Many lenders waste time looking for new technology to replace outgoing legacy loan origination systems blinded by Shiny Object Syndrome. But instead what they should be looking at are new integrative microservices.
Cloud-based microservices can be added to your existing system one lego block at a time, increasing your capacity, productivity and scale, as and when you need. This gives you the power to organise your technology around your business capabilities and makes it easier to build and scale your infrastructure on demand.
4. An evolving ecosystem, preparing for how and when
Change is coming at us hard and fast. We can’t control how it takes place or how it affects us. But we can prepare by keeping abreast of opportunities and being ready and open to adapt as change unfolds.
Lenders must understand that customers are the ones in the driving seat. Their demands for greater convenience will spur future innovation and market competition just as it is already doing.
Look at how new online services provided by digital and neobank lenders are challenging existing participants.
It’s important to look around, locally and globally, not just within your industry, but also across industries for ideas. What’s happening in your immediate ecosystem? What opportunities can you explore to strengthen your partnerships? What’s your competition doing? How are competitors across the globe innovating? If it’s having a positive impact on customers, you can be certain it’s going to expand exponentially and you need to be part of the picture.
5. The need for speed: The core of customer service
Lastly, excellent customer service is the end goal. The fastest lenders are going to be the ones who clinch the deal as customers factor speed into their mortgage choices, even ahead of rates.
Yes that’s right! Consumers are choosing speed and convenience over price, not only for purchasing goods but also when it comes to their loans.
It’s no wonder given the discomfort and poor customer experience that lengthy review processes cause. Time-to-funding is the way lenders will continue to judge their performance, with the best executing approvals and the transfer of funds at speed.
Instant gratification and convenience will draw borrower loyalty as a result.
Again, the power of digital platforms will bring the most benefit. Digitising your application review process will make approvals faster and the processes more efficient while reducing costs and risks along the way.