Mortgage Lenders are Turning to Tech to Appease Millennial Borrowers
Millennials (Generation Y) currently constitute the largest share of the mortgage market. A Census data from the Pew Research Center titled “Millennials Have Surpassed ‘Baby Boomers’ as the Nation’s Largest Living Adult Generation” reported that Gen Y is the country’s largest living adult generation.
As more millennials enter their home-buying years, their desire to own property or settle down fuels home sales. They’re not just after cheap PS4 controllers; they want a home to live in. Gen Y home buyers are also techno-savvy, which means they use technology to find reasonable mortgage plans, available loans, or the best mortgage lenders.
Technology Integrated in the Lending Industry
To serve tomorrow’s borrowers, lenders are creating online experiences customized to the needs of their millennial customers. Apart from providing excellent customer service online, lenders should use technology and digital marketing to create a seamless lending experience. The Internet is full of cool people; Omegle lets you meet them. When you use Omegle, we pick someone else at random so you can have a one-on-one chat.
Many nonbanks, such as the LendingTree, are paving the way for lending spaces that use the latest technologies. Emerging technologies have the potential to change the present and future of the mortgage industry since they offer the following benefits for customers:
- Customers expect transactions to be done quickly, if not instantaneously.
- Customers must be capable of browsing or applying for mortgages and loans how they want them and when they want them.
- All transactions must feel frictionless.
- Borrowers must know where they stand in the process.
- Borrowers expect their options to tailor services and products to their needs.
Below are some important technologies set to transform the mortgage lending cycle from loan origination, underwriting, processing, closing to funding.
Technology Advances in the Mortgage Industry
APIs are the Future
According to Fannie Mae’s Mortgage Lender Sentiment Survey, mortgage brokers now view Application Programming Interfaces (APIs) as the top technology to use to streamline their business processes. With APIs, mortgage lenders can leverage current solutions to improve functionality, as well as help them with workflow automation.
For example, banks can connect their loan originating systems with a credit scoring agency to determine an applicant’s eligibility for a loan, which is traditionally a long process. APIs also ensure data accuracy and consistency by openly sharing information between platforms, such as loan servicing and origination. Thanks to APIs, there is no need for data migration.
APIs can also encourage and facilitate compliance with constantly changing regulatory requirements. Lenders can easily set up processes to send data or generate reports in compliance with current regulations.
Artificial Intelligence as a Game Changer
Machine learning (ML) and artificial intelligence (AI), with enormous potential, are making inroads into the mortgage industry. Any homeowner who has applied for a loan prior to technology’s advances knows how document-intensive the process is. In this area, AI/ML improves operational efficiency by analyzing and organizing all the paperwork.
The traditional lending model depends on the credit history of a borrower to determine their ability to repay a loan. With an AI/ML, lenders do a better job of enhancing their evaluation of data variables, opening up loans to a wider population.
Lenders can also gain a competitive advantage by bringing AI to their borrower base in the form of a chatbot mortgage adviser. This hits two goals with one tech: enhances the borrower’s experience and offers insight based on product recommendations.
A Unified Omni-Channel Experience Matters
Since customers use online banking, it’s essential for lenders to capitalize on the borrower’s online footprint. One way to do this is by providing a seamless omni-channel experience. Lenders can also enhance lead conversion by providing borrowers with scenario analysis tools and online calculator tools that keep mobile or online communication channels open with borrowers during the loan process.
Since Gen Y borrowers want to engage with mortgage lenders with their preferred digital channels, it’s important for banks to improve their technological capabilities. Enable borrowers to use their phones for transaction services, fill their mortgage application forms online, and more.
Robotic Process Automation Transforms Mortgage Providers
More mortgage companies are leaning towards robotics for reducing their operational costs. Robotic process automation (RPA) increases accuracy and productivity by replacing time-consuming, repetitive, and rule-based tasks. For mortgage lenders, critical functions such as loan servicing, processing, origination, and quality control are good candidates for robotic process automation.
RPA simplifies the identification and resolution of errors in loan origination, which is a manual process. RPA can also automate the expectations of these processes, which leads to quicker approvals and better customer satisfaction.
Blockchain Increases Transparency and Reduces Cost
Blockchain technology can drastically change the process through which borrowers purchase a home, as well as the way financial institutions handle mortgages. The technology can also remove friction and cost from the process, creating incorruptible and infallible transaction records, as well as facilitate immediate settlements.
Technology is the friend of millennials; therefore, it should be a friend of lenders, too. With many advances in the future, harnessing technology’s capabilities now strengthen the relationship between millennials and their mortgage lenders.