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Digital Lending: Move Ahead or Fall Behind

A recent tech study conducted by STRATMOR Group shed light on where lenders have made major strides as well as the areas where they are lagging.

The January issue of the Insights Report examined system technologies widely used by lenders and found that 76 percent of mortgage lenders currently give borrowers the ability to sign disclosures online compared to 61 percent in 2017, while 72 percent allow borrowers to upload documents and respond to loan conditions online. The share of respondents who use agency solutions for loan delivery data validation, compliance and loan salability was 72 percent.

The report pointed out that the primary driver of lenders' technology investments has shifted from regulatory concerns to a focus on improving customer service. Providing mortgage borrowers with a digital experience is no longer a competitive advantage but the new reality for mortgage lenders. 

"Today we have an environment that is about stealing market share and succeeding with the tougher purchase transactions. Customer satisfaction and maintaining relationships have replaced regulatory mandates as the top concerns. That means meeting the needs of borrowers and referral sources," said Garth Graham, Senior Partner at STRATMOR. 

Ellie Mae's Encompass was the most used point of sale technology for the fourth year in a row, followed by Blend, the report noted. Only 18 percent of respondents said they do not use a company-sponsored lead management tool.  The rest of the 82 percent use one or more CRMs of the 24 third-party systems. Top of Mind, Salesforce, and Velocify hold the top three spots. Optimal Blue was the leading product and production engine among respondents.

According to the report, among the different technologies used, lenders were most likely to stay with their current production pipeline hedging, loan origination software, and product and pricing engine technologies rather than switching to competing products.

"Today's borrowers expect a digital experience, and lenders that do not empower consumers to upload and execute loan documents online are not only in the minority but are falling far behind their peers," Graham said.  He also reiterated that “while lenders are deploying and utilizing digital capabilities on the front end of the origination process, there are great opportunities to gain efficiencies on the back end.”

It is a mistake if lenders do not consider the impact of new technologies on customer experience, according to Graham. He emphasized the need for lenders to “measure borrower satisfaction at a deep level to quantify the impact,” before making an investment in any new technology.  

Participants in the STRATMOR study included independent and bank-owned or -affiliated mortgage companies ranging in size from under $250 million in annual production to those that ranked among the 10 largest in the industry in total origination volume.  

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About Author: Donna Joseph

Donna Joseph is a Dallas-based writer who covers technology, HR best practices, and a mix of lifestyle topics. She is a seasoned PR professional with an extensive background in content creation and corporate communications. Joseph holds a B.A. in Sociology and M.A. in Mass Communication, both from the University of Bangalore, India. She is currently working on two books, both dealing with women-centric issues prevalent in oppressive as well as progressive societies. She can be reached at donna.joseph@thefivestar.com.
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