Mortgage lenders ultimately want to ensure that their borrowers are completely satisfied with their service. Director in the Mortgage Practice at J.D. Power, Craig Martin, advises lenders to do in order to boost their originations business and ensure customer satisfaction.
MReport: How can lenders improve their origination business and appeal to borrowers a bit more?
Martin: Lenders need to make the origination process easy and make the whole process clear. It’s all about clarity even beyond closing. This is where a lot of mistakes happen. Lenders will do a fine job up until the end of their process , they reach the closing table and all the paperwork is signed so in their mind the process is complete but they kind of forget the fact that someone is going to start living with that mortgage. How does that experience affect them, did they prepare for that, did the borrower have any unfulfilled expectations in being a successful homeowner? Making sure to see the big picture is key to lenders success in the future.
Another challenge to lender satisfaction is the amount of lost trust among lenders over the last five years. Younger borrowers, in particular, tend to have more “trust issues” around banks, financial institutions, and lenders as they grew up in the midst of major market turmoil. For a lender to say that we have been doing this business for 50 years may not necessarily a badge of honor from a consumer perspective. Not to say that people will not trust their banks, but millennials have a different set of expectations and demands. They will do online research to gather information and are expecting a digital experience, but they also want to have a personal connection that gives them confidence that their lender is on their side and have their best interest in mind. If it’s just a transaction, or the impression given is we have loans and you need a loan, then that doesn’t win the customer over.
Everyone is offering what they say will be the cheapest, fastest, easiest thing these days, so to stand out lenders need to connect with the borrower and let them know that they have their best interest in mind and will make the loan origination process easier and simpler. The American Dream is not to have a mortgage, it’s to own a home.
MReport: How should lenders approach the millennial generation to earn their business?
Martin: The millennial generation is starting to become a large purchaser of home loans in the last two year. They are so digitally-inclined with their smartphones and tablets and going online to shop. These behavioral traits are key to reaching them. From a communications standpoint, lenders need to be able to interact digitally, but also through every channel that the consumer wants. There’s not a silver bullet, but lenders have to be able to understand what this generation wants, how they want it, and when they want it to be successful. A large part of this is just good old-fashioned listening and then recognizing what the customer truly wants and expects and delivering it that way. In a lot of cases, lenders will lean toward the notion of this is the way that their business model has always been so this is the way we work regardless of what the consumer really wants. Millennials are also looking for advice and guidance and that starts with good communication. The most effective communicators will be the firms who will achieve greater customer satisfaction and the resulting financial success in the future.
As I mentioned earlier, a lot of millennials have doubts about the banking industry and large financial institutions. At the same time the millennials have a high degree of openness to non-banks offering financial services, such as Apple, Google and the like. Those other companies that are breaking the mold and are not traditionally thought of as lenders, but there is an openness and willingness to partner with these firms and work with these firms. Millennials’ expectations as far as what they can do online and their comfort level with technology is pretty high. It’s not enough to say I have a website and you can apply online. Millennials want to know that communication will be smooth, easy, and fast. There are other players that are offering ‘all digital mortgages’, so the expectations are constantly being raised about what is possible. Millennials expect to be online, and these expectations are not necessarily limited to mortgage, this view is influenced by all experiences. Every interaction they have, whether it’s going to the airport and using a boarding pass on their phone or shopping for shoes, reflects what millennials expect from an online experience. This is really imperative for lenders to understand and should be a key consideration as new solutions are being developed.
MReport: How can lenders be competitive in today’s fast-paced, technology-driven housing market?
Martin: Being slow in getting up to speed in technology is one thing, but letting other player get ahead is another. The consumer doesn’t think it should take four to twelve weeks to get a mortgage; a borrower thinks they should be able to do that in a few hours. The future expectations of borrowers will be shaped by people who have grown up with things like TurboTax and being able to deposit a check with their phone.
The consumer does not necessarily understand what is going on behind the scenes or any of the technical things that occur, and in a lot of cases they don’t necessarily care.
Lenders need to be willing to take on more self-service. If you look across the market, you will see that borrowers are willing to use self-service technology, but they expect something in return, like a collaborative or cooperative effort. They are willing to provide information and take action, but they recognize or at least believe that they are doing some of the work for the lender so the borrower is going to expect a discount or some other form of added value for their effort. As more technology comes in, there’s more of an expectation to get more for less. The challenge for the mortgage industry in the near future is making the case for why a borrower should pay a premium for a human to be involved. If a borrower is paying twice as much for a human to do something that can be accomplished with technology, then they want an explanation as to what the added benefit is to them. If the value isn’t clear then the consumers will go with the cheaper option which puts a lot of mortgage business at risk.