The mortgage process is multi-layered and sometimes overly complicated, but technology has provided lenders with various options for making the process more efficient and user-friendly. These options allow for the creation of unique platforms as opposed to relying on one Loan Origination System (LOS) to meet all of their needs.
The May 2019 STRATMOR Insights report highlights two options that lenders can take: the traditional vendor-centric approach or the blended, best-in-breed option.
“The argument has been that when a lender purchases a platform from a single vendor, the complexities of integrating multiple technologies fades away and simplicity reduces the need for expensive IT teams. The cost per loan becomes secondary to the comfort the lender experiences when hearing the vendor say, ‘We’ve got you covered — our product is all you need to originate a loan,” writes STRATMOR principal Andrew Weiss in the report.
This approach has been effective for many lenders, although this has led them to focus less on the LOS as a major point of differentiation among competitors. Another approach is to look at all of the individual options that Fintech has facilitated in the mortgage industry and combine them for a customized alphabet soup: from CRM to POS to ECM (enterprise content management), some of which may overlap and all of which claim to be better at its primary function than a general LOS. LOS vendors have responded by creating more comprehensive and competitive technology offerings.
“Vendors are making their advanced, point solutions ready to be integrated into the fabric of a lender’s technology stack. It is in their best interest to do so; if they don’t, it is much harder to convince lenders that their solutions are useful,” Weiss writes.
Choosing between the two paths isn’t straightforward, and although origination costs have crept upwards of $9,000 per loan, technology still represents a relatively small fraction of that. The first step to developing a technology strategy is to identify critical elements of success and what business activities will serve as a differentiator in the marketplace, followed by recognizing the capabilities required for the desired end-to-end platform, and analyzing ways that technology can address those necessary requirements.
Most lenders understand that the primary purpose of technology is to perfect the borrower experience as much as possible, and so there needs to be a way of measuring the effectiveness of the technology once it’s implemented.
“You must measure the customers’ perception of your technological improvements to get to the ultimate truth of the success or failure of your strategy,” writes Mike Seminari, director at STRATMOR.
MortgageSAT is STRATMOR’s borrower satisfaction program, and it can determine whether technology changes are having the desired impact on borrower satisfaction. Measuring specific parts of the process like document collection and communication allow lenders to tweak specific parts of the platform—and not throw the baby out with the bathwater.
Once that’s done, Seminari suggests creating accountability for the team, perhaps by creating a relationships between overall originator compensation and customer satisfaction. “The more you can create team accountability, he writes, the quicker culture changes to prizing delighted customers above all.”
Whatever approach a lender decides to take, the planning is just as important as the follow-through.