FINRA's BrokerCheck

Online mortgage origination key to future success

It’s clear that online and mobile banking delivery channels are increasingly in demand and popular with consumers. The appeal stretches beyond the ability to conduct routine banking transactions, such as depositing checks, transferring funds and paying bills, to include mortgage rate comparison, educational research and online applications.

According to JD Power & Associates, non-institution lenders that have embraced an online business model are experiencing higher loan growth rates than traditional lenders relying on “pen and paper” applications. In fact, Quicken was recently recognized as the number one online lender, the third largest retail mortgage lender in the US and for the fourth consecutive year received excellent customer satisfaction scores on the JD Power survey. This is largely due to the average 17.8 days from application to approval for Quicken Loans customers, compared to the industry average of 26.3 days. Moreover, the use of electronic closing documents delivers higher customer satisfaction ratings, while offering the lender the advantages of speed, cost-efficiency and flexibility.

A report issued by Accenture projects that by 2020, today’s traditional lenders, who are not agile, do not embrace online technologies and are unable or unwilling to become more customer-centric, could lose up to 35 percent market share to new and current institution and non-institution lenders who adopt new business models. It’s already happening; the report also notes that over the past five years, emerging online lenders, many of whom did not exist during the credit crisis, have stolen market share away from midsize and regional financial institutions. Coupled with an expected rise in interest rates, which could slow the pace of refinancing and purchases, and as much as a 79 percent increase in origination costs since 2009, it’s clear that institutions need to focus on increases in efficiencies to reduce expenses.

Specifically, the Accenture report offers these and other best practices for institutions to transform their operations and become high performing lenders by 2020:

  • Be Proactive and invest in initiatives that build business and take advantage of consumer trends, rather than just respond to regulations, competitors and industry changes.
  • Embrace Digital capabilities for not only the loan onboarding process but also to facilitate consumer rate shopping and finance education. This can include automated processes to collect and route mortgage files and documents and real-time status alerts for borrowers and their agents. Digital imaging technologies should also be used in-house to exchange information, provide transparency throughout the life of the loan, increase efficiencies, reduce costs and save employee time.
  • Become Customer-Driven so that all decisions are made with a keen eye on satisfying customer needs for transparency, ease of doing business and access to assistance when needed, rather than focusing on a product-driven culture.
  • Open Omni-Channel delivery options to capture the expected growth business conducted through digital channels, while still serving customers through “bricks and mortar” without relying on the physical presence for survival.


Sources: JD Power, Accenture

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