Digital Mortgage
The barriers to a successful digital mortgage transformation
The mortgage market witnessed a considerable uptick after governments around the world reduced interest rates to help borrowers face the economic crisis caused by the pandemic. However, post the initial refinance and new loan boom, lenders worldwide still faced pressure to be profitable. A recent survey by Fannie Mae revealed that lenders in the US cited lack of supply, rising rates, changing market trends, competition from other lenders, and evolving customer expectations as the top challenges in the mortgage industry, causing a declining profitability expectation.The current market situation and the complexities in the mortgage process pose both a problem and an opportunity for lenders. One way of dealing with these challenges in the mortgage industry is technological advancement. Lenders must look for solutions to increase productivity, provide high-quality service, and speed up client acquisition.*
Why should lenders adopt digitisation?
From managing applications online to automated valuation modelling solutions and minimising repetition, digitisation can significantly reduce cycle time and improve customer experience. According to a survey, about 64% of consumers are already inclined to choose fintech over traditional banks.
Challenges in digital mortgage
The top digital mortgage challenges involve management, personnel, processes, and strategies. As we pursue the benefits of digital mortgage, the challenges are bound to follow. Most of these challenges are implementation issues and will only affect businesses during the initial stages.- Resistance to change:
- Replacement of traditional workflows:
- Transformation of trusted processes:
- Disconnect with the larger digital transformation strategy:
- Partial adoption of technology:
As with any change, both borrowers and employees dealing with them can have apprehensions about the digital ecosystem and sharing sensitive personal data, making it difficult to implement technology. Thus, employees cannot fully support customers at every stage of their mortgage journey, leaving them with a subpar experience with the lender.
Digitisation has focused on customer-facing processes for most businesses, while back-office workflows are still rooted in conventional manual tasks. Analysing all processes and moving them to a seamless digital experience is a significant digital mortgage challenge.
Borrowers must trust lenders with personal information, while lenders rely on their trusted processes for mortgage origination. Digitisation is often perceived as a disruptor to these trusted processes.
Digital efforts frequently fail due to the lack of a clear, comprehensive approach and a failure to communicate the overall strategy to all stakeholders. Many digital transformation activities are typically performed locally, at the business unit, or on a functional level without effectively aligning with other units. Moreover, while digital transformation may be a high priority for the top management, implementation is frequently stalled at the middle management level.
Adopting partial digitisation and poor change management can affect training and cohesive transformation. It leads to disparity and data silos within teams that aren’t completely merged. Such silos affect the efficiency of the entire mortgage journey.
How to deal with the obstacles?
Lenders targeting cost savings and high volume can expand their reach by embracing a wide range of digital technologies strongly connected with existing product capabilities. However, this transformation comes at a cost. Lenders must discard traditional processes and face the challenges. Here are a few recommendations for dealing with such obstacles.
Starting from the top:
As a first step, the leadership should clearly communicate its core values and prepare a digital road map. As a next step, employing external facilitators for process assessment will result in operational efficiency and enhancing customer experience. This brings the distinct advantage of providing deep insights into process-based changes. All verticals and teams must understand the benefits to assure cross-functional collaboration.Digitising the value chain:
To create a seamless experience, lenders need an end-to-end solution for digitising the mortgage journey, right from front- to back-end operations. It is the only way to integrate data flows for sharing among processing, underwriting, and closing teams. Systems such as document management, knowledge management, intelligent loan pipeline, and task workflow management solutions can help standardise data and avoid silos.Prioritising compliance:
The digital mortgage challenge involves dealing with third-party data, error-free real-time validation, and strict compliance with regulatory norms. Increasingly, regulatory bodies are embracing new technologies, and lenders can proactively communicate with regulators to drive meaningful innovation.
How can Infosys BPM help?
With deep industry experience, Infosys BPM offers a comprehensive digital mortgage solution as a part of its Live Enterprise suite. Powered by AI, ML, and RPA, the digital mortgage solution includes:
- Document classification and extraction for auto-indexing, funding and audit, and new loan set-up
- Automated conditioning of processors and underwriters using AI/ML
- Deployment of RPA in third-party order, wire processing, and customer fulfilment processes
- The use of analytics and deep insight to streamline loan pipeline, optimise cycle times, manage complaints, and understand borrower engagement
- The use of task management and knowledge management solutions for smooth data and process flows
*For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like living organisms, will be imperative for business excellence. A comprehensive yet modular suite of services is doing precisely that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.
