Understanding digital mortgage operations
In 2022, the estimated value of the digital mortgage market was US$ 8.7 billion. It could stand at a valuation of US$ 46.2 billion by the end of 2032. What could be the reason for such a huge jump? The experience of a mortgage is generally a cumbersome one. Traditional ways of mortgaging include higher lending rates, exclusion of communities on factors like race, religion, and colour, and, most importantly, it was time-consuming and overwhelming. These complications led to the denial of applications of many eligible candidates. The dynamic had to change when it came to the business of mortgaging. Digitalisation is proving to be a boon for this industry. Let us delve into how digital mortgage operations work.
Many lenders in the market feel they are obsolete in this new phase of digitalisation – which is not necessarily true. Traditional brokers can bring their years of expertise to a digital platform and reap its benefits. Digitalisation does not aim to remove the broker but to lower the margin of error in these processes.
What sets digital mortgages apart?
The difference between traditional methods and digitalisation is that digitalisation helps borrowers and lenders stay updated with the process along the way and reduces the processing time. Streamlining the operations benefits both sides of the table while reducing overhead costs. Additionally, online and digital options provide more access and choice. In today’s age, we receive an update for ordered food when it is out for delivery. It makes better sense for a process involving money to have regular updates. And it does not end here. Digitalisation helps in personalised services and customisations which cater to the needs of a fast-evolving market.
Digital mortgage options have paved the path for more equitable lending. Mortgage operations now allow for comparison and competition. With lenders vying for a share of the market, borrowers can expect better interest rates, favourable loan terms and better long terms savings. Also, the hidden charges are done away with online, which saves customers thousands of dollars over the tenure of a loan. All this with lesser discrimination as the process becomes more transparent in its functionality. This benefits marginalised communities who had long had to deal with bias when applying for mortgages.
Circumstances of digital expansion
The digital mortgage operations process is vital going ahead. The sheer volume of applications demands a more robust and reliable method. Consumer confidence in digital products is growing, spurred by the mobile-first approach. Any information on any given criteria is procured through these devices. They enable all services to be available at hand. Hence, speed cannot be compromised. COVID-19 was the major reason leading to the digitalisation of products and services. Due to that shift, consumers expect speedy communication and access to services without them having to be physically present. With more accessible information, consumers are more aware and educated about who they are dealing with and what the best course of action would be.
Advantages for lenders
The advantage for borrowers is alleviated financial and time constraints. What could be beneficial for those who are professionally involved in this market? While they still need to adapt to the changing market, there are many positives for them should they shift to a digital approach. At the outset, brokerage efficiency would increase, saving money. Additionally, the digital approach to mortgages ensures the following:
- Documents are easily managed
- Fewer meetings to allow employees to complete other tasks
- Compliant and secure processes
- Timely and accurate collaboration with different departments
- Minimal use of office supplies and paper
- Faster closing times
- The integration of common applications
Signing documents electronically with a digital signature has now become the norm. For a progressive lending business model, digital mortgages play a significant role. 99% of lending institutions believe that technology has helped scale business with a simplified process (74%), quicker closure of applications (70%) and reduced data entry (67%).
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How can Infosys BPM help?
Industry leaders are investing in technologies that enable simplification of the mortgage lifecycle. While the advice is available, Infosys BPM commits to partnering with industries and delivering throughout your digital mortgage operations journey.