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Financial Services

Understanding the Role of Mortgages in the Financial Services Industry

The mortgage sector plays a pivotal role in the financial services industry, driving both economic growth and individual wealth-building. As the demand for digitalisation and efficiency increases, mortgage providers must adapt to shifting market dynamics and regulatory requirements. In fact, the U.S. mortgage market alone is valued at over $12 trillion, making it one of the largest debt markets in the world.

This article explores how these financial instruments have evolved into essential players in the global economy, particularly through the development of a personalised mortgage solution that caters to the specific needs of borrowers.


How mortgage solutions drive economic growth?

Mortgage solutions and financial products impact everything from capital flows to financial stability. Creating revenue streams and influencing market trends, financial mortgage solutions are critical assets for financial institutions. Their key roles include:

  1. Homeownership access: Financial mortgage solutions make homeownership more accessible by providing financing options for individuals and families who may not have the upfront capital to purchase property outright.
  2. Economic growth: This range of mortgage solutions stimulates the broader economy. The construction, renovation, and home improvement industries all thrive when people buy homes, generating jobs and contributing to GDP growth—approximately 18% of the U.S. GDP in 2023, primarily driven by construction and real estate activities.
  3. Wealth building: Mortgages enable individuals to invest in property, which can appreciate over time, helping people build long-term wealth through home equity, which can be leveraged for other financial goals, such as retirement, education, or investment in additional properties.
  4. Financial product innovation: Lenders create innovative mortgage products to cater to diverse needs, such as first-time buyers, investors, or those refinancing, fostering competition and financial inclusion in the industry.
  5. Liquidity and risk management: Mortgage-backed securities (MBS), which pool mortgage loans, provide liquidity to the financial system and allow lenders to manage risk by selling or trading mortgage debt, ensuring that the housing market remains robust.

Key trends and innovations driving mortgage solutions in 2024 and beyond

Unlock the Right Mortgage Solution for Your Financial Needs 

Unlock the Right Mortgage Solution for Your Financial Needs 

In 2024, several trends and innovations address key pain points in the mortgage industry, resulting in optimising operations.  

Artificial intelligence (AI) and machine learning (ML) play a crucial role in analysing borrower data, enabling more accurate risk assessments and informed decision-making. AI-powered systems can evaluate creditworthiness and predict potential risks, providing personalised mortgage options based on individual profiles.

Cloud-based mortgage solutions enable lenders to scale their operations, access data remotely, and maintain compliance with evolving regulations. These platforms offer enhanced security, data storage, and seamless collaboration between teams, ensuring a more agile and flexible approach to mortgage lending.

Rise in flexible loan products tailored to non-traditional borrowers, such as gig economy workers, entrepreneurs, and those with fluctuating incomes. This customisation helps increase accessibility to mortgages for a wider range of individuals, reinforcing the housing market's role in economic inclusivity.

Environmental and social governance (ESG) considerations are starting to shape mortgage solutions. Green mortgage solutions provide incentives for borrowers to purchase energy-efficient homes or make environmentally friendly upgrades. These solutions not only benefit the environment but also reduce energy costs for homeowners, creating long-term savings.

From loan origination to digital processing solutions and advanced data analytics, these trends and innovations in digital mortgage solutions help lenders reduce costs and improve customer satisfaction. Lenders can offer more personalised mortgage products while ensuring compliance, leading to a more agile and responsive mortgage process that meets the needs of both borrowers and lenders effectively.


The impact of mortgage solutions on customer experience

The digital revolution is reshaping lender services, with demand for digital mortgage origination often outpacing supply. Nearly 72% of borrowers now begin their mortgage process online, reflecting a clear preference for digital solutions. As a result, digital mortgage offerings are rapidly gaining traction, particularly in advanced markets.

From 2023 to 2024, customer satisfaction with mortgage servicers has risen, driven largely by improved digital channel experiences. These platforms enable smoother interactions, real-time updates, and more efficient problem resolution. Automation of routine tasks allows customers to personalise their mortgage journey, leading to better decision-making and higher satisfaction levels. Satisfied customers are 35% more likely to refinance with the same lender.
AI also plays a significant role in automating common tasks like answering queries, which boosts efficiency and satisfaction. Additionally, AI-driven analysis of user interactions helps optimise digital platforms, resulting in a 20% increase in customer satisfaction.


How can Infosys BPM help?

As the market continues to evolve, so too will mortgage solutions. Lenders are constantly innovating to provide more flexible, customised, and sustainable financial products, ensuring that mortgage solutions and financial instruments remain accessible to a broad spectrum of borrowers.

Infosys BPM delivers comprehensive financial mortgage solutions that cover the entire mortgage lifecycle. Our AI-powered automation, advanced analytics, and compliance-driven workflows optimise processes, reduce operational costs, and accelerate the journey toward the best borrower experience.


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