Digital Mortgage

The role of technology in mortgage lending

Traditionally, mortgaging has been a tedious task that took several weeks to complete. Once the borrower created a rapport with the bank, they had to approach a bank's branch and undergo a time-consuming process. At any point in this journey, the borrower wouldn't know whether the mortgage would be approved. This process required huge manual effort and money for both the bank and the borrower.

The COVID-19 pandemic has shifted the future of mortgages and the way financial institutions serve their clients. According to a survey, about 99% of lenders believe that technology can significantly improve the mortgage application process. This includes simplifying the process (74%), minimising data entry (67%), and reducing time to close (70%). This would, in turn, shorten the process and enhance customer delight.

What is digital mortgage technology?

Digital mortgage technology simplifies the mortgage process by offering online tools to complete mortgage loans remotely.* The technology enables businesses to produce and transfer mortgages and store the mortgage details without the help of a paper trail, a loan officer, or a closing agent.[1] Every part of the process works digitally with as little human intervention as possible.

Future trends in digital mortgage

The digital transformation wave has changed the way organisations view lender–borrower relationship. Here is the list of all the latest trends that define the future of mortgage lending:[2]

• Top-performing financial institutions processed loans 63% faster than their competitors. This includes shortening the average time of loan processing by 4–6 days.
• The share of fintech companies and online lenders in the mortgage industry has gone up by 33%.
• Consumers prefer a mix of digital and in-person services. The majority prefer to submit financial documents, learn about the loan, and pre-qualify the loan online. They also prefer to speak with a representative while reviewing the final loan details.
• The global digital lending platform will grow by $20.5 billion by 2028.
• One in four lenders reported that they are already investing in new technologies.
• About 64% of the customers say that the time it takes to close a loan is the most stressful part of the process. Most customers expect loan closure within 15–30 days.
• About 59% of millennials and 70% of generation Z applicants want the process to be completed entirely on a mobile app.
• Businesses can save up to $1 billion annually by notarising the documents remotely.
• About 81% of customers prefer to e-sign documents rather than visiting a branch.

With such statistics, the future of digital mortgaging is certainly shining bright.

How does a digital mortgage application work?

To simplify the process, we will take an example of a residential mortgage loan. The general flow of a digital mortgage application process is as follows:[3]

• The lender provides an online form to the applicant.
• Most of the fields in the application are pre-filled based on the lender's credit history, income, and assets.
• The customer enters the remaining information manually and uploads scanned copies of the relevant documents.
• Once the customer completes the form, the information is instantly transferred to the lender to jumpstart the loan disclosure and processing (if approved).
• The customer can complete these steps either from a laptop or a mobile application.
• The online system automatically updates the customer at every step of the loan application process.

As customers become comfortable with technology, digital mortgages gain acceptance for their simplicity and speed.

How can Infosys BPM help?

To enhance the borrowers' experience, Infosys BPM uses artificial intelligence (AI), machine learning (ML), analytics, mortgage analytics, and robotic process automation solutions (RPA) in digital mortgage operations. This ensures complete digitisation, a paperless process, and quicker loan disbursement. It allows buyers to make decisions faster and get cheaper rates. Our primary focus at Infosys BPM is improving the processes and operational efficiency using deep insights. We achieve this by providing:

• Process assessment for a complete ROI realisation for the lender
• Mortgage solutions:
• Document extraction and classification
• AI/ML conditioning solution
• RPA-based customer fulfilment
• Advanced analytics and deep insights
• Master data management
• Knowledge management
• Intelligent task management

*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 organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive yet modular suite of services is doing exactly that. Equipping organizations 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 organizations that are innovating collaboratively for the future.