Technologies that have revolutionized other industries are–finally–revolutionizing the mortgage industry as well.
Technology has changed every part of our lives, from socializing, shopping all the way to property buying.
One way that the property industry is changing is with mortgages. With new technology being introduced, gaining a mortgage has changed dramatically.
Believe it or not, technology has revolutionized how we apply for and obtain a mortgage.
In the past, some even states offered free land or to apply for a mortgage, we would have to drop by the local bank or mortgage lender and speak to a Loan Officer. This could be lengthy and intimidating – and didn't always promise the result that you wanted.
Now, you can send, receive, and manage all your documents without even meeting face-to-face.
So, how has technology completely revolutionized the mortgage industry?
Below, we explore the main changes that technology has brought on the mortgage industry.
Consumer expectations
There is now a consumer expectation that at least part of the process will be online or digitally.
Even if this means that customers will be able to communicate with their bank or loan lender, in the same way, that they would anybody else.
There's undoubtedly an increase in consumers wanting to submit documentation electronically. The challenge in the mortgage industry is keeping everything secure, as well as accessible.
Technology has completely changed how we apply, communicate for, and manage our mortgages.
Regulations
One of the main challenges that the mortgage industry has, in terms of technology, is to work within the regulatory framework.
The main issue is, particularly with anti-money laundering. Lenders have to prove that a customer is telling the truth about their identity and that security is adequate.
While technology has undoubtedly simplified some processes, they still tend to do things in a formulaic manner. The most significant change will be the addition of a single source of application data.
Regulations are always a main concern, especially regarding money. Technology will unquestionably solve many of the regulatory issues in the future.
Automation
Technology is convenient, nobody can deny that.
Many people have embraced automation and technology, noticing that it removes any wasted effort from the mortgage process.
Specialist mortgage markets should not be threatened by automation, either. The complexity of their cases means that bespoke and personalized services will always be needed – automation just makes tedious tasks a little more manageable.
Robo-underwriting will never replace the human element in the process, it will only make it a little more straightforward.
Also, sourcing systems can immediately respond to applications with a quote and any information that they'll need.
Risk-based pricing
Many organizations may be rich with data, but do they genuinely know their customers?
Collecting the right data from people means that you can get risk-based personalized pricing.
Technology has already improved how we collect data, and also how we organized it.
AI
AI is arguably the primary way that technology has transformed the mortgage industry.
Lenders are turning to AI to reduce the time and cost it takes to close a mortgage.
AI is driving a new generation of software that will automatically process mortgages and replace slow and costly manual processes.
AI will also make OCR technology more obsolete. You might already know, OCR was invented almost a century ago – and it just feels outdated.
OCR is expected to give way to AI, which will enable machines to read content and react. This means that manual document processing is replaced by software-based robotics processing.
There's also a possibility that “instant mortgages” will become a thing. Consumers will be able to get their mortgage approved in days, rather than weeks. This has become known as an “Uber experience.”
It's safe to say that AI is changing the mortgage game.
Customer retention
Customer retention is a significant interest for mortgage providers. The potential to support customers, even post mortgage, is highly appealing – which is something that technology can help with.
Even just be able to communicate with your clients and customers more effectively can help to improve customer retention. To improve communication, consider translating or localizing your website. There are now many tools and services like PickWriters that allow organizations to delegate translation and localization projects without hiring in-house teams.
Interest rates issues
Technology can also be used to predict which customers are more likely to be affected when interest rates increase.
You can use technology to understand a customer's true situation and identify vulnerable customers. Once identified, you can train your staff to be able to properly deal with these vulnerable customers.
ID verification
As you know, a customer has to provide ID documentation to the estate agent, lender, intermediary, and the conveyancer.
Imagine if there is an ID hub for all verifications? This would allow every stage of the process to access the ID quickly and straightforwardly.
Perhaps blockchain technology can introduce this kind of ID hub.
Helping with data
The main reason that the process of securing a mortgage has been so complicated is down to the vast amount of data involved.
Technology can bring fragmented systems together – from credit files, all the way to appraisals and contracts.
Mortgage originators can't access loan-related information, like comparables and financial history, from anywhere. This makes it easier for everybody involved.
All in all, this has completely shortened the mortgage process.
Conclusion
Just like with every type of industry, technology has completely revolutionized the mortgage market.
For both the lenders and those applying, the process no proves to be much shorter and less stressful.
As technology and AI develops, the mortgage industry will undoubtedly reap the benefits – allowing for faster, more accurate, and more personalized services.
