The mortgage market, which entered a massive recession following the crisis of 2007-2008, is now fully recovered and showing steady growth. According to recent stats, during the first quarter of 2021, the value of gross mortgage advances was $83.3 billion. This is 26.5% higher than in Q1 of 2020, and also the highest level since 2007. As the number of mortgage applications grows, lenders are seeking to automate and streamline this process. With mortgage digitization, applying for a house loan is now easier than ever.
In this blog, we will talk about mortgage digitization benefits, and reasons why lenders should consider developing digital mortgage solutions. Read on to learn more!
The Fast Pace of Mortgage Digitization
The mortgage industry digitization was actively gaining momentum prior to 2019 and the COVID-19 crisis. According to a Forbes survey, as much as 42% of lenders reported actively pursuing digitization, before social isolation and contactless services became relevant.
In 2019 the COVID outbreak forced people to expand their living quarters in order to adjust to working from home and to move to rural areas. The mortgage market digitization assumed an even faster pace. In fact, over 30 % of lenders, from big banks to online companies, reported that digitization played a major part in helping them deliver uninterrupted services to their clients and partners.
The value that organizations see in mortgage digitization can be narrowed down to four major benefits:
– Better customer service
– Reduced costs and improved efficiency
– Delivering a fully digital experience
– Gaining a competitive edge
Let’s now explore these benefits in more detail.
Why Is Mortgage Digitization Worth The Effort?
The recent stats show a steady market growth for digital lending platform solutions: the global market size is predicted to reach $20.67 billion by 2027 growing at a CAGR of 15,6%. So what makes lenders willing to build proprietary lending platforms?
1. Delivering Better Customer Service
Millennials, which now constitute the majority of house buyers, appreciate digital services and find the conventional loan application process boring and tedious. They also find the necessity to communicate with organizational officials, waiting in queues and filling out forms by hand annoying and stressful. Gen Z, which has grown up with digital services, is expected to be even more critical of the traditional loan application model. Companies are introducing digital solutions to cater to existing customers and attract young prospective applicants. As such, organizations list better customer service as their #1 reason for digitizing mortgages.
2. Improved efficiency and reduced costs
The traditional mortgage process is lengthy and requires careful evaluation and assessment of application documents and other info provided by applicants. Granting employees access to these documents in a digital format helps streamline the mortgage process and accounts for better speed and efficiency, not to mention customer satisfaction. In fact, fewer employees are now required to deal with mortgage applications, which reduces salary expenses. Needless to say, digital-only institutions save considerable amounts of costs on office rentals.
3. Delivering a fully digital experience
Delivering a fully digital experience not only caters to customers but also helps with verification and compliance. Complex income and employment verification routines are automated, and most of the digital platforms come with preloaded compliance frameworks updated when needed and helping protect consumers and lenders.
4. Gaining a competitive edge
Companies with a distinct competitive edge have shared the same approaches and philosophy: they are willing to put customers first and invest in the most up-to-date technological solutions, even if it doesn’t result in immediate profits. When technology becomes mainstream, these organizations end up having an upper hand.
Final Thoughts
As companies start to increasingly implement digital mortgage services, they also start to introduce organizational changes such as increasing their technology investments, hiring tech talent, accelerating technology development, improving staff training, introducing better cybersecurity practices, etc. Digital lending platforms also require development expertise as well as 24/7 tech support and regular updates. Tech partnerships, with this regard, assume high importance and will continue to play a crucial part in delivering fast and secure mortgage services.
Looking for a reliable tech partner to guide you through mortgage digitization? At VARTEQ we are ready to offer our experience and expertise in building digital lending platforms. Contact us now for a free consultation!