E-Payment Rate Approaching 50%
A study of mortgage borrowers found that nearly half of them now pay their monthly bill electronically, up from just 34% two years ago.
Moreover, electronic payment - whether through automated bank account debits or through online bill paying - results in higher customer satisfaction, according to a survey done by J.D. Power and Associates. (See related story, this page.)
Rockwell Clancy, executive director of the banking and mortgage practice at J.D. Power, said that electronic billing and payment results in more consistent and accurate loan servicing, which boosts customer satisfaction with their servicer.
Satisfied customers require less contact with their lender's customer service agents, resulting in lower servicing costs as well, he noted.
Mr. Clancy told MSN that the more payments are on autopilot, usually through automated clearinghouse payments but also through website payments, the less friction there is in the process, reducing payment and billing mistakes.
The significance of the trend toward electronic payment is that it boosts customer satisfaction while helping lenders control costs, he said. Mr. Clancy said lenders should promote electronic billing and payment as a result.
"It speaks to this idea that the customers themselves are seeking that option not only because they can but also because they find it is a better experience," he said. "The happier customers are, the less costly it is to service them."
Essentially, the J.D. Power study found that consumers view mortgage servicing as a utility. In general, the less contact they have with their servicer the more satisfied they will be, because they generally only need to call the lender if there is a problem. In general, the less contact borrowers have with their lender, the more satisfied they will be.
"The thing that really jumped out at me was that we found a very significant correlation between the cost to service a loan and the degree of customer satisfaction," Mr. Rockwell said, noting that the lower a lender's cost to service, the higher customer satisfaction tended to be.
"The emotional commitment in a mortgage servicing relationship is not high from the customer standpoint."
The J.D. Power and Associates survey was based on responses from nearly 13,000 homeowners who rated their servicer in the areas of administration of the account, the billing process, the payment process and the process of contacting the mortgage servicer if necessary. (See related story, also starting on page one).
Separately, research by Fort Knox National Company, Crone Consulting and Javelin Strategy & Research also finds increased use of expedited, electronic payment options across several industries.
While payment by phone is still the principal method of making expedited payments, a growing number of consumers prefer to use the biller's direct Web site to make payments, FKNC said in a news release. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com