2020’s mixed bag of mortgage takeaways

2020 was quite the year for the mortgage space. Like all industries, mortgage professionals navigated unprecedented challenges amid a global pandemic, soaring unemployment, an upended economy and government relief programs. The result: a mixed bag of takeaways. On the one hand, the mortgage industry demonstrated an unlikely agility and willingness to learn. On the other hand, 2020 also reinforced where the industry is weak and needs to adapt — quickly — to be able to compete.

Nimble spirit

Despite all of the uncertainty and volatility of 2020, the mortgage industry proved it can be nimble. The mortgage space immediately threw its support behind government-sponsored enterprises, increased its flexibility on appraisals and transitioned underwriters to remote work. The industry’s response to the pandemic has enabled mortgage lenders to transition to “the new normal” of business despite ongoing, continuous changes to regulations, rates and relief programs. This newfound nimble spirit will undoubtedly come in handy in the new year ahead.

Embracing technology

The pandemic thrust many industries — including the mortgage space — into rapid digital transformation. While the mortgage industry isn’t known for being overly tech-savvy, lenders have illustrated their agility by exploring — and increasingly accepting — new technologies. Lenders are learning big data and machine learning, for example, to enable them to mine the entire ecosystem and acquire insights about borrowers for improved speed, quality and customer satisfaction. And loan officers are learning that automation can make loan origination and service much more efficient.

AI-driven workflows are a huge 2020 takeaway because they standardize the entire delivery process, eliminate loan defects, boost productivity and accelerate scalability.

Customer experience

It’s comforting to see mortgage professionals adapting to new ways of work and leaning in to technology to help them work smarter, because the customer experience needs a dramatic overhaul. Simply put, borrowers are not pleased with the current application-to-closing experience. In fact, the mortgage industry’s net promoter score stands at a paltry 16 compared to the average for most industries of 44. This year has driven home the fact that consumers today expect a seamless process with a quick turnaround. By nature, the mortgage industry’s manually powered, document-heavy ways don’t align. Going forward, technology will be both a self-serving and a self-fulfilling prophecy for mortgage lenders — they have to adapt not only to compete, but, more importantly, to deliver.

Borrower questions

Finally, the mortgage industry has learned that a digital-first communication approach with borrowers is key to the customer experience. Rather than picking up the phone and waiting until a representative is available to discuss an issue, borrowers today start their search online and expect to find solutions within seconds. By adopting technology that makes information easily accessible to borrowers, lenders can significantly improve their level of customer service, which, in turn, increases NPS and reduces customer churn. This is an important takeaway knowing that 62% of customers looking for information will visit their lender’s website first but only 25% will find it to be the most effective channel for resolving an issue. More often than not, consumers have greater success in resolving their issues when they pick up the phone and talk with a representative, which, of course, takes time and costs money for both parties.

Going forward into the new year, the mortgage space should draw upon its resilience in 2020 and commit to improving the lender’s customer experience and process. And conveniently enough, agility and technology will be two of the best tools in their arsenal.