Half of lenders now focused on improving both front- and back-end tech

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Nearly half of mortgage lenders are now putting "a great deal of effort" on improving both the front end and back end of their technology as part of their digital transformation efforts, according to Fannie Mae.

Because the survey was conducted in early February, before the coronavirus spread, the results "likely understate the benefits of digital transformation," Andrew Peters, Fannie Mae's vice president, single-family strategy and insights, said in an accompanying blog post.

By lender type, 67% of mortgage banker respondents are placing a greater effort on improving both the front- and back-end experience, compared with 53% of credit unions, but only 29% of banks, according to results that were pulled from the first-quarter Fannie Mae Mortgage Lender Sentiment Survey.

In the not-so-distant past, most lenders concentrated on making their sites consumer friendly, but they gave little concern to their back office's user experience.

Last October, another Fannie Mae survey found that only 16% of respondents said one of their tech upgrade goals was to improve both front- and back-end functionality. Front-end only was cited by 45%, while back-end improvements got a 36% response rate.

Still, the front end seems to get more attention. Over two-thirds of the respondents said they are placing a great deal of effort on improving borrower experience, while 58% said they are doing the same for back-end operational efficiency.

When it comes to the benefits of investing in a digital transformation, 89% that emphasized both front- and back-end improvements said the biggest benefit would be increased productivity, versus 66% of all other respondents.

In addition, 73% of those doing both said it would attract more borrowers, compared to 41% of all other lenders.

But the biggest net differential among the benefits cited was in response to lower workforce turnover. Among those accentuating both sides of the equation, 66% said lower turnover was a benefit of the digital transformation, compared to 30% of all other lenders.

At the other end of the spectrum, 3% said they were putting not much effort into enhancing their front-end technology, while 7% said that was true for their back end.

Role expansion is one of the touted benefits of a digital transformation. Those that are updating both ends were more likely to say the responsibilities of many key roles are expanding, while those which weren't said roles and responsibilities stayed the same.

"As the industry continues to evolve, it is critical for lenders to think strategically about their workforce management practices, including skills, structure and training, to ensure that staff adapt well to future role changes and deliver new efficiencies," Peters said. "This will be particularly important to help lenders remain competitive as industry-disrupting firms emerge, bringing with them new competitive advantages associated with the re-engineering of past processes and workforce roles."

There were 183 lenders participating in the first-quarter MLSS, with 71 from nonbanks, 73 from depositories and 38 from credit unions.

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