Lenders are not deploying mobile technology because doing so would magnify inefficiency and increase risk in their operations, to paraphrase Bill Gates.
Few would question that the technology in place at many large lenders, certainly the top 10, can handle mobile technology, but it’s the processing piece that would make adoption difficult—and give them fits.
To help mitigate risk, lenders require “touch points,” where loans are reviewed, quality checks are performed and risks can be managed.
That gives risk managers and others an opportunity to read the documents, identify areas of concern and to review data for inconsistencies. Removing them to support the mobile channel exposes lenders to levels of risk they consider unacceptable—especially in the aftermath of the mortgage bubble.
Handling loan applications, customer service and servicing through a mobile device, for instance, would mean removing the touch points to optimize the performance of the technology. Retaining them and developing a mobile channel would make the process too slow and lenders could never keep up with the business.
That explains why just 9.1% of bank risk officers considered the increased use of mobile technology as the financial institution’s top priority, according to “US Consumer Credit Risk Tends and Expectations,” a survey from Professional Risk Managers’ Association that was released earlier this month.
There is little doubt, however, that borrowers consider mobile access to be much higher on their wish list than do lenders.
To be sure, the disconnect between borrower and risk managers is understandable: Borrowers want to feel coddled and that means doing business through the channel of their choice. Risk executives, in contrast, want to strike a balance satisfying borrowers’ needs, while insulating lenders from unnecessary exposure.
A top priority, 35.2%, was improving the customer experience, according to the survey. These executives are sophisticated enough to understand that iPads, smartphones and Androids can help achieve that goal.
But as a consumer-facing tool, lenders are taking a “show me” the risk mitigation solution before they deploy the technology.
As a result, few lenders have begun to explore, much less integrate, mobile technology into their business practices—and they won’t until the risk issues can be satisfied.
One lender, however, has released a mobile application.
Republic Mortgage Home Loans created, “My Mortgage App,” billed as the first tool that provides borrowers complete transparency into their loans, through a personalized dashboard, populated with current information on the loan.
The lender devoted nearly a year to develop the mobile application, which thousands of borrowers are expected to rely on. The goal is to make homeownership an easy and enjoyable process.
Among the features offered are the following:
- Loan applicants and borrowers can track their loan application from submission to approval.
- Allow borrowers to follow changes in their mortgage balances and monitor payments.
- Track interest rates and home values in their communities.
- Contact their loan officer, real estate agent, insurance agent and title company to receive updates through “Mortgage U,” an education database dedicated to homeownership.
As a tool to make originating and servicing loans easier, more fun, and creative, few technologies, if any, are the mobile channel’s equal. It is about speed, straight through processing, connectivity—but it simply does not lend itself to mitigating risk very easily.
That will translate, undoubtedly, into slow adoption rates and frustrate technology purists but it shouldn’t. That’s because the lesson is clear: To the risk adverse, go the spoils of the mortgage industry.
Matt Strickberger is the managing partner of OnPoint PR and Consulting LLC, a public relations firm that represents lenders, servicers, technology companies and others. He was editor of Mortgage Technology magazine from 1997-2000. If you have comments or suggestions for future columns, email him at mstrickberger@onpoint-pr.com.
