Mobile strategy plays key role in winning younger borrowers: report

Nearly all mortgage businesses see the value of customer acquisition, and many are plotting out a mobile strategy to reach the next generation of borrowers, according to research from Arizent.

Approximately 98% of respondents said customer acquisition was a high priority for their companies in a survey of over 100 home finance professionals conducted by the parent of National Mortgage News. More than four in five, or 82%, went as far as calling it critical to their success. At the same time, though, even as companies understand the importance of having an outreach plan to find customers, their investment in them and satisfaction with the results varies widely.

Lenders appear to realize that the most effective way of attracting new consumers in the future, especially Generation Z, may be on their phones. Raised in the smartphone age, Gen Z has spent hours a day consuming content on mobile devices before they were even old enough to open a bank account. In 2019, Morgan Stanley determined that 60% of teenagers knew how to use a smartphone by age 14.

Thus, it might not be a surprise that over half of all mortgage businesses, including 52% of banks and credit unions and 60% of nonbanks, cited outreach via mobile content as one of their top methods to acquire younger customers. 

Even though borrowing volumes currently remain subdued compared to the record-breaking originations boom of 2020 and 2021, housing industry researchers expect an uptick as soon as 2024. And as more members of Generation Z mature, a majority of them say they plan to become homeowners, making the current period pivotal to capturing their attention.

"Our advertising strategy has shifted to include more digital marketing, such as ads on social media and organic content created by influencers, in order to attract younger customers," wrote one survey participant, a director of a national bank or credit union 

While on their phones, consumers spend plenty of time on social media, where there is a potentially lucrative opportunity for companies trying to market themselves to younger demographics and stay top of mind. "It gives our organization a platform to increase brand recognition and forge connections with new audiences," said a department head at a national mortgage broker in an open-ended response about the social media use.

Close to 93% of businesses said an active social media presence was important for acquiring Gen Z customers, with an even higher share of 96% seeing it as key to finding younger millennials. The share fell to a still-elevated 89% for older members of the millennial generation. 

While social media is used by those in nearly every part of the mortgage industry, banks or credit unions are employing it more frequently than their peers at nonbanks and brokers. At the same time, though, their higher level of prioritization correlates to greater satisfaction in the results, with 94% of banks and credit unions saying social media initiatives were successful. The share fell off to 67% and 66% among nonbanks and brokers.

But the variations in approach and the degree of prioritization between banks and credit unions and other mortgage businesses don't end at social media usage. While a vast majority of companies surveyed consider younger consumers an important demographic, the share of depository institutions calling them a critical priority was 58%, and fell off to just 17% and 20% for nonbanks and brokers. 

A similar gap appears in companies' relationship to data science. The 58% share of banks and credit unions who said they were using it aggressively far outpaced the 17% and 29% at nonbanks and brokers. But as observed with social media involvement, companies making data science a priority reported a high level of satisfaction in both the quality and quantity of leads produced.  

If there's a leading factor behind how businesses perceive the success and sophistication of their customer acquisition efforts, it may be size. Companies that produced greater than $1 billion in production were more likely to rank social media and data science as highly important lead generation methods compared to smaller counterparts. 

Budgetary concerns are largely behind the disparity. Almost two-thirds of companies, or 65%, of businesses under the $1 billion threshold said a lack of available funds was one of their biggest impediments preventing them from pursuing more targeted marketing, compared to the 28% share who generated greater than that amount.