Consumers, not technology, will drive digital mortgage disruption

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It's 2017 and most recent home buyers still rank a day at the DMV above their last home closing experience. Everyone, including the financial services industry itself, anticipated that business-to-consumer "fintech" disruptors would singularly redefine how consumers obtain a mortgage, similar to what Silicon Valley did for ride hailing and personal tax filing. Well, we're still waiting.

Meanwhile, the ramping down of Sindeo created more buzz than the average mortgage originator shutdown because of its venture backing and Silicon Valley pedigree. There will invariably be talk about the demise (and reprise) of Sindeo being the result of the complexity and high cost to build technology to enable an end-to-end online experience. There will also be talk, particularly from established players, of mortgage being a relationship business in which technology has limited space to influence.

Don't believe it. The real takeaway here is that technology is an enabler, not a catalyst itself. As any successful mortgage origination company knows, success is tied to customer acquisition and customer delivery. Just like many traditional originators, Sindeo struggled in these areas. Technology isn't a magic bullet for success, and just doing something digitally doesn't change how it fundamentally works.

The change agent is actually the consumer; technology just helps make it happen. Consumers vote with their thumbs and their feet and the market will respond accordingly. At every opportunity, in every industry, consumers have voted that they want the ability to approach transactions on their own terms, and at their own pace. Banks that know this and offer the consumer options for a different experience are already on the journey.

In fact, the whole industry is already on the journey, coming at it from different directions. OpenDoor and Credit Karma are moving into the mortgage brokerage business, Zillow and Quicken Loans are beginning to facilitate real estate transactions, while behemoth banks are rolling out an entirely online mortgage experience. What do all of these trends have in common? They are moving to the consumer, rather than insisting that the consumer come to them.

It won't be clear for a while as to how it will all play out, but it is safe to say that offerings that put the consumer first will be best positioned to create true transformation in the space. One can also safely posit that as highly regulated as the space is, and — more importantly — as intertwined with the surrounding ecosystem of ancillary stakeholders (real estate, title, settlement, etc.), change will be incremental and experimental. If you're waiting for the overnight Uber-like disruption, you're missing the real change happening all around you.

Finally, in this intertwined ecosystem, it will take a village. Innovative partners focused on addressing consumer pain points will push the industry forward, such as a true "search and transact" self-service experience for consumers. This general convergence of real estate and mortgage is what consumers want.

Make no mistake — just as legacy on-premise software providers were skeptical about their customers' willingness and resolve to move to the cloud, many lenders, title companies, and real estate agents remain unconvinced about consumers' resolve to control more of their home buying experience, and can be expected to obstruct such progress. But true disruption in this space will not be borne out of fintech's focus on digitization. True disruption is happening right now, and it's rooted in how fintech is helping lenders meet the consumer's desire to self-serve.

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