Would it surprise you to know that a handful of online lenders that barely existed just five years ago have emerged today to capture 10% origination share from traditional mortgage lenders?
Digital technology and rapid changes in customer preferences are threatening full-service banks that do business primarily through branches.
Accenture research indicates that this disruption is more widespread and happening faster than many bankers realize. Our survey of over 2,000 retail banking customers across the United States found that, while branches remain important in the minds of most consumers today, digital banking is making sweeping inroads.
- Sales of mortgages via the Internet increased 75% last year from the year before, while sales at branches fell 16%.
- Mobile banking has increased nearly 50% since last year.
- Consumers view online banking as the single most important area for banks to invest in and develop.
Brand loyalty is another concern: our research found that many consumers don’t think that their primary bank has the best offering.
More than 60% of survey respondents have chosen a provider other than their primary bank for home mortgages. Even more go elsewhere for auto loans.
All of this points to a new reality: digital banking has become indispensable. Indeed, our market analysis indicates that by the end of the decade, 35% of revenues will be lost by traditional full service banks to digital innovators.
By enabling a digital mortgage experience, lenders and servicers can compete more effectively in an evolving market.
One way banks can do this is by engaging prospects prior to the application process and providing them with important information on what to expect during the mortgage process and how to financially prepare for the obligations of home ownership.
Banks can deliver this information by striking relationships with online real estate service providers.
Thus, if a consumer searches for active listings using an online real estate database, she would find information sponsored by Your Bank about the significance of her credit score, the documentation needed to obtain a mortgage, how long the process takes and a link back to the bank’s web site to initiate the application.
Any information that the prospect enters onto the website, such as her assets or the price range of the homes she is considering, should be stored on the bank’s data base.
If she decides later on to engage the bank, it will be able to retrieve her data without having to ask her for it, and it will also be able to make more relevant mortgage offers. More importantly, the bank has her information and contact preferences and can proactively reach out to build the relationship and better understand her needs.
Banks can also promote their self-service capabilities to engage with prospects on next steps, eventually making it unnecessary for borrowers to ever walk into a branch to fill out an application and negotiate loan conditions.
It is, undeniably, a digital world. Hopping on board that digital train can help ensure that your company stays competitive.
Ghazale Johnston is a managing director with Accenture Credit Services.