As we reach midyear, mortgage lenders confront a sluggish origination market and an increasingly competitive battle for customers. In order to hold onto, if not increase, their share of the shrinking origination pie, lenders need to embrace a more digitally focused mortgage experience.

Digital shifts are rapidly redefining customer preferences and expectations. Accenture research found a 50% percent increase in mobile banking activity and double-digit growth in online sales of banking products last year. Indeed, sales of mortgages via the Internet increased 75%, while sales at branches fell 16%.

Before embarking on the digital transformation journey, however, lenders must have the fundamentals in place. First, existing origination processes must be streamlined to ensure that closing dates and other deadlines are efficiently met. Next, lenders need basic digital capabilities to meet customers’ expectations, such as interacting with them online and via mobile channels.

Accenture’s roadmap for digital transformation includes four steps:

Full Integration. While many lenders may offer customers the ability to upload documents via online or mobile channels, these processes are often operationalized on the back end via manual steps and additional staffing. To achieve desired levels of efficiency, these processes must be fully integrated into back office technology and workflow. Lenders can also leverage technology to not only integrate images but auto-populate data into the LOS through use of OCR technology.

Extend Capture Methods. In a purchase volume market, the realtor and builder roles become increasingly important. By targeting digital capabilities at these critical third parties, lenders can engage with prospective buyers earlier, thereby increasing their influence in the market.

Advanced Analytics. In today’s market in which lenders are competing for a smaller pie, more sophisticated use of customer data and analytics can help identify underserved customer segments. For example, by effectively applying analytics to understand the risk profile of potential borrowers, a lender may discover that they are creditworthy even though they don’t meet the qualified mortgage underwriting standards. That kind of assessment enables the lender to compete for a set of consumers that other banks may forsake, thereby broadening its customer base.

Customize Experiences. By using analytics to predict behaviors and emotional drivers, lenders can identify borrower segments by common characteristics. That, in turn, enables them to tailor a customized experience. For example, the first-time home buyer segment is typically more risk adverse and may be less financially savvy than other segments. Thus, lenders may provide them with higher-touch services—educational materials and in-person meetings with a loan officer. In contrast, investor buyers are likely more experienced and have less emotional involvement. They value a lower-touch, streamlined and quick process.

As the mortgage industry continues to evolve, lenders need to invest in digital initiatives that help differentiate them. For those that move quickly, the reward can be stronger customer relationships and greater market share. 

Kelly Adkisson is an executive with Accenture Credit Services.