The Big Digital Shift in the Mortgage Industry


In the last few years, the market dynamics of the mortgage industry have fundamentally shifted. The average age of homebuyers was already at a decline when the pandemic hit in 2020. Now, after a period of sluggish growth, demand is expected to pick up and the market will be more fiercely competitive than ever before. Alongside traditional lenders, fintechs and digitally native startups are going head to head – necessitating rapid digitization. According to new research, 82% of banking and lending executives believe digitization to be key to transforming mortgage processes and keeping up with future demands and opportunities.

Specifically, technologies like artificial intelligence (AI), machine learning (ML), robotic process automation (RPA), and the cloud will help lenders deploy low-touch, efficient processes that provide customers with a seamless borrowing experience while cutting costs at the backend.

Home-Buyers Get Younger and More Digitally Savvy

The average homebuyer in the US is now less than 37 years old. Indeed, research indicates that 98% of mortgage customers are 37 years old or less, and the share of Gen Z buyers is constantly increasing. As of 2021, Gen Z (born after 1997) represents 32% of the global population and will soon swarm the housing market with a new set of expectations and needs native to the digital era. After all, this is a generation that grew up well after the popularization of the internet and during the rise of social media and e-commerce.

Coupled with the changes of the pandemic, low touch will now be the norm in the mortgage sector.

This is precisely why so many mortgage executives report digitalization to be a top priority. Across every stage of the mortgage lifecycle – from customer targeting to origination and underwriting, servicing, and portfolio management – there are efficiency gains to be unlocked at every step. However, surveys suggest that just 1% of mortgage lenders in the U.S. are confident in their digital capabilities at the back office. This inevitably adds to your operating costs. It takes approximately $9,000 per customer to initiate a mortgage loan in the U.S. and costs $7,227 to close it. Loan files exceeding 500 pages require around 50 days to fully process.

Digital enablers like AI, ML, RPA, and the cloud are essential to addressing these legacy inefficiencies and prepare for a new era.

What Lenders Can Do to Keep Pace and Capitalize on Opportunities

Lenders need to take a leaf out of the fintech playbook. Fintech firms that are close to full-scale digitization can process loan applications 20% faster while ensuring 25% lower default rates than the U.S. average. This entails strategic interventions at key junctures of the mortgage lifecycle:

  • Automation in loan origination and underwriting – Lenders can predict applicant behavior through custom AI/ML models. RPA bots and intelligent document management can help process the necessary paperwork using a fraction of your regular manual efforts.
  • Efficient and tech-aided servicing – AI/ML can power predictive models that tell you which borrowers to engage, which relationships are at risk, and how to increase each customer’s lifetime value. 52% of older millennials will be repeat home-buyers, and lenders need to anticipate such opportunities without relying on subjective human discretion. You may also rely on remote and offshore support to provide borrowers with 24/7 availability.
  • Low effort total experience (TX) model – A TX approach ensures that there is a focus on the quality of digital experiences at every level, from user experience and employee experience to customer experience and multi-experience. This will minimize the friction between digital systems and data silos, which is a common problem among non-digital-native lenders.

Nexval Brings Future-Ready Tools for Deployment TODAY

Nexval is a proud digital partner for the U.S. mortgage industry, helping you streamline mortgage IT transformation. Our solutions make use of the latest innovations in digital technology so you can reduce costs, eliminate errors, and manage risk – all the while delivering a “stickier” experience for borrowers and predictive outcomes. With 40+ automation tools, we have successfully built ready-to-use automation scripts for more than 90 mortgage service processes. This also includes sophisticated sequential RPA bots to automate specific servicing functions.

As lenders consider a futureproof back-office overhaul, it is vital to benchmark your current levels of maturity and build accordingly. We offer a free, ready-to-deploy discovery phase solution to aid in the compliance and techno-feasibility study for every project.

Further, a futureproof digital environment needs to be hosted on the cloud to reduce your operating costs and drive agility. Nexval helps you modernize regardless of the current levels of digital maturity, through fresh development of cloud-native apps as well as cloud migration of legacy apps. Throughout this, we maintain a strong adherence to cybersecurity and DevSecOps principles to prevent any exposure of sensitive data (like the one that recently caused a mortgage company to pay out a $1.5 million settlement).

Our goal is to help you achieve near-STP levels of efficiency – where your human workers are engaged in the most value-added tasks, RPA bots take care of documents and data entry, and there is stringent monitoring by a managed service provider and through BI dashboards to preempt any bottlenecks.

Finding a Customized Solution for Your Needs

Right now, mortgage lenders stand at the cusp of an incredible opportunity. More homes sold in October 2021 than any other October in recent history, and median prices have also increased. Goldman Sachs predicts a multiyear boom, even as the majority of Americans (81%) feel confident about conducting high-value financial transactions online.

Lenders that pivot on time and effectively, will find themselves in an advantageous position. It is vital to seek help from battle-tested experts, particularly if you require a customized solution that doesn’t try and impose a one-size-fits-all model. Nexval employs 1000+ subject matter experts and a bleeding-edge DevOps team to configure solutions that are the best fit for you.

Connect with us to know more or reach out to a Tech Guru for an insightful exchange of ideas and future possibilities – in this exciting new space – in 2022.

Subhankar Saha

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