Innovation in the mortgage industry - a faster route to "yes"

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Technology, innovation and new market entrants are disrupting all aspects of our lives, both personal and professional, and the mortgage industry is certainly not immune.

Mortgage professionals and consumers looking to purchase a home have been affected by unique challenges and opportunities created by the rapid pace of change.

For mortgage professionals, innovation in the industry is being shaped by technology, regulation and competitive forces, and by consumer expectations.

Mortgage origination in the digital age

The emergence of the ‘iPhone culture’ is driving a shift in consumer behaviour, where customer experience is key. Immediacy and personalisation are no longer added bonuses – they’re the norm.

This mindset presents a challenge when buying a home. Lenders, brokers, lawyers, real-estate agents – everyone involved in the path to purchase is tasked with finding the balance between ease and simplicity, while also meeting increasing regulatory compliance obligations.

But the opportunities presented by a digital mortgage origination process shouldn’t be underestimated.

The age of the digital mortgage should be viewed through three lenses: how digitisation can improve the customer experience; how it can reduce costs and improve lender efficiency; and how it can help lenders comply with regulatory obligations.

Delivering a better customer experience

A study by Equifax UK revealed that 20 per cent of consumers in the UK have had an application for a financial product rejected, and following that unsuccessful application, 62 per cent of those were unlikely to use that company again in the future.

The study illustrates the implications of not properly knowing your customer – including not marketing the right products to the right people, and not fully understanding each consumer’s transactional and credit behaviour.

This lack of knowledge may increase the chances of a rejected application – an outcome that may be detrimental to both the consumer and the lender, both of whom come away from the interaction empty handed.

Consider this finding in the context of mortgage applications, which remain one of the most challenging and arduous parts of buying a home, and it isn’t unreasonable to conclude that knowing the customer better can significantly improve the customer experience element of the mortgage origination process.

For Equifax, harnessing the power of a digital process is key in finding the balance between lender compliance and ease for the consumer.

Industry-wide improvement

Innovation in the mortgage space is also an opportunity for lenders, who are constantly searching for ways to become more efficient.

The additional data made available by a digitised system allows lenders to better understand who the customer is, and to quickly reach a decision.

This helps streamline the mortgage process, delivering immediacy for the consumer and improving efficiency for lenders – which, in turn, has a positive impact on a lender’s bottom line.

Facilitating responsible lending

To further complicate matters, banks and lenders must also ensure they are complying with their responsible lending obligations while striving to deliver the best possible customer experience.

Regulators have been placing a greater emphasis on responsible lending, aiming to avoid situations where consumers borrow beyond their financial means, saddling them with a debt they won’t be able to repay.

With more robust analysis, lenders can make more efficient decisions for eligible customers.

The mortgage process of the future

Equifax sees the digitisation of the mortgage application journey as having the potential to make the process smoother and more rewarding for all parties.

Already, Equifax has been using its services, such as digital income verification and expense categorisation, to empower banks and lenders to make swift, responsible decisions and put the right product in the hands of the right consumer.

A faster route to yes is a win-win for lenders and consumers alike. Equifax is excited to help our customers realise the power of digitised data and reap the benefits of innovation in the mortgage industry.

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