OPINION
AASHISH SHARMA
Rethinking the mortgage lending experience
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here is no denying the recent volatility of the real estate market. During the pandemic, US lenders saw record numbers of mortgage applications driven by the low cost of borrowing, whilst record-low interest rates fuelled a rise in housing prices across Asia-Pacific. Now, in mid2022, rising interest rates are cooling real estate markets as consumers rush to refinance into the best deal they can find for their mortgage. Regardless of the ebbs and flows of the markets, lenders are sharpening their tools as competition increases. The mortgage industry has been adopting technology to streamline the process of getting a loan, with the goal of making the consumer experience smoother and faster. It’s true to say that this step change is not evenly distributed. Many lenders are still engaged in laborious and repetitive fulfilment and servicing processes, meaning they are unable to scale their operations quickly enough to capitalise on opportunities. The rise of new fintech lenders, offering new digital end-to-end loan processing poses another challenge. At the same time, customer expectations are sky high in a world of Amazon, Uber, Airbnb and numerous other companies that have delivered frictionless digital experiences that delight their customers. A McKinsey study found that providing an “exceptional customer experience” can be a critical differentiator for consumers. As the world becomes increasingly digital, it has become necessary for mortgage lenders to adopt technology that can help them to make instant decisions, optimise loan pricing, respond quickly to the market, and improve customer experiences, putting them in a better position to compete and win.
AASHISH SHARMA Risk Lifecycle and Decision Management Lead, FICO
Common pain points for borrowers Personalisation is critical for consumers in Asia Pacific and they want companies to do better. For example in Singapore, a country known for its business efficiency and e-services, a Twilio report found that 81 percent of consumers said that they will stop using a brand if it does not personalise their experience, compared to the global average of 61 percent. A recent Forrester report has highlighted current gaps in the mortgage lending process that are impacting the customer experience and result in higher costs and a loss of market share. Mortgage borrowers are often required to email or upload personal documents such as bank statements,
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payslips, and tax returns, which are then manually entered, checked, and verified by loan officers. This lack of automation in the application process causes errors and can delay approvals by days or weeks, and even longer if there are errors. Further, departments and staff involved in mortgage origination and processing often must rely on different systems and platforms that have been built up over time, which makes it difficult to quickly access the information that they need. These disparate interfaces and systems end up creating data silos and information asymmetry, causing disjointed customer journeys, poor employee experiences, and process inefficiencies that hurt the company. In countries such as Australia and the UK where brokers are an important source of mortgage origination, being able to deliver a great user experience for them by automating processes can help greatly in customer acquisition. However, this important business channel is impacted when there are disconnects between the broker and mortgage platforms. Embracing simplicity and speed Mortgage lenders need to evaluate how they can leverage emerging technologies in their tech stack to tackle customer and business problems. A recommended approach is to align business processes with the customer journey, and in doing so, eliminate the most critical customer pain points in the mortgage application process and create longterm efficiencies for the business. Increasingly, as mortgage buyers move online, mortgage lenders can take advantage of data integration and aggregation to remove paperintensive processes and make applications simpler for customers. Consolidating systems with other financial or government institutions, which already hold existing financial information on customers, allows lenders to aggregate the necessary information on behalf of mortgage borrowers, instead of asking for repeat documentation. One recent example of this was Singapore’s OCBC Bank, which launched a 60-minute mortgage approval service in 2020 that integrated employment, income, financial assets, property details and repayment records using from a government data platform for citizens. Mortgage lenders also need to prioritise simplicity and speed via automation and artificial intelligence (AI). AI and machine learning are important tools to ensure operational efficiency and data accuracy in the lending process.
