The mortgage industry has been historically behind the ball when it comes to both meeting customer expectations and embracing rapid change, particularly when it comes to technology.
As borrower needs evolve, what can mortgage lenders focus on to ensure they are investing in borrower satisfaction as the mortgage origination process rapidly changes in the wake of COVID-19? Let’s take a look at 6 focus areas to improve borrower satisfaction in today’s market.
1. A digital mortgage experience
According to J.D. Power’s 2019 U.S. Primary Mortgage Origination Satisfaction Study, digital mortgage has a growing influence on borrower satisfaction. Overall borrower satisfaction improves as digital plays a larger role, and satisfaction with mortgage originators with digital services was up 14 points (on a 1,000-point scale) in 2019 over lenders without digital solutions.
Increased utilization of digital and mobile channels is partly to credit, with the average borrower using 3.1 different channels throughout the mortgage process, with phone (63%) and email (70%) as the most commonly used channels (mobile mortgage applications, on the other hand, only accounted for a mere 15% of interaction).
COVID-19 has forced many mortgage lenders to get on board the digital mortgage train, a trend that will likely persist even after the pandemic subsides.
However, reaping the benefits of digital solutions go far beyond software launches and implementation initiatives.
Digital solutions need to be integrated throughout your entire origination process, infused throughout your operating model, and woven into the very fabric of your culture
“Not all of companies have availed themselves to leveraging digital tech,” said Faith Schwartz, president of the consulting firm Housing Finance Strategies. Schwartz went on to point out that the mortgage companies using lending technologies that leverages consumer data points will likely continue to be the most disruptive to lenders who are relying on more traditional modes and methods for originating and servicing loans.
2. A premium on customer service (even in times of high volume)
While JD Power’s 2019 borrower satisfaction survey does reveal a year-over-year growth in borrower satisfaction, the survey reveals that borrower satisfaction sharply declines as loan volume rises.
Q2 of 2019 saw a 54% growth rate over Q1 2019, which was accompanied by a 16-point decline in borrower satisfaction (on a 1,000-point scale)
Notably, borrower satisfaction declined more drastically for home purchases than for refinances in that same quarter.
“Mortgage originators have been consistently transforming their businesses by adding self-service technology tools and reducing customer-facing staff, but when put to the test by an unexpected surge in refinancing volume, this approach fell short of customer expectations,” said John Cabell, Director of Wealth and Lending Intelligence at J.D. Power.
Cabell continued, “It is critical that originators get the balance right between tech and staffing to be able to deal with the swings in loan volume that can dramatically change from month to month.”
3. Convenience (with a catch)
In the age of Amazon, your borrowers are used to widespread digital accessibility, on-demand service, and near-instantaneous wish-fulfilment. That’s why Rocket Mortgage’s “push button, get mortgage” strategy resonates with borrowers who are used to getting what they want, when they want it.
As COVID-19 has more and more people relying on digital services like grocery delivery and telemedicine, the importance of a digital mortgage experience becomes even more crucial to lending success.
However, as we all know, “push button, get mortgage” is great in theory but less stellar in practice. That’s because it misses the mark in understanding that borrowers want convenience and digital accessibility — but only up to the point where they have a question or need guidance. Then it’s about how quickly they can engage the lender via their preferred communication channel when they need help.
Even though digital mortgage tools are becoming a staple in the origination process, the most impactful tools that positively influence borrower satisfaction are those that make the tedious, manual tasks easier while providing clear-cut, efficient methods to communicate with the lender at the moment a question arises.
Real-time loan status updates are the most impactful on overall borrower satisfaction. When mortgage borrowers are given access to real-time loan state updates, overall satisfaction scores are 140 points higher on average (on a 1,000 point scale).
4. Speed of contact
The most impactful driver of borrower satisfaction is the speed of follow-up after an initial inquiry from the borrower, and speed of response when confirming loan terms and payment.
After a borrower reaches out for the first time, overall satisfaction declines sharply for each day spent waiting to be contacted by the lender. It doesn’t matter if you do everything right after the initial lag in speed of contact; you can close the loan in 10 days and the borrower will, statistically, walk away unsatisfied because they were left hanging for several days at the start of the process. That first touch is crucial to starting off on the right foot and ensuring borrower satisfaction throughout the process.
Overall satisfaction among customers who are contacted within one day of inquiry is 869 (out of 1,000). Satisfaction falls to 852 after two to five days, and 806 after six or more days.
5. Empathy & education
Even the best customer satisfaction initiative is bound to fall flat if we forget the human element and merely focus on the data. When it comes to the customer experience, emotional connection is actually a better predictor of customer behavior than satisfaction and advocacy combined.
Over the last decade, the top 10 most ‘intimate’ brands (i.e. brands built upon fostering an emotional connection with consumers) have consistently performed better than the Fortune 500 and S&P indices for both revenue and profit growth.
Furthermore, a Harvard Business Review study found that customers who are ‘fully connected’ emotionally with a brand are 52 percent more profitable than ‘highly satisfied’ customers.
For mortgage lenders, there is clear opportunity to tap into the (largely negative) emotions experienced by borrowers throughout the origination process and transform them into positive emotions to enhance overall borrower satisfaction.
One 2017 survey of mortgage participants found that 75% of recent borrowers compared the mortgage process to a painful doctor or dental visit. One borrower even described the mortgage experience as a “financial colonoscopy.”
Especially as face-to-face communication has become near-impossible, it is crucial that lenders focus on how they can provide adequate financial education and advice through digital channels so the anxiety of the mortgage transaction can be somewhat alleviated.
6. Consistency across the digital borrower journey
In the financial industry, where fewer than 30% of consumers trust most major financial brands, research shows that consistency on the customer journey is the most reliable way to build trust and facilitate long-term growth.
With so many touchpoints along the borrower’s journey to close comes opportunities for inconsistency. Take a good, hard look at the mortgage process through your borrowers’ eyes, looking for ways to improve the digital borrower journey from application through to clear-to-close to ensure the borrower experience is streamlined and consistent.
High volume is not an excuse to let borrower satisfaction fall by the wayside. As COVID-19 continues to disrupt how we live, work, and play, it’s imperative that savvy mortgage lenders invest in improving their borrower journey for the most seamless digital experience in our increasingly remote world.