How Mortgage Lenders Can Unlock Increased Productivity & Profit
We all know the industry is in a state of margin compression, and will most likely continue to be for the foreseeable future. One of the most important levers in increasing margin is increased productivity. At Maxwell, we’ve witnessed how technology, when used and implemented correctly, can have drastic improvements on a lending group’s productivity & profit margins.
And even though we are a bit biased, we’re not alone.
In the eyes of industry executives, the single largest benefit of a digital mortgage solution is internal cost reduction, according to the January 2018 MBA Technology Profile.
When the aim is profitability, it’s clear that finding ways to save time and maximize lead conversion is critical.
Today, 55% of lenders invest in technology such as CRMs to nurture and manage sales, yet less than 24% have technology solutions with features designed to improve efficiency and reduce costs such as document checklists, messaging collaboration, and verification services. Only 24%!
What’s even more shocking is that in total, only 3% of the $7,300 loan production expenses is invested in technology, while 66% is spent on people-related costs. What’s clear from those numbers is that, while the industry has become increasingly complex, the processes and workflows have not adapted. We as an industry must challenge each other to adapt and change processes to garner the results that we want to achieve.
We must quickly frame ROI to inform our decision-making when investing in technology to be confident that we’re on the quickest path to improved margins and increased profitability. (On this topic, see Maxwell’s whitepaper, Happy Borrowers and Why They Matter).
The True Value of Mortgage Technology
The value of technology is often seen in four key areas: enhanced collaboration, automation of manual tasks, improved decision-making and service innovation.
Mortgage lenders of all sizes have their work cut out for them as they adapt their processes and workflows while fending off new digital entrants, like Rocket Mortgage and Better Mortgage. We believe that fundamentally different expense structures will emerge amongst traditional lenders over the medium-term as customer interaction costs, processing time, and underwriting automation continue to take hold.
In the short term, targeted investments in core capabilities that reduce cycle times are critical for a successful impact. Every day, we see lenders reaping tangible value from mortgage technology that positively impacts their bottom line. Mortgage lenders investing in technology derive the most value from:
1. An Intuitive Borrower Portal
A borrower portal facilitates more efficient customer interaction with intelligent automation capabilities like machine-learning-driven task lists, automated reminders, and integrations to centralize other tools required in the process. A well-designed borrower portal enhances the ease-of-use for borrowers and drastically improves the consistency and quality of the borrower experience
2. Accurate Borrower Data
Accurate borrower data, gathered directly from the source, reduces processing time to help better qualify and engage borrowers as legitimate and qualified borrowers.
3. Streamlined Communication
Clear, consistent, and centralized communication improves borrower engagement and reduce time spent digging through inboxes and responding to emails.
When researching and evaluating mortgage technology, it’s important to know your baseline metrics to understand what results you need to see in order to yield a positive ROI. Every lender is different; by finding the right technology—and, more importantly, a technology partner that understands you business and your desired results—you set your business up for success for years to come.
The established processes in the mortgage industry are slowly sucking away our profits and reducing our margins on each new loan. Increasingly stringent regulatory demands, a higher volume of paperwork, and higher interest rates are the current reality for lenders.
Challenging your teams’ performance and productivity can unlock the key to profitability and increased margins in your business.
Technology can play a critical role in your organization, not by replacing your workforce, but by empowering them to devote their time and effort to high-ROI activities like increasing borrower satisfaction and growing referral networks.
You control the ability to create a process fueled by efficiency and productivity. Let’s get growing!