Mortgage Lenders Face Potential Backlash From ‘Over Automating’


A new report from the global professional services company Accenture shows that about 83% of U.S. consumers prefer dealing with human beings over digital channels to solve customer service issues. The report also found that 52% of consumers have switched providers in the past year due to poor customer service, and banks were among the worst offenders. (Other low-ranking industries were retailers and cable and satellite television providers.) The report, “Digital Disconnect in Customer Engagement,” was a worldwide survey and included 2,003 U.S. consumers in the sample.

In another survey from Chase that focused just on mortgage lenders – “Insights from the Mind of the Modern Homebuyer” – 68% of respondents say they are starting the home search on their own, with 45% using computers or laptops as the first step and 13% using their mobile devices. However, the report notes that although U.S. home buyers are more independent during the initial steps of the home search, nearly three-quarters of Americans (72%) want to meet with a mortgage professional as they consider financing options.

Although the surveys seem to indicate a backlash against automation, most industry professionals say they try not to alienate customers by becoming too reliant on technology. The key, they say, is to offer consumers a choice and make online options appealing in the mortgage application and underwriting process.

“Technology is a great resource for consumers looking to buy a new home,” says Sean Grzebin, managing director of retail mortgage banking for Chase, the U.S. consumer and commercial banking business of JPMorgan Chase & Co. “It allows customers to understand their options and helps us get documentation in a more easy fashion. But the idea that someone is going to complete an application on their iPhone and never talk to anybody and wire hundreds of thousands [of] dollars to buy a house – we still have a way to go.”

He adds that the data suggest that consumers have a comfort level with their mortgage bankers because those professionals have completed the process a number of times and have a high level of expertise. Still, technology does make the process easier for both lenders and consumers. “My prediction is, we will continue to see some really good technology add value in the process,” he says.

Consumers like having an option, says Nancy Pratt, vice president of business strategy and government affairs at Pavaso, which offers e-closing and consumer management technology solutions. “There are going to be some consumers who opt out of the electronic process and want to have a face-to-face interaction with a loan officer,” she says. “You need to make certain you are gauging that consumer and not forcing your process on the consumer.”

That includes consumers in different age groups. Although millennials tend to prefer self-service options and like to do research on their smartphones, these first-time home buyers do not necessarily want to do everything with automation. Pratt says Pavaso’s research has found that consumers up to age 70 prefer electronic versions of the steps leading to closing. Millennials, however, like a combination of automation and human touch. “They have never done this process before,” Pratt says. “They like the instant gratification of pulling up their mobile devices and seeing where they are in the process, but then they invite their parents or someone else to the closing.”

People of all ages expect the closing to be an experience with other humans sitting around the table. “Some things you cannot replace with technology,” Pratt says. “Closing is a celebration – you’ve gotten through it. If you rob anyone of that experience, I think you’ve done an injustice.” She adds that technology has made the closing more streamlined and less time-consuming than it once was.

Closing is an exciting day for everybody, so it has to include a human aspect, says Jim Reuter, chief operating officer of FirstBank, based in the Denver area. “If I was going to schedule a day off work, arrange movers and buy pizzas, I like hearing from a person on closing day versus a computer,” he says. In fact, when customers call the FirstBank customer service number, the option to talk to a person is the first selection on the main menu.

In the steps leading up to the closing, borrowers can do much of the process online or they can talk to loan officers at FirstBank’s branches. “Customers want both, and we are in the process of launching an omni-channel mortgage loan process,” Reuter says. “It’s the best of both worlds. That’s what we’re really striving for.”

Consumers need less personal attention for a mortgage refinance. “A refinance is a pure shopping experience,” says Eric Cummins, senior vice president and general manager of lending at D+H USA, a global provider of technology solutions to financial institutions. “There is no emotion – no attachment to talking to someone about the mortgage. You want to do it for the least fees.”

Cummins says even in home purchases, the desire for a mobile experience is growing. People want the option to fill out applications on their phones late at night, for example. “We see the consumer absolutely wants that flexibility,” he says. He adds that people also like getting status updates and daily texts as the closing date approaches.

Texts work especially well with millennials. “They don’t like to talk on the phone,” says Sue Woodard, CEO of Vantage Production, a marketing automation/customer relationship management company. “You can text them all day long.”

Still, Woodard points out that millennials do not necessarily prefer technology. According to the National Association of Realtors’ Home Buyer and Seller Generational Trends 2015 report, home buyers of ages 50 to 59 were more likely to apply for a mortgage online than people age 34 and younger. Again, that suggests that baby boomers have been through this process, while their millennial kids have not.

Lenders should use a combination of approaches, or automated thoughtfulness, Woodard says. Just as Facebook reminds users of their friends’ birthdays, so can lenders’ systems remind them to send updates to borrowers. “If you are using smart technology to remind you of times to make that contact, that’s the best of both worlds,” she says.

Lenders say they are indeed striving for a balance of technology and personal customer service.

Guaranteed Rate, a residential mortgage company based in Chicago, uses its Digital Mortgage solution to enable consumers to get approved for a loan anytime, anywhere. “People appreciate that convenience,” says Joe Phalen, senior vice president and divisional sales manager. “At the same time, consumers value being able to communicate with a knowledgeable loan originator.”

Phalen says the technology is effective for customers of all ages. “We have borrowers in their 20’s, as well as senior citizens, using the Digital Mortgage, and the average user age is 42, so it’s not only the millennial generation buying homes.”

Vienna, Va.-based Navy Federal Credit Union embraces a hybrid approach to the loan process, says Katie Miller, vice president of mortgage lending. “We understand our members’ needs and recognize that some of them, especially first-time home buyers, require more interaction and a human touch since they’re new to the process. We take pride in the excellent service we’re able to offer our members while making one of the biggest investments of their lives.”

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