PERSON OF THE WEEK: The impact of the pandemic, coupled with a strong economy and low mortgage rates, propelled mortgage origination volume to new highs in 2020 and the first quarter of 2021. Mortgage lenders never could have predicted this confluence of events, thus, many of them were unprepared for the subsequent spike in refinance and purchase volume. Furthermore, the pandemic made it all the more difficult to scale and respond the rapidly changing conditions.
Now that the “dust has settled” and lenders have adjusted their strategies and processes for handling the increased volume, the question is, what other areas of their businesses have been impacted by these recent (and abrupt) changes? As Paresh Deshpande, senior client partner for Tavant, tells MortgageOrb, one area where lenders must now shift their focus is consumer engagement – that is, if they are to continue to ride the wave. He says it is more important than ever that lenders be able to measure consumer engagement across all channels throughout the entire mortgage lifecycle.
Q: Why is it essential that mortgage lenders shift their focus to measuring consumer engagement?
Paresh: Consumer engagement is the key to success for mortgage providers now more than ever. Standard engagement practices simply will not cut it anymore. To achieve end-to-end engagement, it is crucial that brands measure customer interactions throughout all touch points within the mortgage lifecycle. Consistently engaging customers on various channels helps brands build and strengthen a “human-to-human” connection – and add value beyond just transactional relationships.
The pandemic created a wave of changes in the mortgage world, and subsequently rippling consequences akin to a “butterfly effect.” Essentially, even small changes in the state of the mortgage industry can result in large differences in the future. Changes have happened, and the future is now – interest rates are at an all-time low. We are seeing the best two years for lenders, especially now that we are also seeing an influx in new loan applications and refinances. The industry has pulled in so much volume that mortgage providers are beginning to lose track of their consumer engagement.
Q: What characteristics of the target audience do the mortgage providers need to engage with more?
Paresh: Who are these consumers? If you ask me – it’s us! It is you and me, who are at home using devices on average 21 times per hour. Every consumer is multitasking across multiple different devices throughout the majority of the day.
Lenders are not tracking their consumers and activity across all of their devices. The lead-to-application conversion rate will increase by 43% if lenders can identify the consumers’ needs by mapping their different devices and subconsciously drive the consumer to select the lender who will help him with the loan application. Imagine a world where loan officers have the necessary details of the consumer before making the first contact with them.
Q: Why is consumer engagement more important to measure for mortgage companies as opposed to any company?
Paresh: The volume of business is directly driven by the number of loan applications closed by the lender. Data collection of each application is abhorrently time-consuming, and it takes more than one person involved from the lenders side. Application delays happen all the time, sometimes even single-day delays caused by dependence on the customers to provide data. Post-pandemic, for every one-day delay, the lender is losing out on seven or more potential applications within the lender ecosystem. The mortgage industry needs to focus on consumer engagement to make the wise decisions in a timely manner. This will lead to more robust, healthy, and eventually loyal customer relationships.
Q: Why is it important that mortgage providers focus on engaging their customers more so post-pandemic than they have in recent years?
Paresh: Post-pandemic, the dynamics of interaction will have changed drastically. The human-to-human connection has been taken over by Zoom or FaceTime calls. Consumers are forced to be digitally-savvy across multiple devices. Today’s consumers are not willing to wait a full day to receive an answer regarding loan application. They expect immediacy.
At the end of the day, we are all pleasure-seekers. The instant gratification caused by Dopamine receptors within our brains has made consumer expect the lender to satisfy their crave for immediacy. The dinosaur age of adding 20+ identifiers to your website/mobile app and then hiring an expert to generate analytics report is too slow and not adding any value to Generation Z and Generation Alpha consumers.
Mortgage providers need to be one step ahead in the digital world, or risk facing extinction like the dinosaurs. It starts with implementing efforts to understand consumer needs and track engagement across multiple devices.
Q: How are consumer lending service providers taking advantage of recent digital adoption trends?
Paresh: The forward-thinking players in the mortgage space are already preparing for 2022 and 2023. Consumer digital adoption is moving things forward at a faster pace than ever previously expected, which has caused the entire industry to leap forward by 10 years. Our research and discussions with key players within the industry indicate that there are several strategies to give providers the pace to match the wave of incoming technological advancements.
These strategies include the following:
- Identify the process and governance bottleneck to improve the middle office;
- Introduce RPA (Robotic Process Automation) to automate disclosures and save time on each application;
- Reduce marketing collateral and increase spending on digital content via social media, press, and thought leadership;
- Stop using chatbots and start using more innovative ways to connect with people that simulate face-to-face interactions; and
- Stick to the “gold standard” – that is – data is gold; build the data lake for analysis, training of AI/ML model, and predictive scoring/smarter decision.
It is crucial that mortgage providers start implementing these strategies or risk being left behind. Consumers within the financial industry are notoriously fickle. If anything, the pandemic has only exacerbated this quality – loyalty to existing financial institutions is very much in flux. Providers on the “cutting-edge” of digital adoption trends will stand out amongst the crowd, while those who remain loyal to “traditional” practices will be the ones left behind.