Improving the Borrower Experience through research and 3 key observations in lending.
Since 2016, Mortgage Cadence has been partnering with Accenture Research, polling American borrowers to determine what they were thinking, feeling and doing as they were moving through their mortgage application journey. In 2016, when we first asked borrowers to rate their borrower experience, more specifically their level of satisfaction with lenders, 45% said they were ‘very satisfied.’
Just two years later in 2018, that number declined to 39%, leaving a staggering 61% of borrowers who are, at the very best, indifferent about their lender’s performance. It’s safe to assume a low likelihood of future business, an online review, or a recommendation to a friend or family member with such a low satisfaction rate. In any commoditized market where customers are looking for the lowest rates and fees, there is only one thing that separates you from your competitors: the borrower experience your organization is delivering.
Most borrowers today aren’t loyal, and their indifference is preventing lenders from achieving real, sustainable growth. The barriers to a better borrower experience, such as a market transitioning to purchase-dominant and the complex regulatory environment, are real. Sales and revenue growth in your lending operations don’t happen without borrowers who are entrusting you to process their loan faster with less frustration. It’s good for them, and it’s good for your bottom line.
ONLY 25% OF BORROWERS ARE FULLY ENGAGED
At a local level, lenders can take comfort in the fact that customers feel better about the relationship they have with their lender. The 2018 Borrower Survey of more than 1,500 U.S. banking customers revealed that 25% obtained their mortgage from their primary financial institution. According to Accenture Research’s 2017 U.S. Mortgage Market Trends, small lenders have, in fact, become a dominant segment, increasing their market share from 19% in 2010 to 50% in 2016.
This suggests a combination of great marketing by small financial institutions, fully engaged customers who want to keep their business with an organization whose employees they know, like and trust and a great technology stack that creates a better borrower experience.
But any investment in your people, process or technology in order to gain market share has to begin with an understanding of the borrowers’ journey from start to finish. It’s through mapping each borrower touch point that you begin to identify where they may fall through a gap.
Explore objectively the mindset and actions of your borrower at each stage; specifically, what are they thinking, feeling and doing.
It is at this point of understanding that you can determine the best investments in people, process and technology that ultimately supports your organization’s strategy.
In the absence of a borrower journey, you’re bound to fall back on digital and automation investments that aren’t designed to be a substitute for the human-to-human connection. This may, in fact, be the cause for a 6% satisfaction drop in two years.
REPLACING HUMANS WITH TECHNOLOGY IS SHORT-SIGHTED
To be clear, 70% of borrowers surveyed don’t care about meeting you face-to-face, however, they do want consistent personalized communication from real humans that things are on track to close as scheduled.
A highly personalized borrower experience that is fast, simple, transparent and secure across all channels, both online and offline, is a universal want of all borrowers.
If you think you’ve won the borrowers’ business because you have their application in hand, that may not be the case. According to our 2018 Borrower Survey, 49% of borrowers applied to more than one lender, and of those who submitted applications to multiple lenders, 72% did so because they found a better price.
What do you do when half of your borrowers are continuing to shop for a better price after they apply with you? Anything less than high touch from the moment you receive their application to the moment their signature is on the closing documents puts you at risk of losing the loan, and the customer. If you’re not competing on service than you’re competing on price, plain and simple.
The real opportunity for sales and growth is by providing to a borrower the education, resources, hand-holding and assurance they need, want and frankly deserve as they embark on this highly emotional journey of home buying. This is, after all, the largest purchase of their life. If lenders fail to make immediate contact with the borrower and work immediately to develop rapport, relationship and trust, then the borrower may easily be plucked by your competitor, mid-transaction, who is doing just that, only much better and faster than you are.
And, since you don’t get paid until the loan closes, if you fail to nurture them at every touch point and guide them on the journey, you risk not just lost revenue, but the added investment of labor and technology costs that you’ve already put toward this application.
Today’s borrowers demand multiple online and offline channels to use however and whenever they choose. They demand the convenience of borrowing their way, whether it is in person, over the phone, through the Internet, or by using a mobile app. Borrowers want a lending experience that puts them in the driver’s seat.
But as much as borrowers want the convenience of multiple channels, they want something else even more — speed. They want an absolutely seamless experience across all touchpoints so that there are no delays and no surprises. In the study of 1,500 borrowers, 36% cited that it took over 24 hours for their application to be acknowledged as received by the lender.
Acknowledged… As in a simple automated message that confirms receipt of their application, and that someone will be in touch with them immediately to have a chat about their exciting plans to purchase a home.
Acknowledged… As in a telephone call from a friendly voice that congratulates them on completing the first step in a very exciting journey, and that you are there to support and guide them along.
So, when we assess the Borrower Journey Map to better understand what borrowers are thinking, feeling and doing at each touch point, it’s safe to conclude that what borrowers are thinking at this stage of exploring products and rates is, “I wonder who has the best rate?”
What they are feeling is confused on how to compare different products and prices. And in the absence of immediate guidance from a professional who is offering to partner with them, what they are doing is continuing to apply with multiple lenders.
If your people and process aren’t designed to immediately respond to an application, then you’re allowing the borrower to conclude that a relationship isn’t important to you. Conversely, when you respond quickly, provide education and nurture them, the borrower will no longer feel alone, and since feelings are the seeds of loyalty, it makes good business sense that you invest in training your people so that they can deliver an exceptional experience at every touch point, every time.
Digital channels are important to borrowers, and as mobile becomes more commonplace in all facets of banking, it will be essential for lenders to offer their customers a suite of digital lending channels that interact seamlessly with each other as well as with any offline channels.
If lenders want to realize cost savings through their digital channels, they will have to ensure that these channels are highly personalized and in parallel with a human-to-human connection to achieve true customer engagement.
As Mortgage Cadence and Accenture have consistently found in borrower studies, the simplicity borrowers are seeking extends all the way to the closing table where lenders are still not optimizing a safe and efficient piece of technology that is 100% designed to drive borrower satisfaction: eSign and eClose.
Give customers the choice. Although lenders may be anxious to provide customers the option of eClosing, the 2018 survey found that 74% of borrowers would be comfortable with closing with eSign.
Being borrower-centric means providing convenience and designing your solutions around their desires. By contrast, 61% of borrowers were instructed to wet sign their closing documentation, and 16% were instructed to sign both in person and electronically. There isn’t anything about those statistics that serve the satisfaction of a borrower.
Borrowers are ready for more sophisticated digital transactions, but lenders are playing catch up in many cases. By taking steps to ensure the online borrower experience more closely resembles the human-to-human experience — meaning highly personalized — you’ll be delivering an experience that is easy, simple, transparent and maybe even fun. After all, this is an exciting time for the borrower. By playing a greater role in ensuring an exceptional borrower experience, lenders can then work toward upselling and cross selling into other products.