Lending in Real Time: Balancing Consumer Expectations With Regulatory, Risk and Process Requirements
Consumers expect real-time communication – and increasingly, a real-time lending experience. But can getting a mortgage loan really become as easy as ordering an electronic book or music online? Can checking a current loan balance or obtaining a payoff be as simple as making online travel reservations? In reality, lenders must balance consumers' expectations for quick, frictionless lending experiences with regulatory, risk and process requirements.
In a recent Fiserv survey of select clients, 50 percent said they expect the best way to exchange loan information and documents with borrowers will be a secure two-way portal by 2020, while 19 percent chose two-way text messaging. The lending process will undoubtedly adjust to these changing expectations.
Balancing real-time consumer expectations for lending against the requirements of legal compliance, extensive risk management and reliance on other parties for certain process steps is a challenge for most lenders.
A Change in Thinking
Should mortgage lending be viewed as a product or a service? Industry professionals tend to think of mortgages by loan program type – as a product. Bob gets a 30-year fixed conventional, while Janet's circumstances are better suited for a 15-year FHA loan. But for borrowers, a mortgage is more than a product. It's how they buy their home, add an addition to take care of their aging parents, or pay for their child's college education.
Borrowers don't usually say that they are buying a loan – they say they are getting a loan, just like they get a haircut or takeout. In other words, the process underscores the importance of professionals who specialize in mortgage lending and can explain all of the details, as a service. Some borrowers who prefer self-service tools may be able to work their way through most of the steps of origination and servicing themselves. However, just as many borrowers may prefer to access information online while simultaneously discussing it with a mortgage professional who is on the phone or Web-chatting with them.
Balancing real-time consumer expectations for lending against the requirements of legal compliance, extensive risk management and reliance on other parties for certain process steps is a challenge for most lenders. Here are three steps to align these needs toward a real-time communication thread with the customer.
1. Use Loan Origination and Servicing Systems That Process Data in Real Time
The sheer amount of data that must be exchanged as part of getting a mortgage loan, or servicing one, is enormous by any standard, including other types of loans. Being able to know what information you have and what still remains, in addition to keeping track of all document versions, managing payments and escrow accounts, and handling default management scenarios instantly enables you to provide access to that same information in real time.
For example, when a consumer makes a payment, they expect to see that payment applied to their account immediately. If it's not, that can trigger a phone call to the servicer, which means the servicer isn't able to talk to another customer who really needs guidance. Use systems that make the same data you're seeing available to the consumer.
2. Provide the Right Information at the Right Time, on the Right Device
Much has been written and discussed about the omnichannel experience. Lenders need to make sure it is provided in a secure, private manner within the legal state and federal requirements for lending, ESIGN Consent, and ADA compliance, among other considerations. It's not just about what the customer sees, it's all of the plumbing underneath that makes it safe, easy-to-use and intuitive.
Lending is a document-centric industry, so consideration of how those documents should appear and what consumers can do with them on device screens of various sizes is important. Alerting customers when there are updates supports real-time communication flow within the security and privacy requirements for exchanging lending information. Making educational content available – whether written by your company, or linked to industry resources, such as the government's consumer educational materials – also helps consumers learn when it is convenient for them.
3. Preserve the Personal and Automate the Rest
Lending is series of feedback loops between the lender and the borrower, as well as many others in the supply chain. Automating as many tasks as possible frees lending staff to help customers who have detailed questions or need other service guidance. Examples include using technology to automatically ingest documents, index and extract information from them; systems that can redistribute work as needed based on staffing and volume considerations; and process flows that track progress and move from step-to-step, alerting staff for intervention where needed. Automating routine tasks to require staff management only in the event of an exception means more time spent talking with customers.
Mortgage lending is a complex industry. Real-time communication with borrowers enables the feedback loop between lenders and borrowers to progress effectively, with the right expectations on both sides.