For Mortgage Lenders, Digital Transformation Is Key to Growing through a Market Downturn

March 10, 2022

The mortgage space has changed a lot since this time last year. Interest rates are up and expected to stay high through 2022 as the Fed works to combat inflation. Leaders are already feeling the pinch: LoanDepot’s Q4 earnings report showed profits down 90.5 percent from Q3, and share prices for Rocket have been declining since last spring.

There are still opportunities for growth, though. The key to seizing them: improving efficiency to optimize the value of every lead. For most mortgage lenders, that means launching serious digital transformation efforts.

Here, I’ll highlight four ways to drive down costs and boost efficiency via tech upgrades, then offer insight into how to build that tech during a historic labor shortage.

The Big Picture: Managing Rising Costs with Better Tech

The work of mortgage lending is highly dependent on people – loan officers, underwriters, processors, etc. It’s no wonder, then, that the industry’s leaders are companies that have figured out how to automate and scale work that used to require hours of tedious labor.

For the last two years, personnel costs haven’t mattered much, simply because the refi boom was so lucrative for so many lenders. In many cases, lenders admitted that the interest rate environment was so favorable they had all the business they could handle without doing any marketing.

That’s changed. And industry leaders are responding by doubling down on their technology investments. On LoanDepot’s Q4 2021 earnings call, for example, CEO Anthony Hsieh noted that the current growth plan is to “develop and apply innovative technology solutions, drive down costs and add more products and services.” Later in the call, he emphasized the point, noting LoanDepot will “continue to invest in technology to drive operational efficiencies.”

The takeaway for smaller mortgage lenders is clear: the path to growth during this downturn is via digital transformation that allows for more efficient, less human-dependent processes at every stage of the lending process.

4 Mortgage Functions Ripe for Digital Transformation

So which functions should lenders be looking at specifically as they plan their digital transformation? In most cases, these four offer the greatest opportunity to drive efficiency: 

  1. Digital Applications: Since Rocket debuted its digital online application in 2015, the rest of the industry has been on notice. Today, many borrowers expect a digital self-service application that auto-fills as much information as possible – but they’re not always getting it. In fact, as many as 89 percent of borrowers think the mortgage application process is just as stressful as the process of finding a home. Done right, digital applications won’t just make borrowers’ lives easier, they’ll also integrate with the lender’s system of record to streamline underwriting, document management, and more.
  2. Call Center Automation: Connecting leads to the loan officer best suited to meet their needs is essential to managing costs. To do that, lenders need call center tech that can dynamically score leads and LOs on multiple dimensions, intelligently route those leads, and stay fully compliant throughout. Those capabilities are beyond what most off-the-shelf telephony software is capable of and can be a huge differentiator for lenders who get them right.
  3. Doc Management: Streamlining the tedious work that happens once an application is submitted can be a game changer for LO productivity. A document management solution that shows application status at a glance, allows in-context messaging among interested parties, and facilitates tagging and other kinds of markup frees loan officers to focus on selling rather than managing scattered paperwork.
  4. CRM: Automating customer relationship management is essential in a market downturn. A mortgage-specific CRM can provide LOs the information they need at their fingertips to make calls more efficient and productive. It can also power ongoing nurture and educational campaigns that can keep a lender top of mind and help usher potential customers through the funnel when they’re ready to transact.

As I hint above, most of this tech isn’t available off the shelf. That means lenders have to find someone to build it.

How to Build Transformative Tech in a Historic Labor Shortage

Attracting and retaining IT talent has  always been hard for the mortgage industry. The IT professionals best equipped to develop and execute on the custom software lenders need to drive efficiencies and gain a competitive edge tend to prefer sexier roles at technology firms, where they perceive a greater opportunity to innovate.

That problem is even more acute today, given the current labor shortage.

One solution is to outsource software development to a partner with experience in both the tech side of things and the needs of the industry. For more information on how NTERSOL can be that partner, get in touch.

Long-Term Efficiency Gains Aren’t Possible without Digital Transformation

In the coming year, many mortgage lenders will look for ways to cut costs to adapt to the changed market. The shortsighted will scale back on everything to minimize the pain in the next few quarters.

More strategic players, though, will recognize this market for what it is: an incredible opportunity to modernize their front- and back-end tech to automate core processes, eliminate data silos, and increase customer self-service options to improve operational efficiency and reduce costs for every quarter to come.

If you’re ready to figure out how updated tech can transform your operations, let’s talk. We’d love to help you find your tech-powered competitive edge.