Anyone reading a housing blog since 2012 knows that technology makes lending more efficient in the mortgage industry. For instance, 72% of purchases take less than 30 minutes at the closing table, while only 11% of paper purchase closings happen at the same speed. The CFPB found that eClosings ultimately shave about one less business day from clear-to-close to document delivery. However, many lenders aren’t aware of the other “ripple effects” that efficiency (via technology) can have on their business:
Save Money Each Loan
Data suggests that onboarding technology for better efficiency will pay for itself in the long run. Accenture found that automation ecosystems can reduce process costs by >%30, providing a “material impact” on cost-income ratios. The math makes sense at scale. Even if automation eliminated just 5 minutes of manual data entry for 1,000 loans, the result would be 5,000 minutes (or 83 hours, or two full work weeks!) of hourly wages saved. The cost of purchasing that automation technology would eventually be eclipsed by the savings from using it. Lenders would be able to offer more competitive products simply because each loan would cost less to produce.
And don’t worry––automation doesn’t mean that humans will be replaced by 1s and 0s. Letting automation take care of repetitive tasks will allow time for workers to embrace more fulfilling projects.
Errors Are Easier to Find
Transparency is key in today’s regulatory environment, and the efficiency of technology helps lenders get important documents to clients for review before the closing table. 81% of lenders were able to get digital documents to their clients ahead of time, but only 24% were able to do so with paper documents. The CFPB reports that clients who are able to preview their paperwork feel more empowered in the process, and getting documents to the client early just makes the lender look good.
Early review also allows clients and lenders to find errors that halt the mortgage process. Of the clients who found errors before the closing table, 79% of them reviewed documents early and 58% did not. Finding errors before the closing table is a natural boon to efficiency because it helps stop the delays (and frustration) caused by preventable mistakes. Efficiency is not just about being faster; lenders must be accurate as well.
Clients Love It
It’s proven that clients are happier with lenders who have modern technology. J.D. Power found that clients are more satisfied performing mortgage-related tasks on digital mediums compared to using paper. Completing an application, submitting documents and receiving status updates all received higher satisfaction scores from clients when done digitally! If lenders are hoping to attract the largest and most computer-savvy generation of homebuyers then it is critical they have the tools clients desire most.
The idea that modern mortgage technology makes processes more efficient is obvious to the industry. Yet what we don’t often talk about is the “ripple effect”; efficiency spreads outwards and boosts customer satisfaction, profits and transparency. Technology in lending directly translates to a better client experience. If you’re a lender hoping to compete in the market, what else is there?