The following is an excerpt from “The Turning Point for Digital Lending: The quality of your digital lending app is the key to competing in a commodity market”, a whitepaper produced by National Mortgage News magazine and sponsored by Glance.
The process of loan origination is complex. Borrowers wish it was easier and faster. About one-quarter of borrowers start an application online but don’t complete it online, and 60% abandon the application because it takes too long.
Lenders also want loan origination to be easier and faster. An easier digital process for borrowers would translate to higher and faster close rates, lower abandonment, and higher throughput from their team of loan officers.
Competing in a digital lending world
Lenders have plenty of competition in the home loan market—from both traditional banks and digital-only lenders. But, the loan products themselves have become largely commoditized. Interest rates are historically low across all lenders thanks to prevailing Fed policy.
Another reason that mortgages are becoming more of a commodity is that regulations such as the Dodd-Frank Wall Street Reform, Consumer Protection Act, and other regulations defining loan qualifications. These constraints make it difficult for lenders to “think outside the box” and offer innovative products or aggressive qualification as a means of competing in the marketplace.
Borrowers can easily shop around using comparison shopping tools like Credit Karma, Credible, and Lending Tree.
In a world in which loan products all look alike, one of the only things that digital lenders can compete on is the loan origination experience.
Digital lenders have been engaged in a customer experience (CX) arms race ever since Quicken Loans’ Rocket Mortgage raised the bar for borrower-friendly experiences. Lenders often shop each other’s digital origination applications with an eye towards making incremental improvements to their own process to match or beat the competition.
Incremental changes matter: one in five of those who abandon a loan application will choose a different lender.
A better digital experience can help lenders achieve their objectives to:
If you want to learn more, download the digital lending whitepaper, or read more about Glance Guided CX solutions for financial services.