The results show that consumers are willing and able to use mortgage origination technologies. Consumers are also using these technologies at a growing rate as lenders make them available. The largest mortgage loan applicant technology growth of e-sign is in loan application and disclosures, with almost three-fourths having high to medium mortgage applicant adoption. Customer document upload/view usage has also grown. This usage eliminates the customer pain point of having to mail or fax paper documents.
It is important to note that consumer-direct internet usage is much higher than mobile point-of-sale (POS) usage at this point. The large number of data elements makes mobile less practical for some lending processes, but still a good tool for quick communications, status updates, and requests requiring fast response. In addition, consumer use of digital closing platforms and e-signing at closing is “not applicable” for 75% of lenders since they do not yet offer the technology.
Millennials need more than technology
We’ve seen that mortgage applicants want digital technology and will use it when available. But what else do they need? This is a critical question for lenders, because Millennials have been the largest age cohort since 2015, and will continue to be the primary driver of purchase loan growth market for many years to come.
As of 2016, Millennials had a 32.3% home ownership rate, while Generation X (60.4%) and Baby Boomers (75.0%) had might higher rates. This is expected since Millennials are younger, but how do millennial homeownership rates compare with baby boomers and Gen Xers when those cohorts were also ages 25-34? The home ownership rate for millennial aged 25-34 was an estimated 37.0% in 2016, while Baby Boomers 45.0% and Gen Xers 45.4%. This isn’t just a lender technology and process problem, because some millennials are delaying marriage and have housing affordability issues. Some studies indicate that millennial home ownership rates will eventually catch up with industry averages, but what else should lenders do? Lenders can capture their share of the available market with other loan and banking product offerings, personal financial management leading up to home ownership, and mortgage product design (first-time homebuyer programs, customer engagement and service are critical to capture and growth the Millennial segment.
Winning the back office efficiency war by connecting the POS and LOS
Exhibit 2 shows how lenders can respond from a technology, process automation, and customer journey perspective. The key to delighting and capturing the customer at the point of sale is to integrate POS, LOS, and fulfillment technologies with workflow-driven real-time processing.