How Advances in Mortgage Technology Changed Consumer Financing Practices

Banking CIO Outlook | Wednesday, June 29, 2022

With the advancements in artificial intelligence (AI), machine learning (ML), robotic process automation (RPA), and APIs, mortgage lenders need to keep up with their clients' evolving expectations by using mortgage technology.

FREMONT, CA: There has never been a time like now for mortgage financing. Post-pandemic, customers across the financial landscape have different expectations. With low-interest rates and the greatest value of gross mortgage advances since 2007, lenders must provide a timely, personalized, and automated experience to capitalize on the market.

To stay ahead of the competition, mortgage lenders must evaluate the latest developments in artificial intelligence (AI), machine learning (ML), robotic process automation (RPA), and application programming interfaces (APIs) and adopt mortgage technology that will help them meet their customers' changing needs.

Open banking expands access to financial information

In 2018, open banking legislation went into effect in the United Kingdom, requiring banks to open up their customers' payment data to regulated third parties of their customers' choosing and expanding opportunities for SMEs, startups, and industry players to develop a new range of financial products.

Open banking substantially impacts the business practices of mortgage lenders, reducing the number of procedures required to apply for a mortgage and accelerating the financing process. It can also boost profitability by decreasing the data points that must be manually collected and analyzed for each loan application, reducing the administrative costs associated with each application.

Open banking automates the pairing of lenders and loan applicants for loan brokers by granting them access to more data for informed lending decisions.

Open banking has accelerated the digital transition in the United Kingdom, which will see online banking services increased from 30 percent in 2007 to 76 percent in 2020. More than 3 million customers and businesses in the United Kingdom currently utilize open banking-enabled products. The mortgage industry's future success will depend on lenders' capacity to adopt and implement open banking solutions to increase efficiency, customer service, and scalability.

Process automation controls routine activities

Many lenders are still uncertain about the advantages of embracing new, automated ways of working, although the mortgage sector can be process-driven.

According to a 2021 Zapier survey on the state of corporate automation, nine out of ten knowledge employees believe that automation has enhanced the lives of their coworkers, and two-thirds would promote automation to other companies.

Mortgage lending entails many repeated duties, with many paperwork, forms, and compliance instructions that must be handled precisely, in addition to the employees' extensive knowledge-based competence.

Mortgage lenders can gain the following by embracing mortgage technology and digital transformation, which includes mobility, analytics, and paperless processing:

• Time-saving

• Expense reduction

• Increased efficiency

• Minimizing errors

• Standardizing procedures

• Enhanced effectiveness

• ensuring conformity

• Effective document management

• Increased transparency and visibility of auditable records

Business process automation can significantly assist the industry by lowering employees' administrative effort and freeing them to better serve consumers with their knowledge, skills, and expertise.

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