In recent years, the mortgage industry has developed rapidly and technology has become the center of transformation. The current market conditions have been achieved.
With rising output of gold plating and economic headwinds challenging lenders’ profitability, technology is not an optional tool or a “good tool”. Lenders drive operational efficiency, remain competitive in the market and provide high-quality customer experiences are indispensable.
But what is this transformation actually like? This means streamlined processes, reduced costs, and more borrowers than at any time in mortgage history. From AI-enabled automatic credit assessments to blockchain-held transaction records, technological advances have revolutionized the industry. In fact, research shows that 30% of lenders in the U.S. have adopted or tried AI software, and that number is expected to climb to 55% by 2025.
However, as the industry becomes increasingly digital, lending faces the challenge of embracing innovation while maintaining personal style is key to high-quality service. It’s a difficult balance to strike. Technology makes our field better, but it also introduces a new risk: impersonalization, which can be especially detrimental in industries built on trust and nuanced understanding of individuals.
Technology as a promoter
The advantages of technology and automation are undeniable. Online platforms allow users to easily compare rates and track the progress of the application, while AI makes credit assessments more reliable by allowing lenders to predict risks more accurately.
However, withdrawing a mortgage is arguably one of the most important financial decisions a person will make, often involving financial and emotional considerations. These tools also have limitations. Algorithms can evaluate reputation with shocking accuracy allow or predict default risks, but they do not provide empathy or guarantees to anxious customers.
Additionally, borrowers with unique financial situations, such as self-employed people or borrowers with irregular incomes, such as tailored solutions such as flexible underwriting standards, customized repayment plans or subtle risk assessments. In these cases, human expertise is crucial. Sometimes, cases require a certain level of judgment and flexibility, and technology alone can be difficult to provide. Human consultants can provide personalized advice, interpret complex data in a unique situation of the borrower, and provide reassurance in processes that may feel overwhelming.
The value of interpersonal relationships
In our new digital age, the human element is more important than ever. Borrowers want to feel their concerns are understood and their questions are answered by the person who really listens. Personal interactions help build trust, clarify complex terms, and provide guidance through processes that often feel overwhelmed.
Borrowers need to make sure they are making informed decisions, and that guarantee is often not from an application or a chatbot, but from a conversation with a skilled consultant who can provide a clear and personalized explanation. In fact, our study shows that only about one-third (32%) of homeowners prefer to communicate with lenders through mobile app chat, while in-person visits still make 25% of homeowners attractive.
Lenders can provide these meaningful interactions by combining technology with personal style. Consultants can use customer data to tailor conversations to address specific needs and build rapport from the outset. Although technology works by automating routine tasks and providing real-time insights to free up consultants’ time, it cannot automate human interaction.
For lenders, this kind of interpersonal relationship is not only a good customer service, but also a strategic advantage. In fact, the FCA found that customers may be more interactive with lenders if communication is personal, relevant, and emphasize the benefits of making connections. Our research supports this, with 42% of borrowers consider speaking on the phone the most effective way to resolve their mortgage doubts.
Cautious balanced behavior
The solution is balance. The most successful lenders will leverage the power of technology while maintaining their customer-centric commitment. This requires a deliberate and thoughtful approach to integrating digital tools into the collateral process.
To ensure that technology enhances the borrower’s experience, rather than masking it, digital platforms should focus on simplicity and accessibility. An intuitive interface can guide users through each step, whether it is uploading documents or navigating the application process, is crucial. However, for borrowers who need additional support, the platform should also include easy access to human consultants (whether via video consultation or phone call).
Mortgage is an industry where trust is crucial, decision making has a great influence, and the importance of interpersonal relationships cannot be exaggerated. By combining cutting-edge technology with human empathy, lenders can build stronger long-term relationships with their customers. The technology transformation in the mortgage industry is undoubtedly exciting, but its true potential can only be realized when technology and people work together to serve borrowers.
Chris Little is Finova’s Chief Income Officer
