TheMReport — News and strategies for the evolving mortgage marketplace.
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feature ANALYTICS Or ig i nat ion s e r v ic i ng Housing at High Speed a na ly t ic s With lenders' market share becoming more dependent on web-based operations, positioning your company for growth requires meeting contemporary borrowers' demand for strong online origination systems. By Tory Barringer A 2006 study from Forrester Research and Compete showed that on average, an estimated 9.4 million consumers used the Internet to research and shop for financing each month, representing a potential $450 million monthly profit for businesses that took advantage. However, 72 percent of that prospective business went to aggregator sites rather than traditional lenders. In 2008, Deloitte published its own study based on borrower findings from the previous two years. The survey showed that while the vast majority of shoppers at the time used the Internet for research on products (ranging from 60 percent for those who eventually applied in person to 93 percent for those who applied online), many remained skeptical about actually applying through that channel, opting instead for a face-to-face experience with a loan officer. At the time, Deloitte concluded, "We believe that the lending institutions that can take the steps necessary to turn today's online doubters into tomorrow's online believers will be positioned to thrive, not simply survive, in the years ahead." Netting More Business F ast forward a few years to today, when online mortgage lending is growing at a faster rate than any other channel. Technology vendor Mortgagebot revealed in October nearly 40 percent its clients are now taking more than a quarter of their loans online. The number of online applications that had gone through Mortgagebot's end-to-end platform year-to-date at that point was an estimated 870,000, a nearly 50 percent increase from 2011. "We see nothing but positive signs for that distribution channel," said Rick Allen, SVP of client services for Mortgagebot. And then there's Quicken Loans, a site offering direct online mortgage financing. Since its inception, Quicken's volume has propelled it to become the topranked online retail lender and the third-ranked out of all retail lenders in the United States. Last year alone, the company closed a record $70 billion in loans, more than doubling its previous record the prior year. Part of that boom came from a shift in consumer attitudes as more technologically savvy generations looked to the Internet as a way to handle their business at their own convenience. Now, even the slower adopters are turning over. "People are a lot more online and engaged with their finances," The M Report | 75 se c on da r y m a r k e t C all it natural selection for the new age: As the Internet changes the way businesses and consumers interact with each other, a line is very quickly drawn between those companies that can adapt and those that cannot. The last few years alone have seen business empires rise and fall based on the sturdiness of their online platforms. Now, as consumers become more and more accustomed to getting everything they need online, the real estate and finance industries are feeling pressure to evolve.