TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/522162
22 | Th e M Rep o RT Feature a higher price point than other channels that offer consumers access to financing. Learning from Customers' Habits R etail lenders need to acknowledge the impact that current consumer purchase habits have on the mortgage industry. To many, getting a mortgage seems like a scary and complicated process, but there are other approaches that have proven it doesn't have to be. For instance, those operating a consumer- direct model have invested significantly in technology that caters to consumers' tendency to make purchases online, as well as the de- mand for an easy experience. Its high levels of automation make manufacturing hyper-efficient and, therefore, more cost effective. According to a recent article on Forbes. com titled "5 Secrets of Selling and Serving 80 Million Millennial Customers," Millennials are a fast-growing home buying customer segment and are "enemies of inefficiency and stupidity . . . such as filling out duplicate forms on paper when they know this is the same information they entered with your company online and you should just have it on file. Many customers just put up with these stupid ways that business waste their time, but Millennials are not interested." Of course, similar to retail lenders, con- sumer-direct has licensed originators who are good at what they do. However, their tasks are narrowly focused on a particular part of the origination process, so they tend to see more volume than your average retail origina- tor. They're also not chasing paperwork or running down escalations. They're specialized to deliver a service that aligns to a particular set of customers' habits. Lenders also need to acknowledge that their customers are communicating dif- ferently. Fewer customers want to go to a lender's office or meet to manually fill out paperwork. They don't need "face time." They want to do things on their own time. They want to receive communication when and how they want it. They want the ability to review documentation and respond to it when it's most convenient for them. This is all to say that by listening to and paying attention to the customers' needs and tendencies, we, as an industry, are able to evolve our business model and better compete by providing services that align well with customer needs and expectations. Evolving the Business Model W hile the distributed retail model does provide a higher-touch service, there are customers who don't want or expect it. To some, it seems antiquated, inefficient, and expensive. Retail lenders ought to take steps to add value to their services offered, while finding efficiencies that keep up with its range of customers. First, lenders will need to offer fair, competitive pricing so customers are paying for the services they actually receive. Perhaps this means offering customers an "a la carte" menu, working within their budgets, and prioritizing the services that are most important to them. It also may mean reconsidering retail cost allocation-- examining what the cost of added services such as marketing or commission structure might mean in exchange for the price point offered to the borrower. Next, lenders will need to develop more automated processes that increase efficiency and scalability. If a retail lender moves to an e-signature offering, as an example, then all a borrower needs to do is sign one form and their lender can obtain all the documentation required to submit the loan file—pay stubs, tax returns, etc.—without having to bother the borrower multiple times. Finally, retail lenders will need to ensure a superior customer experience. There are two ways to do this: 1. Invest in technology that understands and anticipates what the customer needs or Fewer customers want to go to a lender's office or meet to manually fill out paperwork. They don't need "face time."