TheMReport — News and strategies for the evolving mortgage marketplace.
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30 | TH E M R EP O RT FEATURE key statistics about the genera- tion that will carry the housing market for several decades: • By 2020, Brookings estimates that one in three Americans will be a millennial, and by 2025, millennials will constitute a whopping 75 percent of the workforce. • According to Zillow, more millennials (65 percent) consider homeownership an essential part of the American dream than any other generation. • While they are still "on their way," millennials are, in sig- nificant ways, already "here." LendingTree recently reported that more than one-third (36.1 percent) of all mortgage re- quests through its site are from borrowers age 35 and younger. Zillow estimates that up to 42 percent of all homebuyers last year were millennials. • All millennials aren't stereotypi- cal internet-start-up urbanites. Almost half of all millennial homebuyers live in suburban neighborhoods, and another 20 percent live in rural locations. • Further, researchers at NerdWallet estimate that two- thirds of millennials haven't even reached the average home- buying age of 31, and 22 percent are still under 25 years old. Millennials have just begun to arrive, and connecting with them isn't just the job of the mortgage originator; servicers, too, must act now to create a culture within their companies that values build- ing long-term relationships with their borrowers. Geared for Interactive Technology B eyond millennials' raw num- bers and purchasing power (Forbes estimates it's at least $200 billion), understanding how to connect with them—as well as Generation X—is crucial. First, company websites and social touch points that aren't mobile friendly may as well be selling Atari systems or vinyl records. Research indicates that 90 percent of millennials use smartphones, 93 percent access the internet on mobile devices, and more than half (53 percent) own a tablet. In between charges, millennials are spending an enormous amount of time on social media—more than six hours per week on average. This is a huge opportunity to speak to potential customers no matter where they are and actively engage with them in a meaningful way. Today's consum- er won't buy a product just be- cause they see a TV ad. No longer passive consumers, they want to actually interact with brands. In many ways, millennials and other internet-savvy generations are becoming more and more immune to traditional forms of advertising. Children who can't yet talk or walk already understand how to skip an ad to get to the content or game they want. A consumer with that mindset will only respond to content that provides them value. That's why interactions with them cannot be superficial. Companies must work harder to truly connect with them. Active Engagement Earns Allegiance E xamine how pop culture icons like Kanye West, politi- cians like President Trump, and companies like Seamless have maximized their social media platforms by doing more than just posting occasional messages. They engage with their audiences and do so frequently, generating intense brand loyalty. While mortgage servicers may not have a new album, policy, or menu item to promote, this is where they can turn what is frequently a weakness into a strength. Consider this: What is the most common complaint consumers have about their mortgage servicers? Too often, it is customer service, as the industry hasn't done enough to effectively communicate with borrowers. Legacy processes and pro- cedures are geared to satisfy statutory and regulatory rules, and that often means mail, phone, and email communication. However, social networks provide a great opportunity for improving customer service, and successful servicers will soon have dedicated staff scanning social media sites and resolving issues by communi- cating through Twitter, Facebook, LinkedIn, Snapchat, and more. Many servicers already have such social media staff in place and are encouraged to see cus- tomers proactively reach out to them on social media channels. Online crowdsourced review sites like Yelp provide businesses a chance to monitor consumer sentiment and potential issues in real time. Clearly, with a more responsive, customer-focused approach, servicers can address issues before they see complaints publicly displayed in a govern- ment database. This approach will also provide new business opportunities. Forbes research reveals that 62 percent of millennials say that a brand that actively engages with them on social networks is more likely to earn their loyalty. This 35-and-younger crowd has mostly grown up in a connected world, and just like marketers in the past used catalogs, radio, and televi- sion, social media is where today's consumer can be found. Additionally, utilizing the mountain of available data and targeted content can increase the effectiveness of messaging. The right message at the right time to the right customer is only possible when marketers know who they are and what they need. Technology's Many Roles N ew technology isn't lim- ited to just social media, however. The ability to increas- ingly automate and streamline servicing operations is crucial to reducing overhead and compli- ance costs, which have skyrock- eted over the past decade. In addition to fueling growth strategies, new technology will help the industry defend and pro- tect both customers and compa- nies. Considering the threats out there, cyber security is a critical component of any business plan. Intrusions into systems threaten customer personal information and data, and it is incumbent on servicers to take that seriously and invest resources in defensive measures. These efforts should also include hosting high-level executive discussions about what do to in the event of an attack as well as creating and maintaining updated disaster recovery plans. Although it promises much, technology should not be seen as a silver bullet. While gaining efficiencies and mitigating rising costs are important, losing touch with consumers would be a fatal mistake. The key is to find balance between the need to utilize technology and the necessity of maintaining a human touch with borrowers. This is where social media can be a powerful tool; it's an effective way to reach borrowers with a personal touch that goes beyond simple auto- generated letters and oft-ignored robocalls. Today's mortgage servicer should already begin to think of itself as "tomorrow's mortgage servicer." New technologies need to be adopted and adapted to ex - isting systems and personnel, not only to streamline operations but to take advantage of rising rates to build relationships with custom - ers, as well. If rates do continue to climb, many of them will be custom- ers for a long period of time, and servicers need to think not in terms of loans, but loyalty. If companies' leaders build that kind of culture, they will find that rate fluctuations won't matter as much. Customers will trust their servicer and, in turn, provide a host of new business opportunities. That's the future of servicing. KEVIN BRUNGARDT serves as Chairman and CEO of RoundPoint Mortgage Servicing Corporation. He has more than 22 years of broad executive leadership experience. He can be reached at kevin.brungardt@ roundpointmortgage.com.