TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/883125
TH E M R EP O RT | 31 FEATURE DOMINATION mortgage companies in the U.S. Digitization has also opened the door for new and non-tradi- tional entrants, including online marketplace lenders and internet banks such as Social Finance Inc. (SoFi) and Ally Financial Inc. (Ally), respectively, both of which have successfully leveraged their digital technology platforms to grow within the mortgage sector. Since entering the mortgage busi - ness in 2014, SoFi has grown to become one of the largest online residential mortgage retailers, hav- ing originated approximately $883 million in prime jumbo loans in the first nine months of 2016 and $750 million as of July 2017. Ally launched its direct-to-consumer mortgage product in December 2016 and expects it will help diversify company earnings over time as it ramps up origination capabilities. Ally's management anticipates $5 billion of mortgage volume in 2017. Big Banks Talk Back M ore recently, large brick- and-mortar banks have responded by investing heavily in their online platforms and mobile capabilities or have sought to partner with vendors to digitize their mortgage process. Bank of America announced a new online Home Loan Navigator in June 2016, a web-based portal designed to make the application process easier and more transparent for consumers. JPMorgan Chase an - nounced a similar program this past February where it would partner with Roostify, a fintech firm, to build a digital mortgage platform through which custom - ers can apply online and track applications by mobile phone. Over time, Fitch believes the larger budgets and IT resources of the banks should provide a competitive advantage over non- bank mortgage originators in the digital arena. In 2016, JPMorgan Chase invested more than $9.5 billion (roughly 10 percent of 2016 revenue) in technology, of which $3 billion went toward new projects. Of this amount, $600 million went toward "emerging fintech" technology, which includes building digital and mobile services and partnering with fintech companies like Roostify. According to CEO Jamie Dimon, the goal is to "benefit customers with better, faster, and often cheaper products and services, to reduce errors, and to make the firm more efficient." Larger banks are also expected to continue to benefit from their lower cost of funds (rela - tive to NBFIs) and scale, which help them maintain competitive pricing, as rates should remain a significant factor when consum - ers choose a mortgage provider. "Millennials are the most rate- sensitive," said Jonathan Smoke, chief economist of Realtor.com, "in part because they haven't hit their peak earning years." A first- time homebuyer getting a mort - gage today may be a home-equity customer 10 years down the line. Additionally, banks' deposit ac- counts and other financial prod- uct offerings naturally provide multiple points of contact for the consumer, which make it easier to reach potential customers to cross-sell and integrate mort - gages with other bank products.