Lending Briefing: How fintechs are digitizing the mortgage process
- Shifting consumer preferences are incentivizing mortgage banks to digitize other outdated, paper-based or manual parts of the business. But most of the innovation is happening outside the legacy system with fintechs taking the lead.
- Given the current macroeconomic environment, uncertainty and dwindling margins in the mortgage sector, digital processes can help weather the storm by reducing costs.
Digital Mortgages: The Final Frontier
As consumer preferences shift towards the digital, everything happens online nowadays. Well, almost everything – it’s not yet time to say goodbye to paper – there are still some processes that haven’t been converted into code. And software engineers are scratching their heads over how to tackle the last remnants of an era before the internet.
One of these head-scratching areas is mortgage. While the pandemic forced the mortgage industry to digitize core functions almost overnight just to keep pace with demand, this segment of the market is often described as the last mile – the daunting task of making a mortgage transaction happen in a few minutes on your phone will be the last piece of the financial puzzle.
The industry adopted digital solutions to perform tasks that were typically completed face-to-face, including e-verification of income and assets, drive-by and automated appraisals, and hybrid closings, according to a Deloitte report.
But now mortgage banks are looking to digitize other outdated, paper-based or manual parts of the business – a huge weight on the lending process, rendering it more inefficient, expensive, and time-consuming, the study argued.
One big player in the digital mortgage arena is Blend, whose cloud-based platform is used by many top US financial institutions, including big banks like Wells Fargo and US Bank. And demand is rising – the fintech’s white label technology processed $1.4 trillion of mortgage and consumer loans in 2020, up threefold year-on-year, according to Forbes.
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