Lenders Look to Technology for Efficiency and to Improve the Consumer Experience, But Do Not Fully Embrace Uber-Like Industry Disruptions
Today’s consumers access myriad products and services via digital platforms that make it more efficient, simple, and pleasant to conduct their business. Amazon, Apple, and online banking services are leveraging digital platforms to meet increasing consumer demand for simple, transparent, and consumable transactions. Historically, the mortgage industry has been somewhat slow when it comes to technology innovation. Recently, a growing number of mortgage originators, origination platform solution providers, and fintech start-ups are introducing innovative technology platforms to not only drive operational efficiency but, equally important, to provide a better consumer experience.
Fannie Mae’s Economic & Strategic Research Group surveyed senior mortgage executives in May through its quarterly Mortgage Lender Sentiment Survey® to examine lenders’ experiences with mortgage technologies and their views about innovation in the mortgage industry.
Survey results indicate that the majority of lenders agree the mortgage industry is innovating to drive operational efficiency. However, lenders are split when asked if the mortgage industry would “benefit from a disruptor like Uber” – only a slight majority of lenders (56 percent) agree it would be beneficial. When asked to provide ideas for technological innovations, lenders cite the need for digitization and automation to address their pain points about regulatory compliance and to improve the consumer experience.
The survey results also show the industry’s heavy reliance on technology solution providers (TSPs). Ninety-five percent of lenders say that they depend in some measure on TSPs for their business – with more than half reporting significant dependence – and 83 percent say they expect to continue to rely on TSPs.
While some lenders might perceive new industry entrants, including fintech disruptors, as a “threat,” many acknowledge that the mortgage industry has successfully invested in innovations that reduce the reliance on paper, use data to a greater extent, and provide a more consumer-friendly digital process. Technology solution providers are expected to play a critical role in driving this technology evolution across the mortgage loan life cycle. In turn, we believe lenders will continue to rely on them to innovate, streamline processes, and improve operational efficiency – and those who can translate these efficiencies to a better consumer experience will encourage others to follow in order to effectively compete.
To learn more, read our Fannie Mae Q2 2016 Mortgage Lender Sentiment Survey Topic Analysis.
VP, Single-Family Business Solutions
July 26, 2016
The author thanks Cindy McKissock, Colette Porter, Stephen Carter, Tom Seidenstein, Doug Duncan, Steve Deggendorf, and Li-Ning Huang for valuable comments in the creation of this commentary and the design of the topic analysis questions. Of course, all errors and omissions remain the responsibility of the author.
Opinions, analyses, estimates, forecasts and other views reflected in this commentary should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Changes in the assumptions or the information underlying these views could produce materially different results.