Mortgage Lenders Weigh in on Customer Acquisition and Retention Strategies, Now and Looking Forward
Fannie Mae's Mortgage Lender Sentiment Survey® (MLSS) captured feedback from nearly 200 senior mortgage executives to learn about how they plan to respond to challenges associated with their current and future customer-retention and customer-acquisition strategies.
When asked to rank their most important customer acquisition channels both today and looking ahead a few years, mortgage lenders cited loan officers, real estate agents, and the use of owned corporate channels, including websites and retail branches, as the top three. However, the impact of digital media advertising is seen as growing most significantly – nearly doubling in importance when looking forward.
Among lenders offering a portfolio of mortgage and non-mortgage (e.g., banking) products, the majority said that having a portfolio of products is very helpful in acquiring customers. However, they were split on whether the mortgage relationship or non-mortgage relationship is more effective in convincing customers to adopt additional products.
Lenders were also asked to identify the most important strategies used to acquire new customers and to encourage their existing customers to obtain their next purchase or refinance mortgage. Providing great customer service was the most important strategy cited, followed by making the origination process easier.
The growing focus in the mortgage industry on the use of digital tools and data is clear. In a recent study1, lenders told us they perceived "online business-to-consumer lenders" as their biggest competitor over the next five years. Lenders in the current study commented that they wanted to use digital media to expand footprints and customer base. About 40 percent said they use predictive analytics to help acquire customers.
While lenders reportedly are placing more emphasis on leveraging data and digital media for future customer acquisition, the findings of this research and previous studies suggest that they should also take into consideration the importance of "human" influences. In a previous study among consumers2, when asked about the most "influential" source of mortgage-related information, consumers told us that industry professionals who offer a personal touch, such as mortgage lenders and real estate agents, were preferred by a wide margin over online sources. Consumers have also indicated that while they prefer to do simpler mortgage activities online, including bill-paying, they still believe more complex mortgage tasks require personal interaction3. These results were consistent across all age groups. At least for the next few years, while we believe that digital media might be more effective in building lenders' brand awareness among consumers, human touch remains critical to gaining their business.
To learn more, read our Fannie Mae Mortgage Lender Sentiment Survey Special Topic Report, "Lender Customer Retention and Acquisition Strategy."
Desmond P. Smith
Senior Vice President and Chief Customer Officer, Single-Family
February 4, 2020
The author thanks Ahmet Hacikura at Oliver Wyman, Steve Deggendorf, and Li-Ning Huang for valuable contributions in the creation of this commentary and the design of the research. 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.
1 "How Are Lenders' Business Priorities Evolving to Compete Against Industry Competition?" Mortgage Lender Sentiment Survey Special Topic Study, July 2019, https://www.fanniemae.com/resources/file/research/mlss/pdf/lender-business-priorities-mlss-q22019.pdf
2 "Lenders and Real Estate Agents Still Beat Online Sources as Top Mortgage Influencers," October 2017, https://www.fanniemae.com/portal/research-insights/perspectives/top-mortgage-influencers-lenders-agents-deggendorf-101917.html
3 "What To Digitize First, According To Recent Homebuyers," National Housing Survey® Special Topic Study, Q1 2018, https://www.fanniemae.com/resources/file/research/housingsurvey/pdf/nhs-special-topic-digital-mortgage-process.pdf