American banks and credit unions that do mortgage lending say their adoption of “smart” online-lending technology to automate their consumer-direct channel is both imminent and inevitable, according to a new survey of 330 American financial institutions conducted in early 2010 by Lieberman Research Group, an independent market-research firms. For example, while only 18 percent of lenders surveyed currently provide borrowers with a “smart,” online mortgage application, 71 percent of banks surveyed say they “will offer” the technology in the near future.
The study, sponsored by Mortgagebot LLC,, the survey tracks and analyzes to what extent mortgage lenders use the online channel to automate the mortgage application process. Results from this first-ever survey verify that a technological sea change is taking place in the way lenders take mortgage applications, and confirm the increasingly vital role of online technology in helping lenders grow their mortgage businesses.
Independent research reveals the impressive rise of online lending technology
Working from a database of 2,391 banks and credit unions with assets of over $100 million, Lieberman researchers conducted detailed, personal interviews with 330 financial institutions (251 banks and 79 credit unions) that are not clients of Mortgagebot. Due to the large sample size, survey results can be considered statistically significant at a 95 percent confidence level (plus or minus five percent).
The survey reveals that the online mortgage channel will grow faster than any other channel through 2013. In fact, respondents say they expect their overall online loan volume to increase by 157 percent:
►Banks expect that their online application volume will more than triple (a 225 percent increase).
►Credit unions, which already take one-fifth of their mortgage applications online, expect their online applications to grow from 20 percent to 31 percent of total volume (a 55 percent increase).
Online channel automation perceived as a “must-have” solution for mortgage lenders
The survey confirms that lenders are beginning to see the competitive value of the online mortgage channel, and are increasingly viewing smart, interactive mortgage point-of-sale automation as a “must-have” technology. In fact, 61 percent of banks and 82 percent of credit unions surveyed say they are either very or somewhat familiar with the technology.
A “smart,” interactive mortgage-application system is a fully transactional, Web-based solution that intelligently guides borrowers through the application, adjusting the questions for applicants according to their unique situations. It enables borrowers to complete an application and get conditional approval with full disclosures—all online.
While only 18 percent of lenders surveyed currently claim to offer a smart, online mortgage application, the survey reveals that widespread adoption of the technology is inevitable—and imminent. Seventy-one percent of banks say that they “envision a time in the future when they will need to offer” the technology to their borrowers. In addition, nearly half (46 percent) of the lenders surveyed are actually evaluating or planning to evaluate “smart” application solutions—and of those, about two-thirds (63 percent) plan to implement a solution before 2012.
Better service online: The new reality in mortgage lending
The survey results contradict traditional attitudes that view the Internet as a poor substitute for personal service. Among the lenders surveyed that already offer or are planning to offer a smart, interactive mortgage application, well over half (and nearly two-thirds of those with $500 million or more in assets) say their primary reason for going online is to better serve borrowers. The need to improve efficiency came in a distant second.
These lenders’ strong service focus shows they understand a vital new trend: Today’s borrowers prefer the Internet as a delivery channel for financial services, including mortgages. Lenders that are fully engaged with their borrowers realize that to compete in 2010 and beyond, they must meet borrowers at their preferred point of sale.
“We’re very pleased to not only sponsor this unique survey, but to share its results,” said Dan Welbaum, Mortgagebot’s chief marketing officer. “As far as we know, this is the only independent survey ever done on this topic, and it reveals some surprising industry trends—not the least of which is how important the Internet point-of-sale channel is becoming to today’s banks and credit unions.”
Integrating mortgage POS channels: The next big thing
The survey also verifies the importance of providing a consistent “borrower experience” by using a single technology solution to integrate all of a lender’s mortgage point-of-sale channels (Web site, branch staff, call center, or loan officers). Such integrated point-of-sale (IPOS) technology provides many benefits—not the least of which is giving borrowers the flexibility to start a mortgage application in one channel (such as a bank Web site) and finish seamlessly through another channel (for example, in-person with a loan officer). The survey reveals that 23 percent of banks and 56 percent of credit unions see IPOS mortgage technology playing an “extremely important” role in their mortgage businesses in the near future.
For more information, visit www.LiebermanResearch.com or www.Mortgagebot.com.