In the old days, if you wanted a home loan, you didn’t go into a big bank—and you definitely didn’t go online. You walked down the block and talked to the small banker who had done business with your father and your grandfather. They knew you, you knew them and you both trusted each other.
While this image of a bygone era might seem quaint, the smart lender will squint past the fedoras and handshake deals to take a closer look at the details: That old fashioned scene could serve as the blueprint of banking’s future.
As business grows faster and more competitive, customer-obsessed details are roaring back into fashion. You see it in the emergence of banks hiring vice presidents of customer service–a title that didn’t exist 10 years ago, but now is essential to a lender’s success. You see it lending “concierge” services. And you see it in actions like the one Wells Fargo plans for August to take control of closing services.
Of course, some customer-centric moves are being made to keep banks in compliance with the Consumer Financial Protection Bureau (CFPB), but much of what banks are doing they would have to do simply to keep up in this evolving Age of the Customer.
Among the top 40 lenders of 2014, non-banks accounted for 37.5 percent of originations. This is partly due to differences in regulations faced by banks versus non-bank lenders. But much of it has to do with user experience.
With banking loyalty a mere speck in the review mirror, lenders need to make sure their customer service is as high-touch and trustworthy as that handshake deal at the corner bank.
This means understanding how your potential customers shop. Millenials don’t want to walk into a bank to talk to somebody about a loan. They want to get a loan on their smartphone. This means their lenders cannot keep “bankers hours,” they must be available at all hours. Technology isn’t going to put lenders out of business, but the lender with the best technology will win.
To ensure the best tech, you must invest in your Web presence the way you would invest in a bricks and mortar building–because customers are not just shopping around for prices, they’re shopping around for the best user experience. If a Web page takes more than 30 seconds to upload, you’ve just lost a customer (or a whole generation of customers who measure time in the milliseconds and view “slow” with suspicion).
The evolution in the expectations of buyers is what inspired the development of remote online notary services and other tools to help buyers close on their homes, no matter where they are in the world. Five years from now, Millenials will look at you slack-jawed if you tell them that you once had to spend an entire day signing papers at some building to close on your home.
The shopping practices of new homebuyers is also allowing online lenders to capitalize on quick and cheap leads, attract serious buyers and vet their applications before the borrower has even finished breakfast. Wayne Gretzky famously said he skates to where the puck is supposed to be, not to where it’s been. Similarly, online lenders seem to know where the end game is and are getting there faster.
To compete successfully, traditional lenders will need to extend that level of speed and accessibility to all areas of the lending experience. Ask any vice president of customer service and they’ll tell you that every innovation must serve the customer. Tech has to create transparency and efficiency in a process that has never been known for either.
Immediately after the housing bubble burst, borrowers complained that–with moving trucks in the driveway and the clock ticking on their loan lock–they felt rushed into putting their signature on documents without really understanding what they were signing.
The federal government’s response was the Dodd-Frank financial reform law and the CFPB. The smart lenders’ approach has been “concierge” services. By dedicating borrowers to hold a buyers’ hands through the entire purchasing process and take the time to really explain every step, concierge services build trust–and maybe even that lost sense of loyalty–in a lender and help borrowers through the most significant purchase of their lives.
This is where traditional lenders have an advantage and can leverage their customer service experience to create that personal approach customers desire. To that end, Wells Fargo’s decision to deliver the Closing Disclosure Form is brilliant.
Due to the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures (TRID) rule, lenders will resume responsibility for the actions of all parties at the closing table on Aug. 1. TRID requires that the Closing Disclosure be provided by either the creditor or a settlement agent–but it places the ultimate responsibility and liability for ensuring that the disclosure is provided in accordance with the rule squarely on the creditor.
So on its face, Wells Fargo’s decision looks like a matter of compliance and expedience. In fact, Wells Fargo has explained the reason they will be delivering the Closing Disclosure Form is because they want to maintain evidence the borrower received the disclosure at least three days prior to the closing.
But the move does more than prove that a critical compliance requirement is met. The unstated motive here is that Wells Fargo wants to make sure that everyone who appears to represent the lender looks and acts the part.
For years, we have heard horror stories about signing agents showing up to people’s homes in flip-flops and beachwear, acting unprofessionally and making buyers uncomfortable. The buyer generally has no idea that this person is not affiliated with the lender, so everybody gets a bad rap.
By taking control of the closing, Wells Fargo is also taking control over who represents them, ensuring that the bank’s professionalism and customer service extends to the very end of the home buying experience.
The move also gives customers access to someone who can answer crucial questions at the “11th hour.” While signing documents at 8:00 p.m., if a buyer has a question, the independent contractor working as a settlement agent can’t legally answer it, and the question might have to wait until morning. This potentially puts the loan at risk and threatens the entire purchase. By deploying a knowledgeable professional, banks will be able to take care of their customers’ questions on the spot.
This brings us back to that old-time type bank on the corner. Today’s homebuyers expect an experience that is fast, convenient and transparent. But they also expect excellent customer service and a personal touch commensurate with the enormity of the purchase they’re about to make.
A homebuyer’s trust in the lender and her feeling of being supported through this monumental process has to be as powerful as it was back in the era of the handshake deal … even if that handshake has been replaced by a click.
C. Richard Triola is president, CEO and founder of NotaryCam Inc., an innovation leader in online real estate eClosings and online notary services. He may be reached by phone at (949) 289-3299 or e-mail at [email protected] or visit www.notarycam.com.
This article originally appeared in the May 2015 print edition of National Mortgage Professional Magazine.