Technology As The Ideal Complement To A High-Touch Ethos
Wondering if it’s time to integrate fintech into your core processes? The answer is “Yes!”
Fintech, as explained by Investopedia, is “utilized to help companies, business owners and consumers better manage their financial operations, processes and lives by utilizing specialized software and algorithms …”
In the mortgage world, fintech allows providers to be more productive, more customer-service oriented and more effective. But you don’t have to be a huge national company with unlimited resources to make it happen.
At Boston-based radius financial group, our motto is that we “Make Mortgages Better,” and fintech has become a key component of our ability to do so. Here are some of the lessons we’ve learned and best practices that any mortgage company can borrow.
Start With First Things First
Fintech bells and whistles are great, but as they say in the computer industry: “Garbage In, Garbage Out.” In other words, merely layering a tool on top of inefficient processes is bound to lead to frustration and wasted dollars. That’s why our first step in implementing fintech was decidedly low-tech: Deconstructing and recreating our workflow process. The goal was to map our entire workflow and identify inefficiencies or inconsistencies in order to establish a set of best practices that would be adopted companywide.
The workflow analysis examined the mortgage transaction through every department, phase and step. We broke down silos in order to get every department to merge their ideas and come up with one common workflow that was universally agreed upon and then documented to ensure we were all on the same playing field.
Once we established a standardized workflow, we incentivized adoption through upstream and downstream service level agreements (SLAs), with a joint level of standards and KPIs that are measured throughout the process.
If you’re considering implementing automation, our experience shows that taking the time to tighten up your processes will pay off, not only in a more effective adoption of automation, but in team motivation and customer service.
Robotics Process Automation Gets The Job Done
Wouldn’t it be great to automate those tedious, yet critical, factors that go into a successful mortgage experience? Once we had created that well-documented workflow, we then analyzed it for pieces we could automate.
As an example, we know we need to order a flood certification on every property. So now, as soon as the processing status is enabled in the loan file, our “robot” builds a list of property addresses and orders them all at once every hour.
Not only does it save our team from having to do it manually, but we’ve realized how much our customers appreciate having this information up front. After all, if you’re planning to buy a home and expect the payment to be $2,400, it’s an unpleasant surprise to find out you’re in a flood plain, and your payment will jump to $3,000. You may no longer qualify for the mortgage or the amount might be outside of your budget.
However, it can be human nature to forget to order a flood certificate, which can lead to an upset customer if this reality is discovered later in the process. But as we like to say, “The robot never forgets.” That’s just one example of the 150 processes we have automated.
Another important byproduct of artificial intelligence (AI) use is that it has allowed us to redeploy staff to more customer-centric tasks, which gives them a more engaging job.
And finally, robotic process automation has made a significant difference by making our business scalable. Even as the economy seems to flip daily, we, like many others, have our biggest pipeline ever. At radius, we don’t need to hire and train a bevy of employees because automation allows us to scale our model with the employees we have since it handles these mundane yet key tasks. That is where fintech wins the battle in allowing your company to be prepared to handle a spike in volume, without having to worry you are overstaffed as demand fluctuates.
Artificial Intelligence Creates Efficiencies
As we moved through our workflow process, we identified a bottleneck that I imagine any mortgage company can identify with—the fact that one of our biggest time-wasters was the physical action of organizing loan documents. In fact, we were astounded to realize that our loan analysts spent nearly 30% to 40% of their day working in documents, handling mundane tasks, such as making sure each document faced the right way to separating tax statements and pay stubs.
Through AI, we have been able to remove that process from their plate, and as a paperless company, we make sure that every piece is digitized and organized in a way that allows them to move directly to analysis.
Now, the loan analyst will get a message that the “Jones File” is in the document storage part of our loan operating system, and they’ll open a neat file that is ready for analysis. Not only does that allow us to complete more files, but it removes a laborious process and allows them to engage at a higher level with thought work.
Getting Small Wins As You Move Toward The Bigger Picture
Of course, not every firm can implement a robust fintech process in its entirety. That’s why it’s important to identify places you can make incremental changes, in order to help create buy-in and momentum.
One of our most successful processes that’s relatively easy to implement as one of the fastest, easiest wins, is improving our customer experience with better communication, which we believe is a significant part of a successful fintech stack and a crucial factor in a positive online application experience.
Customers have done their part to fill out the application and submit their W-2s, and they want to know how it’s working through the system. Through automated communication, they don’t have to wonder where it is, nor do we have to rely on a loan officer keeping them apprised.
Using our digital system, they log into the portal where a track bar shows them how many steps have been completed and what’s next; which is also supplemented with e-mail communications that alert them when each milestone is completed. It standardizes the process and allows them to feel engaged.
We’ve seen our positive feedback skyrocket once we implemented this effective communication step. In fact, when we look at our Net Promoter Score (NPS) every Monday, we can see the impact—ours hovers around 87, which is far higher than the average in financial services.
How Can Fintech Initiatives Set Your Mortgage Company Apart?
Ready to embark on a fintech project and wondering if it’s worth it? I can assure you it is, from both a customer and employee experience perspective. But I also realize that’s not enough—after all, mortgage providers are used to dealing in hard numbers. And that’s where fintech can back you up.
The most important byproduct of a fintech initiative is that it reduces the cost of production in a way that you can measure. For example, you might know that last June it cost you $4,000 to manufacture a loan, but in the following year, it only costs you $1,000. That’s an incredible savings, and it’s not just a ballpark because it’s substantiated with real figures. FinTech allows us to measure how much time a loan assistant spends on a file, divided by their salary, we can find the hourly rate of each employee.
In today’s environment—where the mortgage world is constantly being attacked by margin compression and increased regulatory pressure—collectively we’re making less money on the product, and it’s more expensive to produce. The only way to make that margin back is reducing the cost of production—and that’s where the rubber meets the road for automation and fintech.
However, we also know that efficiency is just one component of a successful mortgage operation. You have to balance it by keeping internal and external customers at the heart of the process.
We have always sung the praises of using technology to make mortgages better, but never at the expense of the “high touch” service our customers expect and appreciate.
In fact, that’s where we started this process, with the goal of creating a better customer experience and improved team commitment and motivation. But it wasn’t long before we realized that fintech could be an important tool to help create efficiencies.
That’s why I would encourage any mortgage company investigating the benefits of fintech to remember what really matters—customer service, improved productivity and employee experience—and identify ways that automation can help them realize their goals.
And it will look different for every firm, depending on your culture, your budget and your needs. Take charge of your tech, rather than allowing it to be in charge of you.
This article was co-authored by David O’Connor (pictured right), chief technology officer for radius financial group. Davis can be reached by phone at (781) 742-6500, ext. 513 or e-mail [email protected].
Dustin DeMeritt is director of marketing for radius financial group inc., and can be reached by phone at (781) 742-6500 or e-mail [email protected].