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Lessons From the Digital Mortgage Conference – Part II

Here’s part II of my summary of last week’s Digital Mortgage Conference in Las Vegas. (See Part I here)

If attendance figures are any guide (1,500 this year versus 750 two years ago), the quest to digitize mortgages is becoming more urgent than ever. But surprisingly (or not), just 3% of conference attendees were from Canada.

The highlights that follow were comments shared by tech experts at the event. They come from U.S. lenders and IT suppliers but are largely apropos for Canada’s market as well.


On the Importance of Contact

  • Constant communication is essential to nurturing leads, said TotalExpert. The most successful lenders know where a lead is in his/her journey at all times. All communications must be tailored to that point in the client’s cycle.
  • The new era of client contact is hyper-personalization; i.e., throw out your crusty old email templates. Each email needs a personal touch with a “real conversation,” said one panellist. Traditional CRM communicates with people like “they’re not customers yet.” That “erodes” the relationship, he added.
  • Issuing a pre-approval and not contacting the customer for weeks—thinking they will contact you—is a huge mistake in the age of online rate shoppers, said Home Captain. Regular contact keeps you top of mind, kindles trust and builds relationships.
  • Polls have shown that realtors trust direct-to-consumer lenders less, so it’s especially important for such lenders to maintain regular contact.

On the Human Touch

  • Purchases—where the borrower is worried about getting approved—are more “emotional” than refis and therefore purchase borrowers are somewhat less rate sensitive.
  • Numerous panellists repeatedly stated that loan officers are not going extinct. But there will be a lot fewer of them. (On the very next day, news broke that BMO Harris Bank is eliminating all of its loan officers.)
  • Days of mass emails to entire customer bases for a refi offer are gone. People get upset if ads aren’t targeted to them. It’s not easy, but the key is to recommend the right offers to a borrower at the right time.
  • Personalized service starts with how the client contacts you. This reveals to you the customer’s preferences as to the time of day and type of communication they prefer (mornings, afternoons, evenings, email, phone or text).
  • Client emails must reference the client’s mortgage specifics, said For example, an email might say: “We recently analyzed your current mortgage with XYZ Lender and can potentially save you $5,390 a year.”

What Millennials Want

  • “The millennial generation is the largest generation in the history of generations,” said Emerson.
  • The average age of a millennial is 29. The average age of a first-time buyer is 32. We haven’t yet seen the height of the first-time buyer boom.
  • The #1 thing millennials say they want to improve in the mortgage process is to “make it go faster” (28% of millennials agreed with this statement in a survey cited by Ellie Mae).
  • The #2 request was for the process to include more personal interaction (24% agreed). A sizable minority of young buyers want more communication with people (but not necessarily face-to-face).

Artificial Intelligence (AI)

  • According to Steve Brown, Intel’s former futurist, the two technologies that could have the biggest impact on the mortgage industry long term are AI and blockchain.
  • AI already has mortgage applications. Blockchain will take longer. Brown likened blockchain to HTML, the foundation of the Internet, which took years to alter our lives. It’s a technology that will lead to “paperless” mortgages, he predicted.
  • 72% have used voice technology like Alexa or Siri, according to the Emerging Technologies panel. Driving adoption are younger consumers, households with children and households with over $100,000 in income.
  • 32% of those who use audio-bots like Alexa or Siri use them as an alternative to typing a question into a search engine.
  • “Consumers will absolutely want to use this technology” for mortgages, said Michael Kolbrener, Chief Technology Officer, PromonTech. It will become table stakes “really fast” once big Financial Institutions adopt it.
  • The most common use for AI will be helping clients input applications by phone or via computer microphone.
  • If you’re skeptical that consumers would want to use voice bots, you haven’t heard Google’s Duplex. Play some of the examples on this page. They’ll blow your mind.
  • “Someday we won’t even know we’re talking to a machine,” said a panellist.
  • Speech recognition will also help lenders answer guideline questions, endangering some business development manager jobs (sorry BDMs!). Brokers or underwriters will:
    1. call a phone number or live chat
    2. ask a policy question
    3. the system will search its knowledge base
    4. the system will then provide an answer in Google Duplex quality language.
  • Someday Duplex will even call borrowers, appraisers, lawyers and title companies to follow up on files. If a borrower is not responding to texts or emails, for example, Google Duplex will call them to see if there is a problem, or to remind them to provide documents.
  • After watching these presentations, it quickly became apparent how many mortgage jobs could be in danger long term.

Trends in Bots

  • Housing finance giant Fannie Mae is busy creating a slew of bots for things like Optical Character Recognition (OCR).
  • OCR will be used by lenders and insurers to replace workers in “stare and compare” jobs (e.g., employees who check documents all day).
  • OCR will automatically scan documents and condition a mortgage file based on the contents of those documents.
  • Mortgage providers will use similar technology to automatically review uploaded client documents and instantly provide borrowers with updated lists of conditions through an online portal.
  • Bots will also slash fraud cases. A panelist related a story about how fraud almost sunk PayPal back in the day. Using AI for fraud detection helped PayPal lower its fraud rate from a peak of 40% (of transactions) to sub-3% today.

Other tidbits

  • Customers feel most comfortable working with the same loan officer. As you lose top producers you lose top lead generators, Tyrell said. You work hard on client retention; work hard on agent retention too.
  • Regulators don’t always grasp technology. Emerson said that after Quicken Loans ran its infamous “Push Button. Get Mortgage” Superbowl commercial, “I can’t tell you how many [policy-makers] in Washington I had to talk to to explain how the world wasn’t going to end.”
  • In most industries, change doesn’t happen from a current industry leader…..”change comes from outside,” Emerson said.

Emerson ended his motivational speech on digi-mortgages by paraphrasing his old football coach, who said this:

“Every day when you wake up you have a choice. You can get better or you can get worse. You never stay the same.”

“So what do you want to do today?” he concluded. “Do you want to create your future [in this industry] or do you want someone else to create it for you?”