As the COVID-19 crisis continues to transform our economy, the companies that have been and have been successful are using technology to create differentiated customer-centric experiences. Companies like Amazon, Netflix, and Spotify have set the gold standard when it comes to providing customization and efficiency to their existing customers. It is time for mortgage lenders to do the same.
The reality is that banks and lenders face tremendous competition when it comes to attracting borrowers, including those they already have relationships with. While some large companies are investing heavily in technology to improve their mortgage business, most lenders are still operating in an analog world.
The biggest challenge facing mortgage lenders right now is that only 22% of borrowers stay around and become regular customers. This is primarily due to the fact that, once closed, a lender's relationship with a borrower is focused on just collecting the payment with little reach or value-added support. Losing these potential repeat customers comes at a very high cost for lenders who typically spend up to $ 1,500 in initial cost for each new borrower.
The best investment banks and lenders can make is a true "loyalty platform" that allows their existing customers to manage their existing home, find a new home, and explore financing options in one place. Integrating this platform with the lender's website and mobile applications can reduce the need for customers to make two external stops: one for an external real estate database and one for another mortgage provider.
If you're a loan officer or an executive in a mortgage business, you've probably dreamed of embedding a Zillow-like platform on your website. Thanks to the rise of companies specializing in real estate data and co-branded technology platforms, this doesn't have to be a dream anymore.
However, it is not enough for lenders to invest in a dynamic user experience that gives customers instant access to real estate and mortgage options. The implementation of a customer loyalty platform should be complemented by a well thought-out strategy for attracting and retaining new and existing customers.
First and foremost, it is important to entice your customers into exploring your real estate platform once it is integrated with your website. This can be achieved by prominently displaying the platform in online portals, on customers' personal account pages and in personalized emails. Make customers aware that you are offering access to something new that will make the home buying experience much easier and more personalized.
It's just as important to maintain customer interest once they've gotten to grips with your platform. Rather than letting customers migrate to a competing real estate database or lender, you should continue to engage with customers through email and subsequent interactions. This should include proactively providing updates on the price of a customer's current home or notifications of new inventory lists that match the search criteria.
Another important strategic initiative is taking the time to understand a customer by tracking and evaluating their interactions on your platform. Use refi calculators to assess whether they store properties in specific geographic areas or with specific attributes and share property lists with other parties. There is a tremendous amount of insight that can be gained about a client's intent and in turn applied to tailored follow-up communications.
America's largest financial institutions are already beginning to understand the value of the in-sourcing experience in home buying. With the amount of time customers already spend on a financial institution's website, adding an enticing home buying experience to the user interface is a breeze. Smart institutes are able to reduce customer leaks and exceed the industry average retention rate of 22% for years to come.
The combination of investing in the right technology and following the right strategy can support a differentiated customer experience that brings more credit. While there are a number of considerations, including cost, corporate security, and compliance. Now is the time for banks and non-banks to adopt new technology to compete more effectively than ever before.