The only crucial aspect of the pandemic is that business as usual no longer prevents it. From healthcare bureaucracy to food supply chains, every industry and company needs to invest in change.
This is particularly true of financial services, a sector that has been forced to respond to very diverse consumer experiences created by the outbreak. When we see light at the end of the tunnel, it will be time for lenders and the mortgage industry to learn four key lessons from the pandemic to future proof their businesses.
# 1: Self-service, digital banking as table inserts
The adoption of online credit and service models was haphazard before the crisis, and many mortgage lenders continued to rely on a phone-centric engagement model to borrow, change payment terms, and perform other meaningful activities.
Blocking and ordering at home accelerated consumer demand for remote self-service banking, even for complex transactions. Frustrated borrowers waited on hold for hours to reach a mortgage agent and postpone their payments. Mortgage lenders who could afford it added more agents and rushed to implement chat support as a short-term solution.
Now digital engagement channels will be central to the industry. Mortgage companies need to refine their digital strategies and invest in ongoing digital transformation to further enhance the user experience and enhance the automation that will help drive down costs.
# 2: empathy is more important than ever
Even when people use online and remote services, the pandemic has also shown how much we value the human connection and the feeling of being heard. When people feel isolated, trustworthy relationships are more important than ever.
To keep and grow the business, mortgage companies need to get to know their customers well and communicate proactively and with empathy. You need to understand and deliver personalized services that support customers during difficult times.
Providers must respond to homeowners' expectations for maximum flexibility with offers that are tailored to their needs and offer options. One simple change is to provide unique payment options that schedule payments with paydays.
# 3: Real-time analytics are critical
Before the pandemic, insurers had a number of tools to measure and adjust for risk that worked quite well. You could evaluate factors such as credit scores, past arrears and bankruptcies, and debt-to-income ratios.
In the past year, however, the risk profile has changed dramatically. Millions of homeowners have lost their jobs. Some start working in the gig economy and are now self-employed with irregular paychecks.
The pandemic has clearly shown that past results are not a predictor of future success.
Not only has it become much more difficult to accurately assess risk, but the rapid development of the crisis has increased the need for real-time financial insight.
Lenders must make the necessary investments to provide the underwriting and service teams with up-to-date insights into which borrowers have lost jobs, whose income has fluctuated, are receiving unemployment benefits, whose debt obligations are rising, and who have cash on hand, and whether payments are made be done or missed.
By collecting and analyzing this information as changes occur, mortgage companies can better assess risk, take proactive steps to assist borrowers, and reduce arrears.
# 4: A Story of Two Borrowers
One of the many worrying consequences of the COVID pandemic is the growing gap between "belongings" and "belongings". This has created two financial realities that successful mortgage companies need to be able to value and serve at the same time.
While many homeowners struggle to pay mortgages, those fortunate enough to keep and grow their incomes try to take advantage of low interest rates and refinance or buy new homes. Providers must be able to quickly diagnose the status of a borrower and have a differentiated selection of products, service models and communications available to each group.
For example, companies must be ready to help homeowners who are on the verge of failure with proactive workouts like Forbearance, or they must have incremental changes in place so that those who already have Forbearance can successfully complete the program.
At the same time, mortgage teams can increase their retention and reacquisition rates even in highly competitive markets with low brand loyalty by identifying loans and offering innovative, flexible payment options that improve customer satisfaction.
A double recovery on balance
It will be years before we know how deeply the pandemic has changed the economy. By applying lessons from last year, mortgage providers can ensure that more people are successfully paying back their loans and staying in their homes. As a result, they are better positioned to borrow more and grow their business.