In recent decades many sectors have been shifting to the digital way of life, including mortgage lending. Due to advanced technology, consumer preferences and communication have changed, prompting service providers to devise new techniques to satisfy their customers. Digital mortgage seems to be the future typical for the next generation of borrowers due to its simplicity and flexibility. This is a plus in the current world, where customers prefer seamless solutions that offer convenience.

Although financial institutions were already implementing the idea of digital mortgages, the COVID-19 pandemic was the catalyst for its implementation. The 2022 FCA Strategic Review of Retail Banking suggests that any financial institution that will remain adamant to shift to the new technology will be left behind. The review indicates that the gap between giant and small banks is slowly diminishing due to the changing consumer behavior, innovation, and digitization. The mortgage sector is not left behind as it is taking advantage of cutting-edge technologies to provide more relevant services for the present generation. Let us focus on how mortgage lenders can influence digital lending for a better tomorrow.

1.                  Turning in supporting and application documents

Considering the ever-changing client preferences, the process of filling and piling application documents is outdated. Digital mortgage application is simple and easy as it does not involve the tedious filling in application forms, and the lenders can access crucial information from third-party aggregators and service providers. The lenders aggregate the documents in different formats, including images and pdf, enabling them to overcome the difficulties arising from non-collate and fragmented case material to obtain a single source of truth, complete control and audit compliance, enhance user experience, and add intelligence.

2.                  Digitized data review and validation of mortgage application

After juxtaposing the data using computer vision technology and OCR, the lenders split, identify and classify the documents into file categories and structures using machine learning algorithms. You can extract the required data from active documents using context learning and natural language processing in a form for easy verification and modification. This technology enables lenders to categorize and recommend the best loan option that fits borrower means, choices, and demands.

3.                  Data validation

The lenders perform data validation on the collated documents by cross-referencing across all data. They also check for consistency, completeness, and correctness before generating a report on the case. This automated mechanism enables borrowers to make informed decisions with certainty. Additionally, the computerized approval relies on fully verified accuracy, logic, and customer financials. Chances of errors, stress, and surprises for lenders and borrowers are minimal.

4.                  Final approval and offer processing

The concerned personnel then access the validation report for final approval. The lenders can better accommodate digital consumers with notifications, real-time case tracking, and critical alerts. They can use artificial intelligence and advanced analytics to eliminate unnecessary steps and simplify the process. The lenders can also adopt AI-powered chatbots to offer financial advice to borrowers, control service requests, and help customers with their loan applications.

5.                  Finalizing and funding

After verification and approval, the lenders conduct electronic closing, saving the customer the time and effort of meeting the closing agent. The customer can review the closing documentation and raise any concerns on their own time. Implementing digital lending reduces the friction associated with eliminating paper and the financing process. Additionally, lenders can review the borrower’s profiles and transaction history using the AI systems.

In the constantly changing world and the continually shifting customer demands and preferences, perpetual innovation is an asset. Providing a standard digital experience is excellent but not enough- the process has to align with emerging consumer demands and expectations. Many consumers expect financial institutions to customize their products and services to meet their specific purposes, needs, and decisions. This transition is only the beginning; a few years later, lending will involve more advanced technologies such as robotics process automation, voice-based recognition, artificial intelligence, machine learning, augmented reality and virtual reality.

 Innovative lenders should determine their customer requirements before working on customer experience. Many financial institutions understand the essence of digital mortgage implementation. However, most of them are still adamant about embracing the technology, which begs the question, how long will the rest of the industry take to catch up?