The Future Lending Office is a Coffee Shop
I’ve written in the past about what it will take to bring mortgage lending into the digital age (hint: digitize the back end) and about the necessity of bringing down the cost of mortgage lending. Today, I want to take a look at what the day-to-day reality might look like for Loan Advisors in a world where the lending tech stack is fully integrated and fully mobile.
For one thing, we won’t have much need for lending offices.
That’s because, when mortgage lenders embrace the back-end technology that enables a truly digital mortgage, Loan Advisors will be able to work from anywhere. Here’s a look at how that can happen and what it means for the industry.
The Decentralized Future of Mortgage Lending
A generation ago, mortgage lending offices were a necessity: you had to have a physical place to fill out and process all that paperwork.
Today, though, digital lending means borrowers can provide most of their information online.
When mortgage lenders adopt the software that enables a true digital mortgage – that is, cloud-based software that has a completely integrated back end – Loan Advisors can use web-based tools to compare rates, structure loans, and even send disclosures and get signatures.
And because Loan Advisors no longer depend on their coworkers’ completion of manual processes to structure loans, they don’t need to be in the same building as those coworkers to check on the progress of their work.
That means, of course, that, for lenders offering a digital mortgage, Loan Advisors can do their jobs from anywhere, including coffee shops and coworking spaces.
While it may still be useful for borrowers and Loan Advisors to meet face to face, there’s no reason that those meetings have to take place in a bank, credit union, or other traditional lending office.
That means increased convenience for borrowers, but it also has exciting implications for lenders’ bottom lines.
Stay Competitive with Digital Lending Startups
In late 2017, Quicken became the largest originator of residential mortgages in the United States, and it’s far from the only fintech company competing for market share. While traditional lenders are innovating to keep pace with fintech disruption, they’ve been hindered by their legacy structures, which come with legacy expenses. Like real estate.
For branch locations, where foot traffic is expected to drop 54 percent by 2022, paying to maintain an office space where Loan Advisors have a desk and file cabinets amounts to paying commercial real estate prices for storage.
After all, the best Loan Advisors are great relationship builders, which means they have to spend time where potential customers and partners are. When they’re free to do that without being tethered to a single office location – when they can work in a coffee shop between open houses, for example – they can do their job more efficiently.
All this is good news for traditional mortgage lenders, who can expect to make an additional $2,000 per year per employee who no longer needs a fixed desk. Those stronger revenues can help traditional mortgage lenders stay competitive with fintech startups.
Attract the Next Generation of Loan Advisors
The good news doesn’t end with leaner operating budgets. When Loan Advisors have the option to work from coffee shops and coworking spaces, lenders will find it easier to attract and retain younger workers to fill those roles.
A recent Deloitte study found that half of Millennial workers (those born between 1981 and 1996) and 44 percent of Gen Z workers (those born between the mid-1990s and mid-2000s) consider flexibility at work key to loyalty. In other words, younger workers able to set their own work location and hours are more likely to be loyal to their employer.
That’s essential for an industry expected to grow faster than average in the coming years: recruitment and retention will be key to lenders that hope to remain competitive.
How to Embrace the Future of Lending
Of course, the first step to enjoying the benefits that the decentralized future of mortgage lending has to offer is to adopt the technology that makes that future possible. If you’re not already facilitating the digital mortgage for your Loan Advisors, get in touch. We’d love to show you what’s possible.
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