PERSON OF THE WEEK: Joey McDuffee is director at Wipro Gallagher Solutions, a Wipro Limited company offering end-to-end technology products and services for mortgage, consumer and commercial lenders. MortgageOrb recently interviewed McDuffee to learn more about how multi-channel lending is reshaping mortgage lenders' approach to technology and customer service.
Q: What does a multi-channel lending model look like?
McDuffee: The advent of digital technology is redefining multi-channel lending. On the one hand, lenders will add wholesale and correspondent channels to open up their market potential beyond the traditional retail branch. On the other hand, lenders are incorporating digital channels, such as online and mobile, to directly engage borrowers in the lending process. A true multi-channel lending model is really about expanding reach and offering the borrower more choices across branch, business partners and through technology.
Q: When or why would a lender add new channels?
McDuffee: Again, the primary goal is to be more accessible to borrowers and provide more choices as to how they interact with the lender. In the current purchase market, more lenders are looking to expand TPO business channels to offset some of the trending decline in the refinance model or to reach underserved or niche borrower submarkets. Right now, what these lenders are looking for is a bigger piece of the smaller pie. During the refi market, the low interest rates drove high levels of borrower demand and less was required to attract these customers. In today's purchase market, there are a number of positive economic indicators and a steady increase in mortgage applications, yet inventory remains limited.
For example, here in Nashville, last month's single-family inventory was down 13% from a year ago. Although there may be plenty of borrowers looking, conversions will still suffer at the hands of low inventory.
This brings me to the second point: Lenders must look at other ways to build and sustain their pipeline over a longer period time. It isn't enough to just churn out an application and move on if the borrower isn't ready to buy. Lenders need to invest in delivering an experience that will keep borrowers engaged over the long haul. With digital channels, such as mobile and online, lenders will deliver a paperless, on-demand and ‘self-service’ experience that most borrowers – especially millennials – desire.
Delivering a convenient and high-tech experience will allow lenders to build credibility with the borrower and, if leveraged effectively, will ensure consistent, automated communication with the borrower that will ultimately increase the likelihood they will return to the lender when the time is right. The way in which lenders interact via their website and via digital communication channels can impact the borrower's perception – and ultimately, determine whether they or the shop down the street captures this business.
Q: What role does technology play in adopting a multi-channel business model? What are the benefits to the borrower and the lender?
McDuffee: Technology should really be seen as the gateway to lender differentiation. With the right technology in place, a lender is able to gain a single customer view across all channels – whether via a branch, call center, Web portal or through a mobile app. Having this single view will enable the lender to provide a ‘mortgage concierge’ approach to the application process. The ability to provide the right data at the right time enables this approach, and having a set of workflow-enabled processes and back-office systems that can expose this data at the right moment is critical.
In addition, the lender will increase productivity if its systems and platforms are interacting seamlessly. Conversely, if a mobile or Web-based application does not synchronize with a core origination system, the lender will experience productivity losses and will deliver a disjointed customer experience.Â
From a digital perspective, there are various aspects to consider, including the responsive layout of the website, the user interface and user experience. The average time a typical user spends on a website is less than a minute. Therefore, designing an inviting and intuitive borrower portal or mobile application will increase the likelihood that a lead transforms to an actual loan.
Pursuing a consistent, convenient, technology-enabled multi-channel lending model equates to having a sophisticated, seamless, borrower-driven technology strategy. Lenders that neglect the importance of technology's role in multi-channel strategy are missing an opportunity to differentiate themselves with the borrower. Ultimately, what a lender wants to achieve is a return on experience, because experience is what drives and retains business in today's market.
Q: When incorporating digital channels into the mortgage process, what are some of the compliance challenges lenders must keep in mind?
McDuffee: Security is at the forefront of all decisions when exposing any information via the Internet. One of the biggest IT trends amongst lenders and other financial institutions is the bring-your-own-device policy. Many times, this is leveraged in conjunction with some type of mobile device management software to ensure security policies are enforced.
Then, as part of the deployment strategy, each website or application must adhere to all of the predominant compliance rules that continue to be introduced in the mortgage arena. Regulatory challenges including TILA/RESPA, MDIA, HMDA and MLO licensing are a few that must be dealt with throughout the application process. Similar to an LOS, a lender's digital channels must also be built to meet regulators' expectations and ensure conformity.