5 Ways Digital Lenders are Improving Customer Experience
As housing prices in the US increased by 20% in February of 2022 compared to 1 year before, it is becoming ever more important to consumers to be able to apply for a loan quickly. Digital lenders are the future of loan origination.
Here are 5 ways digital lenders are improving the mortgage application process:
1.) Quick Access From Any Location
Digital lending provides a service that can be accessed from any location. This can benefit low-income individuals who do not have transportation to visit an in-person lender for example.
Digital lending also helps lenders access a wider audience that they would be restricted from due to distance if they only offered in-person loan applications. This is because the online application process eliminates the need for face-to-face meetings when applying for a loan.
2.) Expedited Application Process
The digital application process eliminates some of the worst parts of applying for a mortgage. One example is consumers would no longer need to meet in person at their local bank, filling out large amounts of paperwork, and waiting long periods for the paperwork to be processed.
Online mortgage applications allow users to upload necessary information and documentation quickly which will be sent to a digital lender immediately. Many digital lenders use automated software which allows for quick review of applications and a quick response.
3.) New Generation of Borrowers
Millennials entered the housing market in the past decade and gen z is next to enter the market. Millennials currently have the largest share of the housing market. Studies have shown that a good portion of gen z plans to own homes in their futures.
With these generations beginning to dominate the housing market, it is inevitable they will be applying for mortgages. Millennials and gen z were also the first two generations to grow up in the online era. With both generations being very reliant on technology and the internet, online mortgage applications would be the most attractive option for their demographic.
4.) Reduces Discrimination Towards Minority Groups
The face-to-face mortgage process is much more likely to result in minority groups to pay higher interest rates on their loans. According to an article from Forbes, black and latinx borrowers pay an interest rate that is 0.079% more than other borrowers, which results in about $765 million paid towards interest.
The digital mortgage process reduces the higher interest rates by more than 30%. This is a great improvement for minority customers that they likely would not have seen with continual use of the face-to-face application process.
5.) Personalized Experience
Providing a personalized customer service experience drives an increase in customer satisfaction. Digital mortgage applications provide multiple modes of personalization for customers.
One example is allowing users to upload documents at whatever pace they choose. Data collection from customers using the application also creates opportunity for personalization as the digital lender will be able to target specific products to the borrower.
Conclusion
Fintech companies have introduced a new era of mortgage applications for consumers. Digital lenders have improved customer service by providing a quick, easy and effective mortgage application process.
While housing prices will continue to increase in the US, customers will continually seek fast and effective ways to find mortgages that match their preferences and work best for them. Digital lenders are customers' best bet for satisfaction in the mortgage process.
Sources:
Yale, Aly J. “Digital Mortgages Reduce Discrimination (and Loan Costs) for Black and Latinx Borrowers: New Study.” Forbes, Forbes Magazine, 24 Nov. 2020, https://www.forbes.com/sites/alyyale/2019/10/01/new-study-digital-mortgages-reduce-discrimination-and-loan-costs-for-black-and-latinx-borrowers/?sh=6c9515d5af3b.