Posted by MeridianLink | October 19, 2021

Satisfying Your Customers (and Yourself) with the Right Loan Origination System

If you’re in the digital lending industry, 2021 is really a great year. For us, we don’t need to anticipate the future – it’s the present.

Bank of America recently announced that 68% of consumer mortgages were made via its digital platform in 2020, and the vast majority of their clients were digitally engaging with them. According to Forbes, 82% of banking and lending professionals polled in their recent Insights Survey Report said digitalization was transforming the mortgage process.

For a broker or lender looking to capitalize on the demands of the digital marketplace (while keeping customers happy), it’s tempting to rush in and simply click the “buy” button on shiny new loan origination software.

But a savvy lender will approach the decision more strategically. While a solid loan origination software can create efficiencies and reduce paperwork, it’s only part of the picture.

The first step? Examining your own performance.

Knowing When (or If) to Change Is Key

David Wieczorek, technical product management and design lead at MeridianLink, advises lenders who may be thinking of adopting a new loan origination system (LOS) to set up a series of internal benchmarks to identify where their business is succeeding… or struggling.

“It can serve as an early warning indicator,” Wieczorek says, advising lenders to periodically monitor those benchmarks for changing trends, market shifts or, more critically, areas where the technology isn’t working.

He also recommends that lenders reach out to consultants and other service providers, particularly if they allow the lender to compare its performance to the performance of peers. If a lender’s company is taking much longer to close than their competition, it could be a significant sign of trouble.

“I think tracking your own benchmarks and being able to compare them both against yourself and your peers are both really important,” says Wieczorek.

However, he also cautions that benchmarks don’t always tell the complete story – even if your research shows you’re outperforming the competition, your loan origination process can still be improved. “I think it’s important to assess the technology that’s out there regularly to keep abreast of new tools on the market,” he says. It’s especially true if a lender plans on making a major change to their operations.

For example, a successful retail mortgage lender in growth mode might decide to open up a wholesale branch, or even an entire division. Their benchmarks may show they’re doing great – but their existing software might not be ready to scale along with the rest of the business when that new channel opens. “Is the technology going to work when the lender opens up that new business channel?” Wieczorek asks.

One way to ensure a software platform is able to scale with your needs is to establish options, along with the ability to change things on the fly.

Scalable Options Equal Flexibility

A vendor that provides plenty of options is going to be able to respond to the changing needs and goals of the lenders they serve.

Why? “A lender is likely going to have to rely on multiple vendors,” says Wieczorek. Those vendors provide a variety of systems and services, including a point of sale (POS) system, an LOS, document providers, and others. Acting together, they allow a lender to provide an entire network of services to their customers. Making sure they’re compatible is important too, he says. “You’re going to rely on strong integrations between all of those systems.”

For example, MeridianLink has its own POS system for its customers, but if a lender finds that it doesn’t serve its needs, that’s fine. “We’ve also seamlessly integrated our LOS with 10 other POS systems out there,” Wieczorek says, giving lenders a wide range of options to find the combination of systems that works best for them. “It’s important that a lender can trade out components of the tech stack.”

This is especially important for growing businesses. A solution that supported your operations two years ago might not be cutting it now, or it might even be holding you back. It’s also an area where keeping an eye on developments in the mortgage industry pays off.

While it’s great to find a tech stack that’s flexible, scalable and meets your needs, there’s one last part that needs considering, and it’s probably the most important of all: how well is it serving your customers?

Technology is Important, But It’s Only Part of the Picture

Loan origination software is revolutionizing our industry daily, but that doesn’t mean you can simply click “on” and watch. While it’s key for eliminating burdensome manual processes, automation comes with some risks.

“Automation is critical to advancing our industry but when you set up automated procedures, you need to have backup options in place,” cautions Wieczorek. “There will be times when automation breaks and some cases when automation doesn’t work very well.”

He speaks from experience. Last summer, Wieczorek was in the middle of a home purchase and trying to get a preapproval with his lender. When he submitted his application for the preapproval, his lender’s system generated an error. It likely would have been resolved quickly, except for one other issue: the weather.

Wieczorek’s lender is headquartered in a tornado zone, and the area around the office was being battered by a violent storm. It was three days before workers were back at their desks.

Meanwhile, the lender’s automation software kept rolling along.

“They had an automated process in their technology that turned my preapproval file into a full loan after a certain number of days. Because it had already converted to a full loan, they wouldn’t let me change the target purchase price and weren’t able to generate a preapproval,” he recalls. “Their system wouldn’t allow it. Basically, their automation created frustration because it automatically advanced something when it shouldn’t have, and it didn’t meet my needs. They asked me to resubmit my application.”

Avoiding those frustrations is key to keeping customers satisfied and retaining them as clients.

Communications & Metrics Lead to Satisfied Customers

“As a borrower, I’m going to be satisfied if my loan closes on time, at a competitive rate and cost, and with minimal stress throughout the process,” says Wieczorek.

Communication, as always, is key. Most people will buy only a few houses during their lifetime, so they have minimal experience with the mortgage process. They may also wait years in between those purchases.

“It’s a complicated process, and I think a lot of borrowers want to be educated by their lender along the way in terms of what to expect,” Wieczorek says. “If I just submit my application and don’t hear from my lender and I have to reach out to them, I think it’s going to be a stressful and frustrating experience.”

Lenders can also benefit by looking for potential gaps in their processes while finding the right mix of procedures and tech with their staff, he says. “It’s really useful if a lender builds out an entire loan-life cycle diagram that they can go through and make sure there are no holes in the process,” he says.

There are many metrics lenders can use to measure client satisfaction. Although Wieczorek says methods like satisfaction surveys are useful, they often don’t tell the entire story. He advises looking at metrics such as the average close time, or the percentage of files that make it to closure.

“Look at things like the percentage of applications that are started in your POS system that the borrow actually ends up submitting or look at the percentage of applications that your underwriter approved versus the ones that were withdrawn by the borrower,” he advises. “If the borrower starts an application but doesn’t finish it, there’s probably a problem in your POS system that you need to address. If your underwriter approves the loan but the borrower withdraws, that might be indicative of a different problem.”

Ultimately, clear communication is incredibly useful. Wieczorek says letting your customers know what’s going on over the lifespan of the loan is key to retaining their business – ultimately, if you’re providing them a great experience, they’re likely to come back to you. Even tech-savvy online account holders accustomed to digital transactions appreciate a post-loan phone call, he says.

“It’s all about building and maintaining trust along the way.”

Finding Your Particular Solution Is Key

Formerly known as LendingQB®, MeridianLink Mortgage is a cloud-based loan origination software platform. Designed to make the end-to-end process as frictionless as possible, MeridianLink Mortgage offers an open API, web portals, eDocs, and other tools allowing you to maintain your processes while staying compliant with regulators.

Want to know more? Contact a MeridianLink loan origination expert today!

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