When it comes to online shopping, consumers look for the best experience. Thanks to the advances in digital technology more and more online platforms for different products and services are now focused on bringing a change in their customer acquisition methods to ensure better user experience.
Practically, you will see that almost every sector of the economy is using technology to the fullest to make their service the best. Among these, the automobile and lending industry seems to be the forerunners. They are always ready to make a few sweeping updates, especially in their sales approach and service processes.
With the use of new tools and technology, several financial companies have started to use the most sophisticated tools and technology available to make their online user platforms more and more attractive, useful and easy to navigate. Tools and techniques such as machine learning and AI have made it incredibly easy for the money lenders to:
- Guide their customers through the entire loan origination process
- Discover all other additional opportunities provided by them
- Use the available data from the loan applicants to customize each loan product and financial services to meet the specific needs of their customers.
This has made the process faster, better and more secure helping both the borrowers and the money lenders.
Better for the entire industry
The finance industry is wide and extensive and in fact, is a huge umbrella that covers almost all sectors of business. With such a huge area of operation and such a diverse range of customers with an equally diverse range of wants and demands to cater to, manual operation is unthinkable in the present time. Use of financial tools and technology has helped the entire finance industry and the statistics of each proves this fact significantly.
- In the mortgage sector of finance industry it was seen that within the third quarter of 2017 the total outstanding mortgage debt for residences meant for one to four family members in the US exceeded $10.5 trillion.
- It is also found that it will continue to rise even more despite the fact that the industry is yet to recover all of the lost ground in the last decade due to the financial crisis that led to significant loss in revenue and business profits of the finance industry as reveled through different experts like libertylending and research reports.
- In addition to that it is found that the home prices as well as the volume of loan originations are continually rising upwards in the past several years. This is in spite of the array of technical problems that the mortgage lenders usually face in delivering their services.
These problems are typical and coexistent in all segments of the finance industry. This is because of the complexity in the process, the time required to process a loan and the lack of available data at a given point of time. This plagues the lenders as well as the borrowers alike throughout the loan origination process.
According to facts and findings published by the Federal Housing Finance Authority it is revealed that:
- 18% of all home loan applicants are compelled to redo their paperwork and
- Nearly 24% of the applicants found that their closing dates were postponed.
The report also notes that the borrower satisfaction level with the closing process is usually high. However, the numbers indicate that this level of satisfaction is found to be low among the younger applicants.
Usability And Convenience
Now, the question that may arise is why this younger generation seems to get a low satisfaction and inferior user experience? This is because they want more convenience in the process and are more and more tech-conscious. They tend to judge a service or an online platform on the specific metrics of usability and convenience.
With the rise in demand in real estate and the prospects of lending in this specific sector such as the ever rising interest rates, more and more fintech companies are entering into the real estate market. This will ensure that the users, irrespective of their age will find more convenience when they borrow money for whatever purpose.
Implementing technology into lending will not only speed up the origination process but will also guide the borrowers from start to finish. The current efforts of the fintech companies primarily focus on two main aspects:
- Streamlining the user experience for the borrowers and
- Improving the data management process that may be required for loan underwriting.
With intent to smoothen the borrower experience the online lending platforms allow users to apply for a loan without even having to meet the loan officer or make a call. The technology provides a lot of benefits such as:
- Giving the customers the ability to upload documents
- Manage their applications on their own schedule
- Reducing the time for the loan processing and
- Lowering the cost of borrowing.
In short, consumers now can have quicker loans through a more convenient process. It is all due to the subprime lending process followed by the banks and financial organizations now. The loan origination costs are not passed on to the customers as the lenders have found the ways to reduce these expenses by automating the loan origination as well as their underwriting process.
Big data backend
Apart from the convenient and faster loan processing, the use of technology in lending has also helped the lenders to verify credit scores of the borrowers, track different information related to their payment history and finally evaluate their credit worthiness flawlessly.
All these automated processes results in the reduction of cost and this saved amount is translated into more reasonable loan fees for the borrowers.
The useful data collected and stored in the systems eliminates the need for any costly manual effort to gather the same. The technology based solutions has enabled them to find more useful and innovative ways to handle customer information and analyzing more efficiently enabling them to act in a better way according to the available data and information ensuring best user experience.