Having spent much of the past year interacting with community bank executives in both formal client settings and at major industry events, like ICE Experience and the MeridianLink User Conference, there is broad consensus that digital lending is the future. Where there is less agreement is what will that future look like and how to go about achieving it.
Opinions and strategies diverge over what is the right balance between digitization and the customer experience and whether end-to-end transformation is the only way to harness the power of digital lending.
FirstClose is currently working with community banks to differentiate and dramatically improve the efficiency of their home equity lending programs. Increasingly, we’re seeing clients fall into one of two “camps.”
Camp #1: Prefer a seamless end-to-end borrower experience through a self-serve process that can be entirely remote. (A subset shares the same ultimate vision, but for various reasons are taking an incremental approach, building out their solution one component at a time.)
For example, one client has experienced a significant increase in leads and pull through using our borrower-facing point-of-sale solution. Their customers can use the POS to get instant feedback on their home valuation, available home equity and loan options. By providing a minimal amount of information, they receive a firm decision on CLTV and pricing in 5 to 7 minutes.
Depending on the customer’s preference, all interaction can be done online including consent to collect and verify bank, asset and employment information, uploading documents and chatting with LOs or processors. Customers can also select their initial draw, provide account information for where it should be sent and even schedule a closing at their convenience which can take place at a branch or remotely. The complete process from initial inquiry to finish can take as little as one week (depending on the transaction type).
Camp #2: Prefer to keep the “personal” in-branch origination experience. In this approach, they aren’t tampering with the front-end of their home equity process. Instead, they are digitizing their back-office and vendor management processes to significantly reduce turn times and take cost out of the process.
We’re seeing several of our clients taking the best of both worlds’ approach to home equity by implementing a core component but still originating home equity transactions in-person. This way they’re able to keep pace with growing home equity volume by using our settlement services ordering technology to automate back-office manual processes.
Each approach leads to improved ROI and customer experience.
You are in a unique position to capitalize on the growing home equity market but need to implement solutions based on the approach that’s right for you and your customers. In some cases, it will be an end-to-end, digitally transformative initiative. Others will be more plug-and-play that focus on a single component but transform backend processes, like a settlement services ordering platform. But the bottom line is that both approaches are changing the future for home equity lenders and most importantly, benefiting the customers served.