How Fintech is Driving the Evolution of the Mortgage Industry

Historically, financial services organizations tend to invest in new technologies at a more conservative rate than firms in other industries. There are good reasons for that, because mortgage banking, like all financial services, has risk mitigation at its core. Adopting every new technology that comes down the pike is not a good way to manage risk in the enterprise. Depending on the size, infrastructure and resources of a particular lender, the decision to adopt new technology solutions can vary and impact the overall perception of financial services industry technology advancement.

 At the same time, lenders are recognizing that they can’t afford to sit back and wait while their competitors embrace technologies that enable them to streamline operations and improve the borrower experience. Increasingly, we’re seeing mortgage lenders taking action more quickly to evaluate and adopt new technologies.

Disruption defined

Forbes magazine wrote about the “Disruption Economy” back in 2015. At the time, contributor Jeff Boss called it a “tectonic shift in technology” and pointed to its workplace response, which he said would ultimately result in cultural transformation. He predicted that the digital disruption that was already prevalent by that time would eventually compel “new thinking and behaviors and ‘end’ one trend while ironically giving rise to new awakenings that previously didn’t exist.”

For most financial services companies, the new trends were not effective in changing their internal cultures – at least not at first. But the new companies that were using technology to help banks present personal financial information via handheld devices were definitely changing the culture for those bank customers.

Today, most banking customers expect to interact with their banks from their computers and cellphones, from wherever they are at any time of the day or night. Banks that are not in a position to offer their customers this convenience are finding it more difficult to attract younger customers. Could the same be true for mortgage lenders?

Lenders competing in a changing world

While it may not have been visible in the early days, the mortgage industry was aware of the changes consumers were embracing and made moves early on to invest in fintech firms and the tools to offer mortgage borrowers a better experience in the future.

Not all lenders placed the right bet, of course, but since all lending executives are also bank customers, it was easy for them to read the writing on the wall and begin to position their firms to think and act differently in the future.

We see a great many Fintech firms that are offering new tools to the industry. Many of the most successful of these brands have traditional bank or mortgage lending stakeholders allowing them to bridge the gap between the Wild West world of web apps and the highly regulated mortgage lending industry.

An evolution in financial services leadership

Fintech firms have been a major force in the evolution of our industry because they introduced conveniences that bank customers embraced, getting the attention of the executives tasked with serving those customers. Successes and failures were celebrated openly, making it possible for observant executives to clearly see the trends and lay plans in their institutions to capitalize on these technologies.

More importantly, it opened their minds to new ways of working with their customers. This was welcomed by the lenders’ technology partners, many of whom had been proposing similar innovations for years. It wasn’t until some of these ideas had been tested by startup fintech firms that lenders felt comfortable moving forward.

While many claim that traditional lenders face an ongoing threat from fintech firms, we suspect that success will more likely come to those firms that partner effectively, placing solid bets on what will appeal most to customers and providing the convenience they want.

In that regard, few partners are better placed than the lender’s document preparation partners, because everything we do involves a borrower touchpoint.