Lenders must invest in improved customer experiences – or fall behind
As the COVID-19 crisis continues to transform our economy, businesses that have been able to thrive and succeed are using technology to create differentiated customer-centric experiences. The likes of Amazon, Netflix and Spotify have set the gold standard when it comes to deliver customization and efficiencies to their existing customers. It’s time for mortgage lenders to do the same.
The reality is that banks and lenders face fierce competition when it comes to wooing borrowers, including those with whom they have existing relationships. While some large organizations are increasing their investments in technology to improve their mortgage business, most lenders still operate in an analog world.
The biggest challenge for mortgage lenders today is that only 22% of borrowers stick around and become loyal customers. This is primarily because the post-closing relationship a lender has with a borrower revolves around simply collecting payment, with little outreach or value-added assistance. The loss of these potential customers comes at a very high cost to lenders, who typically spend up to $1,500 in acquisition costs for each new borrower.
The best investment banks and lenders can make is in a true “customer engagement platform” that allows their existing customers to manage their existing home, search for a new home, and explore financing options online. one place. Integrating this platform into the lender’s website and mobile apps can alleviate the need for customers to make two external stops: one to an external real estate database and one to another mortgage provider.
If you’re a loan officer or a mortgage company executive, you’ve probably dreamed of having a Zillow-like platform integrated into your website. It doesn’t have to be a dream anymore thanks to the rise of real estate data companies and co-branded technology platforms.
However, it is not enough for lenders to invest in a dynamic user experience that gives customers instant access to properties and mortgage options. Implementing a customer engagement platform should be complemented by a thoughtful strategy to attract and retain new and existing customers.
Above all, it’s important to make your customers want to explore your real estate platform once it’s integrated with your website. This can be done by highlighting the platform in online portals, personal client account pages and personalized emails. Let customers know that you are offering access to something new that can make their home buying experience much easier and more personalized.
It’s equally important to keep customers engaged once they’ve engaged with your platform. Rather than letting customers drift to a competing property database or lender, continue to engage with customers through follow-up emails and interactions. This should include proactively providing updates on a customer’s current home price or alerts when new inventory matches their search criteria.
Another important strategic move is taking the time to understand a customer by tracking and evaluating their interactions on your platform. Assess whether they register properties in certain geographies or with specific attributes, using refi calculators and sharing property listings with other parties. There is an enormous amount of information that can be gleaned about a customer’s intent and, in turn, applied to personalized follow-up communications.
America’s largest financial institutions are already beginning to understand the value of outsourcing the home buying experience. Given the amount of time customers already spend on a financial institution website, adding an engaging home buying experience to the interface is a no-brainer. Savvy institutions are positioning themselves to reduce customer leakage and beat the industry average retention rate of 22% in the years to come.
The combination of investing in the right technology and adhering to the right strategy can underpin a differentiating customer experience that drives more loans. While there are a number of considerations, including cost, business security and compliance, now is the time for banks and non-banks to use new technologies to compete more effectively than never.