Mortgage borrowers want a process 'like Amazon' — speedy and intuitive
December 28, 2018 1:46 PM
The mortgage industry is making digital progress. While certain conditions may affect its strategies and pace, the mortgage world is aiming for a quicker, more automated cost-efficient process, all while battling for market share.
In 2019, artificial intelligence will continue to mold the industry, new entrants will shake up the space and technology will help traditional roles evolve, says Teresa Blake, managing director at KPMG. Blake, being well-versed in the tech sector, led different phases of Black Knight's Empower implementation for two large regional lenders. She also completed a testing program with an investment bank, among other accomplishments.
National Mortgage News asked Blake five questions on how technology will shape the industry next year. Responses have been edited for length and clarity.
In 2019, artificial intelligence will continue to mold the industry, new entrants will shake up the space and technology will help traditional roles evolve, says Teresa Blake, managing director at KPMG. Blake, being well-versed in the tech sector, led different phases of Black Knight's Empower implementation for two large regional lenders. She also completed a testing program with an investment bank, among other accomplishments.
National Mortgage News asked Blake five questions on how technology will shape the industry next year. Responses have been edited for length and clarity.
What's in store for mortgage technology next year?
Artificial intelligence will continue to make large strides to eliminate some roles in the mortgage originations space. We could eliminate the processor, and I think some organizations are starting to figure out how to do that. That's a very bold prediction — to say that we're going to eliminate some jobs — but the cost to originate a mortgage is sky high and I actually truly believe there are companies that are making strides in helping artificial intelligence learn the role of the processor and somewhere in the future, maybe it's 2019, maybe it's 2020, we're going to make great strides to eliminate that role.
I also think we're going to see some new entrants shakeup the space. There's a number of companies who are entering the point-of-sale market and that area has become saturated. You may see some new folks either jump into the loan origination system space or really shakeout the POS system. You're just going to see some new players that we haven't traditionally seen before. The market's been dominated by Ellie Mae and Black Knight, but I think you're going to see someone new come into the space who's efficient and effective and you're going to see some market disruption.
The market is so competitive right now — everybody's got new technology, everybody's got good product. The folks who figure out how to better get in touch with their current customers and make sure that they're top-of-mind when a borrower looks to get a mortgage — those who use data and analytics to really tap into that borrower and get connected to them — are going to be the ones who own the space.
I also think we're going to see some new entrants shakeup the space. There's a number of companies who are entering the point-of-sale market and that area has become saturated. You may see some new folks either jump into the loan origination system space or really shakeout the POS system. You're just going to see some new players that we haven't traditionally seen before. The market's been dominated by Ellie Mae and Black Knight, but I think you're going to see someone new come into the space who's efficient and effective and you're going to see some market disruption.
The market is so competitive right now — everybody's got new technology, everybody's got good product. The folks who figure out how to better get in touch with their current customers and make sure that they're top-of-mind when a borrower looks to get a mortgage — those who use data and analytics to really tap into that borrower and get connected to them — are going to be the ones who own the space.
In terms of tech, what can't the industry afford to fall behind on?
A lot of lenders struggle to keep up with their base product releases. The lenders who are multiple releases behind, so if you're on Black Knight's Empower, for example, and you're on 7.0 and you can't figure out how to take 8.0, if you aren't taking the current technology releases, you're really going to struggle to bolt on the new technology.
So lenders who fail to stay current are going to struggle in this market. If they're not using Day 1 Certainty already — I hate to say it — but the customers are looking for an expedited process; they want a mortgage process that's like Amazon. If you can't deliver that, they're going to find somebody who can.
So lenders who fail to stay current are going to struggle in this market. If they're not using Day 1 Certainty already — I hate to say it — but the customers are looking for an expedited process; they want a mortgage process that's like Amazon. If you can't deliver that, they're going to find somebody who can.
What industry trends will we start to see as a result of technology moves and strategies throughout 2019?
Lenders are going to continue to invest in technology in a way they haven't before. They're fighting for every borrower and every customer. Those who are smart realize that they have to stay focused on investing in the future. This is a great time to do it, because volume is lower, but I do think we're going to see heavy mergers and acquisitions activity. We've seen it pick up in a way it hasn't, maybe because of all of the regulatory work we were mired in for years. Lenders are able and have the strategic capacity to explore what else should they should be doing — acquisitions are key. If you're fighting for market share, go buy someone.
We're going to see some unique combinations. Quicken Loans' sister company, Rocket Homes, bought ForSaleByOwner.com, which to me was a very unique acquisition — they're buying a site that lets borrowers sell their homes without a real estate agent.
We're going to see some other unique ones like that, where people are trying to figure out if Offerpad is the next new thing, for example, and if they should be going in that direction or continue to win over the Realtor space. What does a Realtor look like in 10 years? That may be a very different model with OfferPad and ForSaleByOwner. And if you are a builder or a real estate agent, you may want to manage the originations process.
We're going to see some unique combinations. Quicken Loans' sister company, Rocket Homes, bought ForSaleByOwner.com, which to me was a very unique acquisition — they're buying a site that lets borrowers sell their homes without a real estate agent.
We're going to see some other unique ones like that, where people are trying to figure out if Offerpad is the next new thing, for example, and if they should be going in that direction or continue to win over the Realtor space. What does a Realtor look like in 10 years? That may be a very different model with OfferPad and ForSaleByOwner. And if you are a builder or a real estate agent, you may want to manage the originations process.
How will technology evolve traditional mortgage roles?
You're going to continue to see more system architects, business architects, you're going to need roles to be able to manage and drive new technology. The role of the business analyst is changing because of all of the advancements in technology.
Those roles are going to continue to be needed, and you're going to need folks who can think about business needs they're able to solve and how to best enable technology to do that.
Those roles are going to continue to be needed, and you're going to need folks who can think about business needs they're able to solve and how to best enable technology to do that.
Can you identify a technology need that hasn't had enough attention paid to it yet?
The one problem I'd like to be able to figure out is how to eliminate the appraiser. Whether that means using drones to do the appraisal and finding other ways to be more creative, for appraisers who have been in this business a long time and who have been struggling. I think we're going to continue to struggle to manage appraiser capacity, and if we're not thinking about how to get smart about the appraisal, we're going to run out of appraisers in 10 years. They're all going to retire, and nobody's going into that field.
The data is there and you have automated valuation models that have been working for years. Appraisers push back on using an advanced AVM, where we go out and get a property condition report. But at the end of the day, if somebody's taking a picture of a home and you see that there's no structural damage to it, and it's safe, and it's sound, and it looks to be the same it was five years ago when it was appraised last, why do we have to send out a licensed appraiser?
I don't think we'll see this next year though. This industry is going to be a tough needle to move. There's a lot of deeply engrained DNA in these appraisals, and it's going to take something to shift that. We’re not going to see it next year, but eventually it has to happen.
The data is there and you have automated valuation models that have been working for years. Appraisers push back on using an advanced AVM, where we go out and get a property condition report. But at the end of the day, if somebody's taking a picture of a home and you see that there's no structural damage to it, and it's safe, and it's sound, and it looks to be the same it was five years ago when it was appraised last, why do we have to send out a licensed appraiser?
I don't think we'll see this next year though. This industry is going to be a tough needle to move. There's a lot of deeply engrained DNA in these appraisals, and it's going to take something to shift that. We’re not going to see it next year, but eventually it has to happen.
