Overcoming the Top Challenges in Mortgage Lending Industry with Digital Solutions

COVID-19 caused considerable shifts in the mortgage lending services industry amid the volatile market landscape defined by increased customer expectations, reduced rates, and sweeping policy measures to contain the pandemic.

While the situation triggered demand, it also heightened the need for operational agility, customer engagement, and compliance. The new “digitized” market landscape put the financial services industry, including lenders through various challenges while opening new opportunities.

For example, the digital lending experience took the front seat, wherein customers expected financial institutions to offer them fast and precise services focused on delightful experiences.

According to Million Insights, the global digital lending platform market is projected to amount to USD 15.3 billion by 2026, which indicates sizeable opportunities for digitized businesses.

In contrast, “customer retention” was a challenge for mortgage lending services companies, as easy refinancing and restructuring options helped borrowers reduce their loan costs, resulting in switchovers.  As the situation tapered, the demand reduced due to the rate hikes, and now, “servicing” and handling delinquent accounts are among the key business challenges for mortgage lenders.

Let us look at some of the critical challenges mortgage lenders face today.

The 3 Key Challenges Faced by Mortgage Lenders

1. Operational Inefficiencies

Mortgage lending is an “operations-heavy” business relying on several complex and manual processes that are repetitive and interlinked. Nonetheless, these processes, spanning the back, middle, and front office business and technical operations, need to follow a rigorous approach to meet regulatory compliance and required outputs.

These processes lead to inefficiencies, productivity issues, and errors, inflating the overall operating costs and turnaround times.

2.Compliance Risks

The paper-based documentation practices followed by conventional mortgage lending businesses can expose them to compliance risks due to obsolete or missing records. Also, physical records are prone to damage, loss, and inaccuracies due to various reasons such as human errors, environmental conditions, etc.

3. High costs

Mortgage origination involves substantial costs due to extensive human capital involvement, complex transactions, and the need for high accuracy and diligence. According to McKinsey, the origination cost per loan in 2021 was $7000–$9000, highlighting the critical need to build a cost-efficient ecosystem.

Overcome These Challenges with Digitization

Digital solutions like Robotic Process Automation (RPA), Data Analytics, and Optical Character Recognition (OCR) can help address the above challenges and transform the mortgage lending industry by automating repetitive processes and eliminating redundant ones.

  • The digitization of data can allow mortgage lenders to automate document extraction and indexing through RPA and OCR solutions reducing manual labor. It can help create automated digital knowledge management systems for lenders.
  • These intelligent digital solutions can free up the capacity of the human talent pool, allowing them to focus on strategic, higher-value tasks that need manual supervision.
  • Solutions such as AI-powered face recognition and document extraction can enable remote KYC and customer due diligence.
  • Digital solutions can also help mortgage lenders redesign their processes to make them more efficient, agile, and customer-centric.

Accelerate Your Digitization Journey with Anaptyss

The traditional mortgage lending organizations need to speed up the adoption of digital solutions to streamline their operations.

Anaptyss’ Digital Knowledge Operations™ framework provides intelligent digital solutions that leverage AI-powered technologies like document indexing, robotic process automation, text extraction, and more to transform mortgage lending and other BFSI processes.

Further, Anaptyss’ seasoned industry experts offer expert consultation to allow a practical, compliant, and realistic implementation of digital solutions. By bridging the gap between operational capacity and technology, Anaptyss can help transform your business to implement cost-effective solutions and deliver business outcomes.

Want to know more about how we can help digitize your mortgage operations?

Please reach out to us at: [email protected].

Alka Jha

Associate Director – Mortgage

Alka is an experienced professional in the mortgage lending domain with rich exposure to operating and managing across diverse functional areas such as quality and process.

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