Expert Predicts Competition For Online Mortgages To Skyrocket
MEQUON, Wis.-Get ready for a surge of online competition in mortgage lending.
A survey of 330 financial institutions conducted earlier this year showed that while only 18% of all FIs are using "smart" online mortgage application technology and 39% do not even provide PDF or HTML application forms, 71% of the institutions surveyed expect to provide advanced real estate lending platforms in the future. Banks and credit unions expect mortgage volume through their online channels to grow by a combined 157% in just three years.
For now, credit unions hold a distinct advantage over their banking competitors in familiarity with this channel. In the survey conducted by Lieberman Research Group on behalf of Mortgagebot, credit unions reported that they already process one-fifth of their mortgage applications online and expect that number to grow to 31% by 2013. Credit unions are also twice as more likely to be more attuned to intelligent online application technology; 44% of CUs said they were "very familiar" with the channel while only 21% of banks responded similarly.
"The credit unions do a higher percentage of their applications through the online channel. They really push their members through that channel," said Dan Wilbon, chief marketing officer at Mortgagebot. "They are really more attuned to using technology to serve their members."
While the survey revealed that financial institutions expect online self-service to grow as quickly as loan officer led volume falls, cost is not a major factor for why they are embracing the burgeoning channel. By significant margins both banks and CUs said they were using or looking into the technology to serve borrowers.
"They just feel they need to meet the borrowers where they are and they are on the Internet," Wilbon said.
While credit unions hold the advantage today, banks are quickly catching up. As CUs expect a 55% increase in online mortgage volume by 2013 according to the Lieberman survey, banks are looking for a 225% increase in volume in that same period. CUs may be able to retain their edge, however, by focusing on channel integration. By a wide margin, 56% to 23%, CUs said POS integration is "extremely" or "very" important and that could bode well for member satisfaction.
"I [think] credit unions are more attuned to delivering outstanding member experience, so they know the last thing they want to do is have one technology for the loan officer and another online and they don't talk to each other," said Wilbon .