First Interstate Bank of Billings, Mont., attributes $1.3 million of new residential home loan revenue it recorded last year to Mortgage Returns, a Web-based customer retention and marketing tool, which costs the bank roughly $21,120 a year to use.

The service emails loan officers ideas for loan products they can pitch to existing borrowers. A percentage of residential mortgage borrowers will buy investment properties or second homes, or refinance their mortgages, whether to take advantage of better available rates or to use for home improvements, reduce credit card debt or pay for college. So being able to make such loan offers to such customers, by staying in touch with them for the life of their home loans, is important because of the promise of revenue to the bank.

Mortgage Returns offers such capabilities by providing users multiple, preset "triggers" that can be customized for each borrower, which alert loan officers to specific sales pitch opportunities, such as for refinancing. The emailed reminders range from alerts to customer birthdays to dates when adjustable-rate mortgages reprice or when big balloon payments are due. An interface provides options to convey the subsequent pitches to customers through direct mail or email in a fairly automated fashion, or users can track their phone-based follow-ups.

Competing solutions known to serve similar-size institutions include ARG InterActive, BNTouch Mortgage CRM and LendingSpace. Customer data is pulled from a loan origination system to populate the fields in 300 templates that banks can send to customers either via email or as Microsoft Word-created letters. Managers can review usage.

Loan officers can also set up Mortgage Returns to automatically send out direct-mail mortgage statements or yearly or semiannual reviews without pitches: It's up to the bank whether to attempt real sales or instead, simply supply content aimed at reminding customers of their links to the institution. Such customer retention and sales efforts are particularly important for loans in which servicing is sold off to another bank. The $7.3 billion-asset First Interstate sells most of the residential home loans it originates, and services those sold to Fannie Mae or Freddie Mac from the bank's Casper, Wyo., payments collections center. But it sells servicing rights on loans sold to other banks including BB&T, JPMorgan Chase and SunTrust.

"I want my customer coming back to me, not to Chase," says Paul Peterson, vice president and manager of home loans at First Interstate. "So if you did an ARM we'll use Mortgage Returns to send you something six months ahead of the ARM adjustment. If we did a conforming loan for somebody at 5%, and rates dip below 4%, we'll ask you about refinancing. Because we could not only lose the existing servicing, we could lose the new business, too. So it's about customer retention."

First Interstate, which has 71 branches in Montana, Wyoming and western South Dakota, plans to integrate Mortgage Returns with its loan origination system, Mortgage Builder. The goal is to directly feed the marketing system with the bank's residential home loan data more automatically.

The process currently requires a First Interstate administrator to pull and scrub loan files monthly, and hand them off to MOVEit, a third-party secure file transfer system from Ipswitch. Mortgage Returns can handle direct data feeds, but Peterson says the bank must do more work on its end first to ensure clean files buttress any tighter integration.

Nevertheless, he says, Mortgage Returns has already provided returns. "Of the 4,500 loans we originated in 2011, about 640 came from Mortgage Returns, which in dollar volume is about $132 million," Peterson says. The $1.3 million revenue figure derives from the bank assuming 1% net revenue on $132 million. Peterson additionally figures the bank's approximate cost per loan for using Mortgage Returns is about $33 per loan, which he calculates by dividing the roughly $21,120 that Mortgage Returns costs the bank per year, which includes licensing and separate costs for additional services like direct mail and email marketing, with the 640 new residential loans.

It's impossible to say with certainty that the new business can solely be attributed to Mortgage Returns. That's because numerous other factors are involved besides the specific technology used in the lending business, just as multiple inputs influence any financial endeavor. But Peterson links a boost in home loan volume to the tool, which the bank implemented in the fall of 2007 based on his recommendation.




BANK: First Interstate Bank, Billings, Mont.

PROBLEM: The bank needed its busy loan officers to boost home loan origination among existing borrowers.

SOLUTION: Software that creates and automatically emails customized pitches.