Product teams in the mortgage industry are challenged to develop new products that are profitable and competitive. However, loan rates are far from the only factor that determines customer demand and satisfaction. According to research by McKinsey, as many as 58 percent of residential mortgage customers are dissatisfied with the lending process.
In a slowing housing market, product teams have an opportunity to reassess their product strategy and ensure they’re delivering both an optimal selection of mortgage products and the best possible service to borrowers.
Better quality data provides product teams with the foundations for product innovation, a more elastic business model, stronger risk assessments, and stable costs. With that in mind, let’s look at 4 key challenges that product teams in the mortgage industry currently face — and why TRUE is the ideal solution for each of them.
In an age where competitors are no more than a quick Google search away, companies are paying more attention to the quality of their customer experience.
According to the McKinsey report, borrowers want mortgage providers to make the lending process simple and fast. That means getting the all the right documents uploaded, with rapid advice back to borrowers if there is anything missing, incorrect, or when additional documentation is needed.
Meeting these expectations is close to impossible when data extraction and verification tasks are largely manual.
With TRUE’s AI engine powering docs-to-data and verification processes, lenders can analyze incoming borrower documents in a matter of minutes. TRUE helps underwriters check that all documents are in place, flagging any issues. Loan officers and automated messaging systems can step in to nudge borrowers to provide whatever is needed to progress their application.
2. Being held back by data bottlenecks
When volumes are high, mortgage providers tend to stick to the easiest type of loan. That’s because there is limited elasticity in the business model: manual operations processes mean that throughput can’t scale easily or quickly.
Having more business than you can handle sounds like a high-class problem, but product leaders know that it limits opportunities to win new borrowers and grow the business.
TRUE dramatically increases elasticity for lenders – automating docs-to-data conversion and verification with astounding accuracy at unprecedented speeds. One client reported that after introducing TRUE they reduced underwriter headcount from 13 people to 3 while processing the same loan volume. With TRUE, product teams can be confident that the business can scale to demand and keep costs steady even as volumes peak and trough.
3. Navigating leaner times
When the housing market slows down and interest rates rise, volume decreases. Product teams often respond by developing alternative offerings that keep the business moving and reduce idle time for loan officers and underwriters.
Low volumes can tempt mortgage providers to alter risk profiles and accept borrowers that they might not normally have favored. For example, bank statement or stated income mortgage products may be introduced, which could potentially lead to riskier customers.
In these market conditions, more detailed and accurate data can mean the difference between a good or bad lending decision. Human agents have only so much capacity to extract and analyze borrowers’ information, but TRUE has no limits. It gives underwriters a better sense of risk by enabling them to evaluate a broader spread of data points without taking any additional time.
TRUE also helps product teams to be more creative and design new mortgage products for specific profiles of borrower. One of our clients discovered that many doctors were being disqualified due to poor credit scores. Richer data allowed the lender to understand that doctors tended to be late payers, but rarely left a bad debt. The product team was able to develop a unique mortgage product for doctors that took these factors into account.
4. Optimizing for product quality
One of the drags on the introduction of new products is the need to train loan officers and underwriters on changed processes. Although this work is handled by operations teams, product leaders need to be confident that new products can be brought to market with consistent quality for risk analysis and the customer experience.
Innovative products – perhaps introduced as the business adapts to changing market conditions, as in the example above – come with a heightened risk of errors. A client launching bank statement mortgages used TRUE to automatically capture all the data underwriters would need from each bank statement, even when statement designs varied. This avoided the need for underwriters to analyze bank statements manually and allowed more time for dealing with exceptions.
By providing reliable and consistent docs-to-data conversion and verification, TRUE made it easier, faster and less risky to bring a new product to market and be confident in the quality of loan decisions and the customer experience.
Knowing that loan data will be clean and complete also makes it easier for lenders to package up loan books for the capital markets – with reduced risk of having to repurchase loans due to errors.
Helping product teams reach their full potential with TRUE
With TRUE’s AI-powered automation solutions, product teams are able to deliver strong customer experiences while quickly collecting the highly accurate data they need to design new products they know will be well-received by the market.
TRUE helps product teams get better outcomes with two solutions:
- Trapeze, which automates the docs-to-data process and gives product teams access to significantly more data
- VerifAI, which enables product teams to assess the quality of entire portfolios, not just small samples, in hours instead of days — giving them confidence in the products they sell on the secondary market
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