After years of relying primarily on rates to bring in customers, the increase in financing costs in the past year has made it clear that mortgage lenders need to step up their game. They not only have to attract new borrowers, but they have to retain them for referrals or future business down the road.
When it comes to both tasks, there is a particular challenge in reaching younger generations, and the key to solving it is knowing how to communicate with them using data and technology.
“They’re used to interacting with brands that deeply understand their preferences,” said Joe Welu, founder and CEO of Total Expert, a provider of technology used to manage customer relationships. “The communication they get is always in context. Think about Apple TV, Netflix, Amazon Prime, or any online business that recommends content or purchases based on your preferences. That’s the expectation.
“The next expectation is, ‘I don’t want you to call me on the phone until I’m ready to talk to you,'” he continued. “A lot of banks and lenders haven’t realized that, and it’s not that these customers don’t want communication. It’s not that they don’t want to talk to a human. It’s just they’re very particular about what moment in the customer journey they actually talk to one.”
Welu said that to address this lenders have to take a multichannel approach to digital communications that essentially tests what would-be borrowers respond to and when, while personalizing future interactions based on any feedback they give.
“You have to be able to use all channels at any given time. Then you have to be able to use the data and the intelligence around that individual customer to dictate which channel to utilize and what moment in time you use it,” Welu said.
It’s a process Welu said is complicated further by the need to comply with privacy regulations, and the fact that the digital communication channels younger generations are drawn to can shift.
And while a company like Total Expert can provide technology that helps build customer data and manage the automation of responses to it, lenders the CRM vendor works with still have to figure out how to get customers engaged with their front-end software in the first place.
To get a sense of what lenders are testing with as a means of doing this, we talked to an executive from one of Total Expert’s lender partners about a couple of the technological innovations his company is pursuing to this end.
An instant measure of borrower home buying power
“One of the needs that I saw was for a quick prequalification,” said Shashank Shekhar, founder and CEO of InstaMortgage, a digital lender based in the San Francisco Bay area.
“A lot of younger borrowers do not want to take that leap of faith in terms of ‘send me the entire mortgage application, let’s pull your credit, let’s figure out what you qualify for,'” he said. “A lot of them are at a very early stage of home buying and for them, it’s about, ‘I don’t want to do all of that, I just want to figure out, broadly speaking, how much do I qualify for?’ That seems to be big based on my conversation with dozens of my younger first-time home buyer clients.”
The company released technology in May that does more than a basic online calculator and less than a full preapproval of the borrower, returning a prequalification letter to those who input their information and allow a soft pull of credit, Shekhar said.
The processing time to produce a downloadable letter signed by a loan officer takes around 90 seconds.
“It’s more precise in the sense that calculators typically just consider one thing, the debt-to-income ratio. In this case, we are doing a soft pull of the credit and running a host of other underwriting guidelines,” Shekhar said of the company’s new Insta Pre-Qual technology. “We built this specific tool ourselves because there has to be an underwriting component built into your engine and it has to run in the background, so it’s not very straightforward.”
Personifying ChatGPT
Another thing some mortgage companies may do to engage younger borrowers who like digital content and talking to devices like Siri and Alexa is to experiment with using a personified version of ChatGPT as a means of answering prospective customers’ questions.
“It allows a chatbot to take a more human-like form and be more conversational, not just with text, but also voice. So you can talk to Rachel, which is what we call our digital human,” said Shekhar. “It’s not just text to text, it’s text to video and audio, which is more interesting from a user interface perspective.”
There’s a lot to consider when creating a digital human to answer questions. The answers need to be tested for accuracy, and the digital human’s appearance should ideally appeal broadly to younger generations in the United States that are becoming increasingly diverse.
InstaMortgage has been testing “a culturally neutral look” but an American woman’s name and voice, Shekhar said, noting that both got positive reviews in preliminary consumer surveys.
“We will be constantly looking at feedback almost on a daily basis and responding to it,” he said.
The concept of using a digital human to answer questions isn’t new, but hasn’t been used as much in the mortgage industry as it has in some others, said Shekhar, stressing that the technology is still “not ideal.”
Given rules about having a licensed professional involved in the origination of a mortgage, companies have to be very careful about the information they allow a digital human to give out.
“Rachel, of course, at no point of time, can start acting like a loan officer, start giving out rate quotes, preapprovals and all of that, so we have to be careful,” Shekhar said.
Some of Rachel’s limits come from the way the technology works, he noted.
“Right now if it’s integrated with ChatGPT it’s not able to perform other functions,” Shekhar said. “We are hoping we can add more features later on, but as of now, we are kind of tied to one experience.”
“I really wanted to get to a point where you could get all the investor underwriting guidelines and everything else,” Shekhar added. “That may be possible in the future. The technology has a more limited use right now, but it is a way I can see for lenders to make it more interesting for younger audiences to visit their websites.”
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