The power of digital lending
“Digital apps and services, Zoom tips, downloaded documentation and automated assessment models have never been more important.”
Digital lending is not a new concept, but with the current pandemic it is growing rapidly and it is now more important than ever for lenders to keep pace.
Here are the three main advantages of digital lending:
1. Quick decision making
In a world where we have all had to adapt extremely quickly to remote working, and I count us all in that bracket; lenders, brokers and clients – he highlighted some of the advantages of the digital world and the fragility of analog.
Socially distanced loans? What happens to my mortgage schedule if I have to use the mail? I don’t want to leave my house, sit in a branch or in front of a broker. I can’t or won’t allow an appraiser to enter my house. All of these problems have digital solutions. Digital apps and services, Zoom tips, downloaded documentation and automated assessment models have never been more important. All of these are catalysts for quick decision making. Speed matters in different ways for different customers. We saw a superb example of this after the lockdown with pent-up demand boosting the buying market when combined with a time-limited government initiative on stamp duty.
Competition with other potential buyers for the next dream home increases, asking prices follow, speed becomes a catalyst to avoid chain collapse. Not to mention the simple act of de-stressing customers about whether or not they’ve passed the bar for a positive loan decision. That said, perhaps less important to remortgage clients, as long as a lender can complete before hitting a Standard Variable Rate (SVR). Ironically, we’ve seen examples of being too quick and getting a call or two of excuses from a broker saying they entered the app too early, resulting in an offer being issued too quickly that will expire before the end of the transaction. the customer’s current offer.
2. Free up your time
The old adage “time is money” still holds true. It has intrinsic value to all of us and our brokers would love to have more time to do things that add value, whether it’s spending more time with clients, growing businesses, or starting their own. business networks.
Customers want time to focus on other things without worrying or chasing mortgage applications. Lenders would much prefer to be able to review a file once with all the information accurately provided in the most efficient way possible to increase capacity. Digital solutions can turn time into a valuable byproduct – something we could all do with more.
The requirement for paper documentation in an environment where we cannot easily access it can be a point of delay for loan applications. While this has perhaps been felt more keenly in the commercial loan market – have you ever tried to get management accounts or business forecasts from your accountant when he has staff on leave?
This has also been a sticking point in home loans for those trying to get bank statements and payslips. Lenders who are happy to take digital copies of this information are on the right track, but with more time and stronger adoption, must Open Banking and Cloud Accounting be the ultimate solution here? ? Customer-granted permission to access digital source data of bank account data in a consumable format is both a catalyst for rapid decision-making and increased capacity for lenders.
There are clearly barriers to this being the new ‘normal’ of a brokerage position, but also where they fit into the timeline of information coming straight from the source and consumer confidence in handing over the keys. valuable information. The reality is that they have to provide this data anyway, but there is something to be said for a customer who first saw this in a tangible format, knowing exactly what is being shared before allowing it to be done by Compared to a checkbox exercise with unknown or unrevised source data hits an underwriter or decision engine. It’s not about clients having something to hide, but everything about them, feeling a level of control over what exactly is being shared, and trusting how it is being used.