FinTech innovations aren't just for FinTech companies

The mortgage industry gets a bad rap for dragging their feet into the digital revolution, but at this stage in the game, the big players have adapted and adopted what they need to survive. What will they do going forward?

Although the innovations in technology as they apply to the mortgage industry have been led by FinTech companies, traditional mortgage lenders have reaped the benefits as well, and at this stage are poised to compete in the mortgage space.

Compliance costs climbed post-financial downturn. Lenders didn’t enter into the FinTechspace willingly, but Alok Datta, president of SLK Global America, said that it became pretty mandatory for lenders and traditional mortgage companies to explore the options that FinTech had to offer in order to have a financially feasible (let alone profitable) business.

“Mortgage industry professionals have been doing this for a significant period of their life, and most times when that happens, [they] tend to believe that that’s the only way to do it. Some of the new FinTech companies are coming and changing that paradigm, it’s just that some of the existing players are slow to react to it. But having said that, some of the big banks are taking a leap from the FinTech organizations’ books and making those changes,” Datta said. “My sense is that it’ll change and change significantly and the Fannies and Freddies are making it a more level playing field with some of the new tools, techniques, and regulations that they are coming out with, which are pushing lenders to adapt to the new normal.”

When industry leaders come out with a state-of-the-art product that pushes the limits of what’s currently possible, it pushes players industry-wide to look at their own internal processes differently. The impacts of large-scale changes have trickled down to those on the smallest scale of lending, and each effort that lenders, mortgage companies, and FinTech giants make collectively pushes the mortgage industry further along the digital highway.

Eventually everyone benefits from the competition between FinTech companies and traditional lenders to come out with the latest and most relevant mortgage technology.

“It significantly reduces the time to fund. It significantly reduces the iteration for the potential borrower, it reduces errors in the process, because with automation coming in, some of the human errors are eliminated, so I see a host of upsides. From business metrics, your time to fund goes down so your pull through goes up, your customer satisfaction goes up, and over a period of time your cost to fund comes down. So it’s a win-win from a lender standpoint,” Datta said.

As with any industry, there are early adopters, there are willing adapters, and there are resisters, but survivors generally tend to fall in line. And as there’s no going back to the land of the luddites, either. The benefits are significant, and lenders and consumers alike have recognized that.

“Where companies like us or other FinTechs have an edge or can do more of is to clearly articulate what is the problem that we are solving with the technology. At times, we are more enamored by the technology than a solution to business problem. And I think that’s where you’ve got to marry domain to technology to get the right kind of solution,” Datta said.

Starting a process with a clear goal in mind is key when it comes to driving adoption. Everyone wants to appeal to their consumer base and implement easy-to-use, popular technology, but lending organizations need to look at it from a more strategic vantage point: how to gain more market share and increase the profitability per loan. The right technology needs to be married with the right domain because technology by itself may not necessarily drive the required value, and the right checks and balances need to be in place from an informational security standpoint in place to ensure that there are no potential breaches, Datta said.

“Once we can talk that language, I think it makes it easier to penetrate those organizations of industry. I think right now, the focus is so much more on, ‘the millennial behavior is to use a mobile, so let’s start pushing mobile.’ And that’s good . . . But we’ve got to start talking the language that a mortgage leaders understand.”