It’s been a challenging couple of years for the mortgage sector.

Demand skyrocketed during the pandemic and shows no signs of slowing down. In the US, the Mortgage Bankers Association expects the industry to originate over $2.5 trillion per year in 2022–2024, at least 40% higher than 2010–2019 annual averages.

This unprecedented surge in demand, combined with the need to accommodate socially distanced borrowers and an increasingly remote workforce, ushered in rapid digital transformation.

Glenn Brunker, President of online mortgage lender Ally Home, wrote for Forbes recently that the pandemic drove lenders and realtors to “reimagine” mortgage processing and swap legacy processes for more digital-focused experiences.

It’s not all COVID’s fault, however. 

In the US, 37% of homebuyers are millennials — currently the largest market segment. This tech-savvy generation expects the kind of personalised, seamless experiences they get from Amazon, Facebook, and Netflix from all service providers.

And then there’s the mounting pressure from alternative lenders. The National Bureau of Economic Research found that FinTechs process mortgage applications around 20% faster than incumbents. This partly explains why the five biggest US banks had a 50% combined market share in 2011 but accounted for a mere 21% of mortgage originations in 2019.

How to Drastically Accelerate Mortgage Processing

These rapid changes in the market are making many people in the industry uneasy. The good news is that there are tools that can help you to speed up mortgage processing, keep your customers happy, and outperform the competition.

Let’s take a look at some of them.

1. Robotic Process Automation (RPA)

Robotic process automation is software that automates repetitive, rule-based actions such as copy/paste, moving files across locations, pulling and entering data into databases, generating emails, and many more. This enables human agents to spend less time gathering, sorting, and classifying data and more time on tasks that require judgement, reasoning, or customer interaction.

RPA is a real lifesaver for the mortgage industry. Loan processing is fraught with dull routine tasks that eat up most of the time of the average mortgage underwriter or loan officer. No wonder it takes 45 to 60 business days to close a mortgage application!

By leveraging RPA, you can process loan applications much more quickly and eliminate human errors in the mortgage underwriting process. This saves money and resources and ramps up the number of customers you can service without increasing your headcount.

Sumit Chadha, CIO of the India Mortgage Guarantee Corporation (IMGC), said for Dataquest India that RPA helped IMGC achieve faster and more accurate data entry and save 15 minutes of processing time per file: 

“Before introducing the bots, a significant amount of time was used to obtain data from the lender’s system/Credit Appraisal Memo and transfer it to our onboarding system. We have efficiently utilised our workforce for decision-making rather than monotonous data input since the deployment of bots.”

2. Intelligent Document Processing (IDP)

Conventional robotic process automation isn’t “intelligent,” meaning it doesn’t include artificial intelligence (AI). 

As a result, RPA excels at automating repeatable, rule-based processes such as yes-no questions or if-then tasks, but it can’t automate workflows that require decision-making or rely on unstructured data and various document types. That can be a problem considering that 80% to 90% of business data is unstructured.

This is where intelligent document processing comes in. It combines RPA with AI-powered solutions like natural language processing (NLP) and optical character recognition (OCR), which make it possible to interpret unstructured, poorly structured, and unstandardised text, documents, and images. Examples include:

• Handwriting
• Machine-typed text
• Paper-based documents
• Scanned files
• PDFs

IDP enables lending teams to automatically digitise, upload, structure, and extract various data formats and document types, with minimal human intervention and low-to-zero file configuration. 

This can considerably speed up the mortgage application process, allowing you to automatically gather, interpret, and extract not just application forms but also a wide range of additional documents such as:

• W-2 forms
• Tax forms
• Bank statements
• Income documents
• Employment records
• Credit reports

3. Smart Onboarding and Identity Verification

McKinsey reports that digital transformation and a customer-centric mindset can improve satisfaction rates by up to 30% and generate a twofold revenue increase. At the same time, millennials increasingly expect remote financial services, instant support, flexible communication options, and personalisation.

Automated online onboarding and identity verification are great tools for driving satisfaction and increasing engagement. Modern AI-powered solutions allow you to process customer and loan application data, scan and upload ID documents, carry out background checks, and open new accounts automatically — all the while staying compliant with AML and KYC regulations.

You don’t have to take our word for it: According to Forbes, HSBC managed to reduce onboarding costs by 70% and turnaround time by 90% after introducing digital KYC.