According to a Forbes Insight survey, 82% of lending and banking executives believe that digitization is completely transforming the mortgage lending process. Digitization improves the customer experience, reduces manual touchpoints, speeds up the lending process, and gives mortgage companies the competitive agility to maximize their overall customer base.
Despite rallying calls from virtually every major insight company, the majority of lenders still haven't fully embraced digital transformation. According to Freddie Mac, less than 40% of CIOs, CTOs, CEOs, and CMOs of mortgage companies (both large and local) have the right digital transformation tools in place to be considered "digitally transformed."
There's some obvious friction between understanding the broad value of digitization and actually implementing the right solutions. It's easy to say that digital transformation will disrupt your business—it's a trendy topic. But actually retooling your frontend and backend processes with the right solutions is a different story. You may be hesitant. You may worry about hiccups to your core business model. And you may be confused about all the solutions at your fingertips.
The Curse of Paper Mortgages
There are plenty of problems with paper from an environmental standpoint. Paper is the fourth leading cause of greenhouse gases, and 16% of landfill space is occupied by paper. But paper harms more than the environment. It harms your revenue. And it harms your reputation; 87% of consumers have a more positive outlook on your company if you ditch the paper (which is important). Here's more on the cost of paper:
- Simply looking for paper files can eat up 40% of the average employees' day.
- 20% of print jobs are never retrieved — which reduces your business's security posture.
- Even back in 2012, paperless initiatives increased productivity by 20%. Given today's tech-fueled ecosystem, paper reduces productivity; moreso, it impedes it.
- 80% of UK businesses print documents simply to get them signed!
Paper creates obstacles for every layer of your business, from accounts payable to the actual mortgage process. Take a look at lenders who provided an app for consumers to apply for mortgages digitally: they grew from 2% to 8% of total mortgage volume between 2010 and 2016. The drive to paperless mortgages is ramping up.
Digital Transformation in the Mortgage Lending Space — A Not So Distant Future
The future of mortgages is tied to digital. We've moved past digitization as a horizon technology; it's here. 59% of lenders say that leading lenders will be able to authorize and digest mortgage applications in a fully-digital environment by 2025. In fact, 30% believe that industry-leading lenders will have end-to-end digitization (from the application to the approval) by 2023.
To be clear: failure to digitize will put you at a competitive disadvantage. 91% of Freddie Mac respondents said that the period between application to close will shrink from weeks and months to hours in the next few years. If you're still handling paper documents, you'll be light years behind your peers.
Many companies have started to put digital processes in place for mortgage applications. But we're not talking about half-baked digital transformation. While around 50% of lenders say they've achieved some level of digital transformation, the truth is only 55% of mortgage processes are digitized. The mortgage ecosystem exists in that strange gap between fully embracing digitization and still clinging to piles of paper that clog up productivity.
Consumer-side digitization has less friction than digitizing core backend processes. But mortgage lenders need to brace themselves; backend digitization is becoming a necessity.
From HR to AP: How Digitization is Revitalizing Frozen Backend Functions
The mortgage lender space is filled with laborious, manually-intensive backend processes. Whether you're dishing out conventional loans or setting up your own unique processes from unconventional loans like jumbo mortgages, you probably work in a mountain of paperwork—80% of invoices still arrive on paper.
That's a big deal.
Not only does the average employee spend up to 30% of their day looking for paper documents (IDC), but around half of them admit that they can't locate those documents—much less process them. It gets worse. The average manually-submitted invoice has an error rate of 3.6%, and paper invoices take an average of 25 days to process (from retrieval to approval). Without invoice automation, you're tying the department with the most impact on liquidity and vendor relationships to slow, static, and inefficient workflows that impede progress and create errors.
To put it into perspective, 52% of organizations say that paper is their biggest AP barrier. When you automate AP, you're not just enhancing your chances of securing early bird discounts and reducing late fees, you're reducing the overall time and physical cost of your entire AP ecosystem. According to research by AMI-Partners, AP automation saves companies a massive $13 per invoice. Given that many lenders process tens or hundreds of thousands of invoices per year—the cost savings are mind-boggling.
This manual friction doesn't stop at AP. It wraps itself around nearly every business function. HR teams still deal with paper documents and ad-hoc storage. Legal teams still face mountains of unnecessary paperwork, and typical business processes are stalled as employees rush to manually input data and search for the right documents.
For mortgage lenders, adoption rates are awkward. A recent National Mortgage News survey shows that the vast majority of lending institutions have a mix of paper of digital processes. Instead of focusing on full-scale digital transformation, lenders are patch working the system without any real integration goals.
Tying together ad-hoc solutions under one wrapper isn't going to work. Lenders need a more holistic strategy. Data storage and archiving, HR, AP, workflows, processes—all of these business functions—should rally under a common solution that's integrated. You're working toward digitization and automation, not a smorgasbord of stitched together processes. Otherwise, you're not really "digitally disrupting" or "digitally transforming," you're spending money on more solutions.
DRS Imaging Can Help
The results are in: automation and digitization are the future of mortgage lending. From AP and AR to business process outsourcing and HR automation, DRS Imaging pulls tangible solutions under one common banner with easy integration. Don't stop with partial automation. We can carry your mortgage lending institution into the future. Contact us to learn more. Let's put an end to the alphabet soup of "disruption" lingo. Let's bring tangibility to digital transformation—together.