Editor's note: This feature first appeared in the October issue of DS News, available now [1].
A co-worker recently told me about a bad experience he had with mortgage servicers. The company, which had previously serviced his mortgage, transferred servicing to another company. The co-worker was notified of this change through a letter in the mail. The letter also outlined his monthly payments would no longer be automatically drafted from his checking account on the first business day of each month.
To make matters worse, the co-worker told me when he first contacted the new mortgage servicer, they had not yet received a record of his new loan number quoted in the letter and advised him to call back later. Eventually, he was able to make his monthly payment and set up an automatic recurring draft via the servicer’s website, but the question remained as to why he couldn’t do that to start with.
Whereas my co-worker was previously able to pay his mortgage without thinking about it—and get on with living his life—he now suddenly had a fire drill on his hands and a negative impression of both mortgage servicers.
The importance of satisfactory customer service is underscored by Expectations & Experiences quarterly consumer trends research from Fiserv, which revealed that 61 percent of consumers with at least one loan said prior loan experience had a moderate to great influence when choosing a lender for subsequent loans. In addition, when applying for a new loan, customer service was second only to securing the best interest rate and no or low fees and service charges in being a key factor in how borrowers selected a lender.
With exceptional customer experience so important to borrowers, it is time for a mindset change. The housing crisis is now thankfully far in the rearview mirror, but it occurred on such a huge scale that its legacy continues to be felt today. The crash led to a wave of regulatory mandates with the mortgage servicing environment becoming increasingly complex in the face of Dodd-Frank reforms. To address the critical need to comply in an accurate and consistent manner, technology solutions popped up like dandelions.
Striking a Delicate Balance
In our industry, there will always be evolving regulations to keep up with–the latest CFPB servicing updates are a prime example—but it should not consume servicers’ time, effort, and thoughts to the exclusion of everything else. More than ever, consumers today expect exceptional engagement and a real-time lending experience, because they have grown accustomed to having access to everything on their terms. Therefore, lenders must balance consumers’ expectations for quick, frictionless lending experiences with regulatory, risk, and process requirements.
As attitudes shift, servicers are transitioning their focus to the consumer experience and how technology can support that effort. This is manifesting itself in several ways, but all with a common thread in that they are centered on delighting their borrowers.
Ensure Consistency in Communication Channels
The first facet is how lenders communicate with their borrowers. Those borrowers want to be empowered to choose their preferred method of communication–this is evident in the wide variety of options consumers choose to use. Whether it is by letter, telephone, walk-in, online, or mobile, consumers want it to work seamlessly with their daily lives.
This underlines the importance of lenders having the capabilities to deliver a true omni-channel experience to guarantee superior borrower communication support. That way, a borrower can select the best way to interact with their servicer, and pick up in one channel where they left off in another. For instance, if a borrower had recently initiated an escrow analysis via the web, but for whatever reasons their next touchpoint is a call, the call center agent must have the ability to see that the borrower had recently initiated the escrow analysis and is perhaps calling in with questions.
Many borrowers may opt to have a completely digital experience, but still want to seek out consultation. Only, instead of phoning in, they want a real-time webchat. The same premise still holds true in that the agent should be aware that the customer had initiated an escrow analysis, is likely to ask about it, and will expect the agent to have answers at their fingertips.
The point is that it simply isn’t satisfactory to have many channels … all with different messages. The servicer’s brand, personality, and helpfulness should shine through regardless of the channel used. If the branch experience feels more personable or friendlier than the call center or the mobile site–or vice versa– then the borrower is not receiving a consistent experience. Equally, if the borrower begins the conversation digitally they don’t want to have to begin that dialogue from scratch when they show up at the branch. Today’s borrower–indeed today’s consumer–doesn’t think in terms of unique, standalone environments; they want every channel from digital to human to possess the same personality and knowledge.
Provide Information on Their Terms
The second facet is borrower education.This is related to how borrowers choose to communicate with servicers and consume information. Two demographic groups in particular are seeking trusted advisors– millennials and empty nesters whose grown-up children have now moved out of the family home. Millennials by nature seek out education and want to be taught when it comes to mortgages. In some cases they remember parents foreclosing on a home during the crisis, so they may have a level of distrust when it comes to mortgages.
For empty nesters, they may be looking for advice about how to transition into retirement, securing a reverse mortgage loan, their equity, or whether they need to remain in a five-bedroom house now that the kids have moved on.
Both cases represent different ends of the spectrum of adult life, but they are tied together by a common thread–they want an advisor to guide them through their life changes. Whether they want to talk to an agent face-to-face or engage via social media channels, a borrower wants to be able to gather information on a particular aspect of their loan in a way that suits the consumer. It’s no longer enough to have a one-size-fits-all approach; it really needs to be custom-fitted for the individual.
Blending Hi-Tech With High-Touch
The best way to delight the borrower is to get the blend right between hi-tech and high-touch. Some borrowers may want to minimize the need for interaction, while others require it continually. The rise of digital labor and workflow to perform certain tasks helps servicers maintain consistent levels of service, especially in the execution of back-office activities. The automation of high-volume, repetitive transactions ensures adherence to regulation and business policy. The use of user interface-driven workflow can create a better experience for the borrower by ensuring every interaction is consistent in content and procedure across all borrowers. While the cost of these systems has come down, they have also become vastly more sophisticated–and they are in effect a software version of the robotic arm that assembles automobiles. This frees up staff to do what they do best–interacting with consumers.
Focus on Delighting Your Borrowers
The regulatory environment will continue to evolve–the 2020 CECL requirements come to mind–and minimizing organizational risk will always be of paramount importance as this is the new normal we find ourselves in. However, top-notch customer service should always be top of mind, and the two are not mutually exclusive. It is not only possible, but also desirable, to shift the focus to the consumer experience, while still keeping your eye on the regulatory ball.
Through the right mix of borrower communication, borrower education, and human and automated processes, loan servicers can provide the real-time lending experience consumers increasingly expect. Disgruntled borrowers are statistically more likely to report loan servicers, so compliance and customer satisfaction go hand-in-hand. Taking a customer-centric approach will delight your borrower and efficiently mitigate risk.