The mortgage industry was front and center at Dreamforce 2019, where it became clear that Salesforce is investing sizeable resources in the vertical—and expanding the capabilities of Financial Services Cloud (FSC) to better meet its needs.
Let’s review some of the key trends that we are seeing in the mortgage industry, and the steps that Salesforce is taking to address them.
Millennials are shaping the mortgage industry
There’s no doubt that millennials are driving change across the mortgage industry. According to Business Insider, millennials make up the single largest population of new mortgage borrowers, both in total number of mortgages and in total dollar volume borrowed. And while their purchasing patterns differ from other population segments, relying more heavily on technology and comparison shopping than others, they still expect high levels of human support on demand.
In her session, Sherry Graziano, SVP and Mortgage Transformation Officer at SunTrust Bank, emphasized the importance of understanding millennial home shoppers and their preferences. In particular, she stressed how critical it is that mortgage providers focus on the intersections of technology and human touch throughout the lending process. Digital experiences, she asserted, hold the key to success, bringing us to the next trend discussed at the conference.
Customers expect next-level digital experiences
Several Dreamforce speakers from the financial services industry commented that banks and lending corporations are increasingly being seen as technology companies with balance sheets. For this reason, a seamless, transparent and comprehensive digital experience must be a core component of any mortgage provider’s successful business strategy.
As consumers become accustomed to effortless online sellers and services such as Amazon and Uber, they will expect other online experiences to provide the same easy, instant interactions. And the mortgage process is no exception. To remain competitive, mortgage providers will be forced to keep pace by digitizing and automating the lending process.
The tremendous success of Quicken Loans underscores this trend of mortgage digitization. Without a single branch office, Quicken became the largest U.S. mortgage lender by volume in 2017. Other non-bank lenders have seen significant growth in the last decade as well. According to the Washington Post, non-bank mortgage lenders represented just nine percent of mortgages sold in 2009. Today, more than 50 percent of mortgages are issued by non-bank lenders such as Quicken Loans, LoanDepot and Better.com. Inevitably, lenders across the sector will continue to face pressure to deliver compelling digital experiences.
Costs are climbing and time to close remains high
Despite increasing digitization throughout the industry, the average time to close a mortgage still sits above 40 days. Furthermore, Geoff Green, Mortgage and Lending Vertical Lead at Salesforce, indicated in his session that the cost of selling a mortgage has been steadily on the rise over the past decade. Lender origination costs are now over $9,000 dollars per mortgage, an increase of over 45 percent from 2009.
Disruption and competition are rising, while profit margins are falling
At the same time, the mortgage industry is experiencing increasing competition, with private mortgage lenders and online mortgage providers on the rise. These nimble, aggressive and highly digitized startups are eating into the market share of traditional banks and credit unions, further driving down profit margins. During Q1 2019, the average per-loan mortgage production profit was $285, compared to an average of $367 throughout 2018.
Salesforce is meeting the challenge with FSC feature enhancements for mortgage
Given the pressures that mortgage providers are facing from all sides, the timing of Salesforce’s release of Financial Services Cloud (FSC) features for Mortgage could not have come at a more opportune time. At Dreamforce, Salesforce introduced exciting new FSC features focused on shortening the mortgage sales cycle as well as digitizing the loan application process. For example:
- The latest Mortgage for FSC data model features an additional 13 objects, all based on the U.S. Uniform Residential Loan Application released in February 2019. These objects make it easier for lenders to capture borrower information and turn it into actionable insights.
- New, customizable guided mortgage application flows now allow companies to create seamless, effortless online loan application experiences for borrowers and loan officers alike. Currently, the Residential Loan Application maps to the U.S. 1003 Mortgage Application, but it can easily be tailored to match mortgage applications for other countries.
- Salesforce has added document management functionality to FSC for Mortgage, simplifying document tracking and approval from within the residential loan application. This capability makes it easy to determine which files the borrower has (or has not) provided, view the status of each file and initiate a document request of the borrower.
Thanks to these FSC enhancements, mortgage providers can enrich customer experiences, streamline the lending process—and most importantly, attract and retain millennial borrowers as their generation continues on its path towards the dream of home-ownership.