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How Mortgage Lenders Should Evaluate FinTech Solutions

With so many FinTech options available, these are the questions mortgage lenders should ask when choosing a partner that will best fit their needs.
Anita Padilla-Fitzgerald
April 4, 2022
3 min

As the mortgage industry continues to face the challenge of increasing origination costs – not to mention margin compression and rising interest rates – it's becoming imperative for lenders to evaluate their current cost to produce, from both a technology and personnel standpoint. 

Now is the time when CEOs and executives should be examining their technology production costs in comparison to their labor expenses with the aim of discovering ways to originate more with fewer employees and increased efficiencies. 

Technology cannot solve for all, and lenders still need human expertise. So has the growing FinTech stack really increased efficiencies and reduced origination costs? Or are lenders adding to their FinTech stack without any real return on investment? 

The following checklist can help lenders determine if the solution being considered is worth the price. 

Does it align with your business strategy? 

Established organizations always have dependable, tested and proven procedures in place and do not often embrace new technologies quickly. However, the technology driven world we live in today demands innovation. Therefore, if a lender's business strategy includes scalability and sustainability, it is critical that it evaluate its current FinTech solution to ensure it aligns with strategic initiatives. 

Does it utilize data for sales strategy optimization? 

If a company doesn't have adequate computational resources, it won't be able to monitor all the critical customer-facing activities like organizing, managing and strategically using large datasets to enhance sales procedures. 

Does it have a user-friendly interface? 

You've likely heard the expression that "time is money." A FinTech solution that is difficult to navigate or does not have features that reduce the time it takes to fulfill a loan will not achieve the end goal of reducing the cost to originate. 

Does it offer built in compliance monitoring? 

It's challenging to originate loans in this heavily regulated industry. The technology under consideration should track compliance to the various rules such as initial disclosure, issuance of CD, tolerance cures, etc. It is imperative that a lender's FinTech solution help manage regulatory standards now, to avoid undesired outcomes later. 

Does it support a fully digital origination process? 

A fully digitized loan origination process allows mortgage bankers to immediately issue agency approval while talking to the borrower, which saves time and allows an increase in productivity on the number of loans that can be processed per day. 

Does it offer a guided workflow? 

There are several steps that take a loan from verification to approval faster. These steps can take over 30 days because of the validation necessary to complete the process accurately. When a FinTech solution has a guided workflow, it allows automatic approval where possible and has built in tutorials to help both seasoned and new mortgage bankers streamline their procedures for faster completion. 

Does it incorporate sales strategies in CRM? 

Sales activities drive revenue and therefore the habits of loan officers are critical to meet and exceed revenue targets. When a FinTech solution incorporates sales strategies in a lender's CRM system, all customer data is organized to inform the highest value sales activities for the day based on previous actions and the stage of the customer journey. 

Does it offer a single data warehouse? 

When a FinTech solution has one database for originations, processing, funding, marketing and sales activities, the lender will have a streamlined process that reduces errors and makes historical reporting and future projections easier to prepare. 

The global FinTech adoption rate rose to 64% in 2020. This reveals how important FinTech technologies have become to the mortgage industry. We can expect that rate to be closer to 100% over the next couple years as the industry pivots to more online solutions. 

Whether your company is part of the 64% that already have a solution or the 36% that will, it is critical to accurately assess every solution in order to get the most value for your investment.  

Lenders that evaluate FinTech solutions using this checklist will align their business strategy with their sales strategy and create a seamless workflow that promotes employee engagement, agency and regulatory compliance, faster loan processing, and satisfied customers. 

Anita Padilla-Fitzgerald is founder and managing partner at Take 3 Technologies, which offers cloud-based software solutions that transform how mortgage bankers, brokers, banks, and credit unions use data and technology to work with their borrowers. 

This article was written by Anita Padilla-Fitzgerald from Mortgage Orb and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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Anita Padilla-Fitzgerald

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