Fintegration can create significant ROI for your mortgage business.
There are a lot of financial technologies out there that can be perfect channel partners for mortgage banks. But the sad truth is that they’re currently seen only as competitors. True, some could be a threat to a mortgage business, but it is vital to distinguish between fintechs and fintegrations.
Fintegration companies, like ATS Secured, have a completely different approach than fintechs. They are more of a financial utility—rather than displacing or disrupting the financial space, they enhance it. Their purpose is not to replace banks, or even the banks’ existing LOS, but to connect what is already working with new opportunities.
Below are returns on investment that lenders can count on when they fintegrate. They should leave no doubt that fintegration is in the best interest of banks and other financial institutions.
1. Save by Not Overhauling Your LOS
Because fintegrations don’t require an overhaul of core systems, bank LOSs don’t have to be replaced. This reduces employee training costs and saves money by avoiding the purchase of a shiny new LOS system, or creating an in-house solution. These savings can then be directed toward mortgage originations.
2. Boost Your Mortgage Referrals
Technology service companies are in tune with today’s consumer and thus tend to have high customer ratings. According to a study by JD Powers and Associates, banking industry giants are pulling ahead of mid-sized banks when it comes to customer satisfaction because they have embraced technology, and therefore, convenience.
In an American Banking article, Rocky Clancy, VP of financial services at JD Power commented on technology gaps among financial institutions: “I think it’s a wake-up call for the mid-sized banks” (referring to those in the $2 billion to $33 billion deposit range). “They risk becoming irrelevant.”
It’s in your best interest to find a fintegration company that takes customer satisfaction seriously. It can’t help but benefit your reputation to tie your fundamental functionality to a tool that has a reputation for customer happiness.
Fintegrations can also re-invigorate your mortgage business by setting new standards for customer service. These can include protocols and automated tools for responding to questions and complaints on social media or with online reviews, and using a convenient and intuitive online customer service portal.
In other words, you get to have it all:
- Keep the history and trust you’ve built with your customers, and gain the opportunity to surprise them with even better service.
- Investing in your customer base will keep them loyal instead of giving them reason to wonder what else is out there
- You’ll attract new, younger customers who expect streamlined efficiencies.
- Happier homebuyers mean more referrals. More referrals mean more money. It’s that simple.
3. Earn Better Credit Ratings On Loan Securitizations
Upgrades to fundamental banking core systems also lead to the production of higher-quality loans—cleaner, more accurate, compliant loans.
Better loans also result in a higher purchase value for investors. These loans will be rated higher by agencies, and benefit from higher-priced MBS securities without the need for credit enhancements to entice investors.
4. Create Liquidity You Can Count On
When the data, documents and dollars are verified because they are crosschecked by multiple parties, loans can be assured fit for purchase by the investor at the closing table. With better loans and credit ratings, financial institutions will be able to sell their loan packages at a faster pace, and avoid having them sit on warehouse lines due to TRID violations.
This will create liquidity lenders can count on, rather than living in an uncertain world with ever-lingering questions like “Will these loans sell at a good rate?” or “Will they require discounts—or worse, buybacks?”
5. Sustain Your Bank’s Solid Reputation
The banking model is like a beautiful piece of historic architecture. It has stood the consumer’s test of time, weathered strong compliance and regulatory storms (especially in the past few decades), and its brick and mortar are made of trust they’ve established with a loyal clientele.
There is no need to tear down the institution that has served the customer for so long. But it is important to renovate, to bring in new utilities to keep pace with modern conveniences.
In the digital age, neglecting to implement the amenities necessary to get ahead in a technological environment would not only be foolish, but a disservice to the customer. It would be like refusing to update or install a modern plumbing system and thus damaging your reputation—or floorboards, as it were. This would be a shame because, as a beautiful piece of architecture, the banking process deserves to be renovated.
Still, many banks and financial institutions continue using outdated core systems and LOSes. According to a study by NTT Data Consulting, 78 percent of banks are looking to simply maintain their legacy core deposit systems.
There are so many advantages to updating these systems, such as guarding against cyber threats and improving the speed of a bank’s processes on the back end. And overall, fintegrations will boost these slow, outdated systems and ultimately acknowledge and respect the customer’s needs, while also helping to stabilize the company’s reputation.
Of course, banks could create in-house solutions to their problems, but this avenue tends to be more expensive and difficult to achieve, as technology is not their area of expertise.
6. Gain a Competitive Advantage
As you may suspect by now, there are plenty of financial institutions that are already fintegrating. They know they must to stay competitive. All the more reason to join the club.
In a recent Banking Exchange article, “Banking, Compliance and Fintegration,” Andres Wolberg-Stok of Citi said, “We all have to learn how to supplement the core relationship. Give our customers the best from out there and integrate it with our offerings. At Citi, we call this ‘fintegration.’ It’s not going to be ‘fintech or banks’, It’s going to be ‘fintech and banks.’”
Want more proof? A recent study called “The Disruption of Banking” asked both bankers and fintech executives their views on the future of the financial industry. The bankers’ answer was overwhelmingly (90 percent) that “Fintech will have a significant impact on the future landscape of banking.”
For banks to maintain a competitive advantage, it is essential to forego simply competing with and/or ignoring financial technology. They must fintegrate.
Fintegrations are Opportunities—not Threats—for Banks
It’s important for mortgage businesses to take a good hard look at fintegrations—not as competitors, but as a potential pot of gold at the end of the digital rainbow. It’s evolving all the time, and keeping up is the only way to survive.
Changing the mindset from rivalry to partnership can be the difference between a mortgage bank opting out of the industry because the regulatory pressure becomes too great, or thriving because they found a way to better serve their customers and originate clean, compliant loans.
Financial technology has become a vital utility for banks and other financial institutions. The only question that remains is, how will you use it to your advantage?