By Mike Seminari June 2019
Back in the 1980s, in the days before the Internet, applying for a mortgage loan required physically going into a bank to apply. Independent mortgage lenders were barely a blip on the financial radar screen. Some thirty years later, independent lender Quicken has eclipsed the previously untouchable Wells Fargo in loan volume for the first time. Big banks are on their heels as independents have surged ahead in market share, particularly in purchase business, which went uncontested for years. One of the biggest reasons for this shift in power has been the independent’s ability to provide an exceptional customer experience, driving referrals from satisfied customers and traditional referrals sources. So why do many independent mortgage bankers (IMBs) beat large banks when it comes to satisfying their borrowers?
The ability to delight customers is more directly tied to revenue than many lenders think. When you cannot compete on service, you are forced to compete on price, which quickly cuts into profit margins. And when you can’t compete on service, you gain fewer referrals and end up having to spend more on marketing to drive leads.
When it comes to mortgage origination, banks are not known for their stellar customer service. In fact, the top five nationally-ranked lenders in terms of borrower satisfaction, according to J.D. Power’s 2018 U.S. Primary Mortgage Origination Satisfaction Study, are all independents (incidentally, three of those five also happen to be MortgageSAT clients). And, according to MortgageSAT data, many of the smaller IMBs appear to be right in step with the larger IMBs, with satisfaction scores that would earn similar top-tier rankings. Why is this?
Some will say that the flexibility of the compensation structure at independent lenders (read “more money to be made”) allows independents to attract better talent. This assumes, of course, that with talent comes better customer care. STRATMOR’s Originator Census data does indeed show that independent LOs are compensated more generously than bank LOs (111 bps vs. 73 bps), however, MortgageSAT data over the same time frame shows there is no difference in LO satisfaction ratings based on affiliation with a bank or independent, with both scoring 95 on a 100-point scale. So, what else could it be?
Whether bank or independent, the ability to improve the customer experience is largely dependent on the data you have available. Queue the adage, “You have to find the holes before you can fix the leaks.” Gathering rich data (and getting the most out of it) means knowing the right questions to ask, having a methodology to analyze the feedback, being able to compare results against peers, and then amplifying the customer voice via social media. IMB’s have been quick to turn to best-in-class solutions like MortgageSAT to help with these things, and it’s showing. Big banks, on the other hand, have been much slower to embrace third-party help.
We believe that there are three underlying reasons why big banks have been slow to embrace outside help in creating customer delight:
Here are three ways that banks can adapt and compete with independents in providing an exceptional customer experience:
Find out more about STRATMOR’s MortgageSAT Borrower Satisfaction Program, and how rich, drill-down data can help your company. Contact MortgageSAT Director Mike Seminari at firstname.lastname@example.org.
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