Technology, Revenue and Borrower Perception

Lenders are spending more than ever before on tech as a percentage of loan costs, yet according to STRATMOR data, most lenders are not exactly satisfied with the technology choices they’ve made. And to make matters worse, most lenders have no idea how their customers feel about their technology choices.

How important is the borrower’s perception when it comes to implementing new technology?

According to STRATMOR’s 2019 Technology Insight^® Study, lenders’ number one expectation when they invest in new technology is that it will improve customer satisfaction. So why is it that once the technology is implemented, most lenders fail to measure whether that happened?

Perhaps the answer is that they’re not focusing far enough down the road. If you’ve ever implemented a new technology at your company, you know that success is critically dependent on adoption by your employees. It is essential that your internal staff uses the new tools, but  fostering internal adoption should not become and end unto itself, such that you lose sight of the broader goal of improving the customer experience.

A rocky borrower experience with new technology can immediately affect revenues in terms of a loss of referrals and poormouthing of the company to prospective customers. Ultimately, the voice of the customer will tell you whether your investment of time and money in new technology was worth it. If your shiny new tools are not perceived by customers as simple, intuitive and helpful, then you’ll need to right the ship quickly before you sink in a sea of negative sentiment.

Arguably, providing the best possible borrower experience should be at the top of each lender’s priority list and all other systems and spending should support that goal. According to data from MortgageSAT, which measured the loan experience for more than 133,000 borrowers in 2019, interaction with online tools can very much make or break the chance of repeat or referral business.

Consider what happens to Net Promoter Score (NPS), which measures likelihood to recommend to friends and family, when borrowers have a less than stellar experience with a lender’s online tools:

• Borrowers who considered their lender’s online tools to be easy to use, as evidenced by a 9-10 rating on a 10-point scale, reflected a Net Promoter Score (NPS) of 89. In contrast, borrowers who rated the ease of use between 1-6 had a dismal NPS of -30. The 119-point delta between the two represents the difference between borrowers who are highly likely to refer friends and family and those who are likely to poormouth you.

Chart 1

Source: MortgageSAT Borrower Satisfaction Program annual data, 2019. © STRATMOR Group, 2019.

• Similarly, borrower who liked the visual appeal of their lender’s online tools (9-10 rating) were much more willing to refer friends and family at the end of the process, as evidenced by an NPS of 89, versus -27 for those who did not appreciate the visual appeal (1-6). Here again, the 118-point delta between the two represents a real potential loss of referral revenue and should give lenders pause for concern.

Chart 2

Source: MortgageSAT Borrower Satisfaction Program annual data, 2019. © STRATMOR Group, 2019.

• Finally, and perhaps most significantly, a borrower’s perception of how well a lender’s online tool keeps them informed throughout the loan process can significantly impact their likelihood to recommend to others. Borrowers who felt well-informed by their lender’s online tools (9-10 rating) had an NPS of 92, while those who rated the online tools poorly in this category had a disastrous -42.

Chart 3

Source: MortgageSAT Borrower Satisfaction Program annual data, 2019. © STRATMOR Group, 2019.

In conclusion, while internal adoption is extremely important to the successful rollout of a new technology, it’s only the first stop along the route to success. Lenders need to remember why they purchased the new technology in the first place and keep their eyes focused on consumer adoption — and the ultimate prize, consumer delight.

What’s a Lender to Do?

Here are three ways you can begin to tap the voice of the customer for feedback on your consumer-facing technology:

1. Establish a Baseline. Before choosing and implementing new technology, establish a baseline of customer satisfaction and perception of tech tools. Without a baseline, it will be impossible to measure the impact, both good and bad, of the new technology on the customer experience. A tool like MortgageSAT will ask the right questions and provide a solid baseline.
2. Anticipate Possible Pain Points. Technology is a mixed bag. At the same time your team is eagerly anticipating the time and cost savings, you also need to plan for possible pain points that the new technology could cause your customers. Will customers be confused about how to contact you as you migrate to more digital communications? Will they be nervous about their data security? Will they be reluctant to have another password to remember? Create clear communication mechanisms to preempt these concerns.
3. Tell a Success Story. Use before-and-after customer satisfaction metrics to underline the new technology’s positive impact on customer experience. Employ marketing efforts (internal and external) to amplify customer testimonial statements that highlight a positive experience with your online tools.

How can you learn more about creating a better customer experience and about how the customer experience impacts your company?

Find out more about STRATMOR Group’s CX services and how transparency into the loan process can help your company. Contact Mike Seminari at mike.seminari@stratmorgroup.com.