Ten years ago, most credit unions couldn't even imagine the Internet as a viable mortgage business channel. But things have changed since then. According to a new study conducted by Deloitte Consulting 1 , most consumers say that applying for a mortgage online is faster and more convenient than traditional methods. As a result, more than 70%of all mortgage shoppers now start their search on the Internet .
Despite a volatile marketplace, the Internet has emerged as the fastest-growing mortgage channel. So how can today's forward-thinking credit unions take advantage of this unique opportunity to grow their mortgage businesses?
Saving time, improving member service
That was the question facing Virginia Credit Union of Richmond, VA. (founded 1928; now more than $1.6 billion in assets) when the organization decided in 2002 it had to streamline its mortgage business and better serve its more than 180,000 members.
Management had good reason to look for business improvements. The growing credit union had only a minimalistic online mortgage application; as a result, they were taking almost all of their mortgage applications in paper form. Then employees had to manually enter all application data into multiple mortgage-related computer systems. With only few exceptions, no branch or call-center personnel could take mortgage applications.
“We spent most of our workdays doing manual data entry,” said Leslie Creech, Compliance and Risk Analyst at Virginia Credit Union. “Plus, we had to make a lot of calls to obtain missing application information. And if we couldn't reach the member, the process was further delayed. All this limited our ability to provide quality service.”
After reviewing several alternatives, management decided to implement an innovative, interactive, easy-to-use online point-of-sale (POS) solution across all of its origination channels: web, branch, call center, and loan officer. Management wanted to improve the organization's service levels and overall efficiency by enhancing the online channel and empowering branch and call-center staff to take high-quality mortgage applications.
“By implementing a comprehensive POS system with full underwriting capability, we wanted to speed up our decision turnaround time and improve our application ‘pull-through' rate,” said Creech. “We also wanted to enhance our member service by providing real-time pre-approvals.”
The mortgage becomes a “core product”
Virginia Credit Union has long seen mortgages as important core products. The enterprise-wide POS implementation has enabled the organization to offer mortgages through all of its delivery channels. Where once only seven employees could take mortgage applications, now there are more than 35—a 500% increase.
According to Creech, this was a major first step in transforming the credit union's entire mortgage business. By immediately approving qualifying applications and providing disclosures right at the point of sale, member satisfaction is greatly improved.
Deploying advanced, user-friendly POS technology across the entire enterprise in 2004 has contributed to improved service that has resulted in thousands of new loan applications—almost all of them efficient, electronic files that can be quickly transferred to other mortgage-related computer systems. Today less than 2% of the organization's mortgage applications are taken using paper.
The time for online mortgage applications is now
In the wake of the subprime mortgage meltdown, brokers are exiting the market—which leaves the trusted, local credit union as a prime alternative for today's mortgage shopper seeking sensible solutions. With application volume still strong, credit unions need to ask themselves:
How well are we positioned to take advantage of this unprecedented business opportunity?
The Deloitte study confirms that online mortgage origination provides “a critical opportunity to gain market share.” The study also indicates that online solutions can “reduce origination costs by up to 80% compared to traditional application methods.”
But credit unions beware: Deloitte's research also reveals that even among online mortgage applicants, only 48% rated the online process as “very easy.” For that reason, the study stresses that lenders need to improve the usability of their online application technology.
The study's authors conclude that a “significant opportunity” exists for those that can get it right—like Virginia Credit Union .
How ready are you?
About the author: Dan Welbaum is Chief Marketing Officer of Mortgagebot LLC , the award-winning company that leads the industry in providing consumer-direct, Internet-based mortgage-origination solutions. Mortgagebot combines its mortgage expertise with leading-edge “software-as-a-service” (SaaS) technology to create robust, scaleable, and affordable mortgage Web sites for nearly 800 lenders nationwide—including nearly half of America's “top 100” credit unions. Mr. Welbaum can be reached at firstname.lastname@example.org .
Mortgagebot can be found online at www.Mortgagebot.com .
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