Mortgage Lending and the Digital Experience


Savvy consumers in today’s digital world are constantly pushing the banking industry to better meet their needs. With companies like Amazon raising the bar through a variety of services and products, consumers now demand seamless user experiences and 24/7 access in other industries. What if Amazon started offering mortgages? It’s not as farfetched as it sounds—and if credit unions and banks can’t meet the needs of tomorrow’s homebuyers, they may face stiff competition before long.

Recent articles and studies indicate that millennials will account for 80 percent of real estate transactions over the next decade.  This generation expects an easy, end-to-end experience that’s digital-first and personalized to their needs. But for the financial industry, the question remains: what can be done to bridge the gap between the lender and the real estate consumer, ensuring a seamless homebuying experience over the entire home purchase process for them?

Let me set the scenario: a couple of years ago, one of my dreams came true – I bought my first home. Despite being older than your average millennial, I nevertheless had lofty expectations of a digital homebuying experience, from finding a home to financing and closing. However, that’s not what transpired.

As a typical first-time home buyer, I had little to no guidance on where or how to start. All I knew was that any home would inevitably cost more than I had saved, and I would need a mortgage.

Like most millennials, I went online to learn more about the process and determine how much I could afford to borrow. Having multiple bank accounts with different financial institutions, I decided to visit my credit union, believing they would offer me the best rate while providing an exceptional experience. 

I came away from that brief visit with a more realistic idea of how much I could borrow and the available mortgage rates, as well as some simple guidelines on the mortgage process. However, I was confused about my next step and inundated by calls-to-action inviting me to talk to a loan officer, fill out a pre-approval form, or even apply for a mortgage on the spot. I wasn’t ready for any of that—I just wanted to start searching for suitable properties.

As I began visiting properties and interviewing realtors, my confusion about the home financing process only grew. Some realtors had little interest in providing the level of service that I expected; others harassed me through emails, calls, and text messages, trying to get my business while largely ignoring my personal needs. Yet nearly all of them wanted to know if I had been pre-approved. My credit union’s website had already told me how much I could afford, but apparently, this wasn’t enough.

By this time, a few months had passed with little progress. Winter was approaching, and I found myself growing more and more stressed. I decided to return to my branch and talk to a member service representative (MSR). These folks manage my money, I thought, so I should trust them to help me buy a home. As a loyal member, I was also hoping to get a better rate and more personalized service. Yet after multiple face-to-face meetings, emails, and phone calls, my MSR was unable to match some of the rates I found online. I found myself back at square one.

In short, I went through everything I’d wanted to avoid when I first started the home buying process. As a consumer accustomed to the convenience of finding answers to my questions via the click of a button on my mobile phone, I came to the sad realization that a digital process bridging the gap between home discovery and financing simply did not exist.

It’s worth noting that when it comes to home financing, “digital” does not necessarily mean “DIY.” I may not need any help buying a television or booking a vacation, but a home represents a significantly larger and more complicated transaction. I still want professional support in making major financial decisions. Most millennials share this desire. According to Deloitte, 84 percent of them still want to receive personal advice from their credit union. So, while digital channels are a must, that does not mean the traditional banking and borrowing experience is dead.

To best serve the needs of the rising digital generation, credit unions should incorporate a multi-channel approach that helps members when, where, and how they wish to be served. This approach means offering a superior digital experience and the personal touch of “human” member service — not one or the other. The financial institutions of tomorrow must look beyond the mortgage application process and consider how they can create more value for members throughout the homebuying process. As we become more technologically advanced with robo-advising, chat-bots, and automation, services will become more digital; but the complexity of the homebuying process means that consumers will still need the support of human beings. It is up to credit unions to provide that support, or risk losing members.

Marcos Carvalho is chief revenue officer of Boston-based NestReady, a one-stop digital real estate technology company building innovative tools that empower the next generation to enter the real estate market.