The Role of Tech and Fintech in the Mortgage Industry

Veterans of the mortgage industry have seen its evolution—from the high interest rates of the 1980s to the impact of the 2008 Great Recession through the mortgage rate and inventory challenges of today. Through it all, the home loan process has become increasingly complex, with more stringent regulatory and underwriting requirements.

Couple that with borrower expectations for an increasingly digital experience. Most borrowers have little idea what goes on behind the scenes, but they expect their mortgage process to be streamlined and accessible across different devices.

Lending teams certainly feel the strain, and, in many cases, technology is the solution. Automation, workflows, and AI from fintech mortgage companies can improve mortgage operations and the borrower experience simultaneously.

We’ve rounded up some of the latest mortgage technology solutions and what lenders should consider as they assess potential lending tech company partners.

Loan applications

If you’re a mortgage lender, an online application will likely be many borrowers’ first experience with your brand. They’ll have done research in advance and are ready to move forward with a pre-qualification or pre-approval for a mortgage. So, delighting them at this stage is key to filling your pipeline.

That’s why lenders like Rocket Mortgage have long dominated the online mortgage space, and fintech lenders have cropped up as mortgage lending competitors. They prioritize optimizing the online application experience. But there’s also room for traditional banks and credit unions to compete—if they can match technology expectations at the outset.

Making your online mortgage application easy to use prevents borrower frustrations that can lead to dreaded drop-offs.

Fortunately, there are many technology solutions on the market to help you offer the best application experience possible.

What to look for in loan application technology:

A seamless digital application experience to collect borrower information and loan information, such as the requested loan amount and desired terms
An easy way for borrowers to share income documents like paystubs and W-2s
Efficiency and automation behind the scenes that properly routes the application and identifies any necessary follow-up tasks
Customization options to collect different information for different mortgage loan products (such as a home purchase versus refinance)

Leading providers in loan application technology:

Floify offers an intuitive, user-friendly application process with a centralized platform and real-time updates—so borrowers can complete their entire mortgage application in one place and stay informed as to their status.
Ocrolus extracts and analyzes data from borrower-supplied documents, then populates that data into your point-of-sale (POS) or loan origination system (LOS).
nCino’s Mortgage Suite ensures borrowers enjoy a seamless experience at every step. Features include a shareable mobile app, integrated calculators and home search, bilingual (Spanish) support, automated loan status updates, and mobile eSign capabilities.

Third-party verifications

Identity verification. Income verification. Asset verification. Credit scores. Flood determination.

At all stages of the lending process, borrower data is being exchanged and verified. To do this manually—requesting information from a third party and waiting for a response—comes at a cost in terms of both time and efficiency. Additionally, using legacy verification solutions like The Work Number (TWN), comes with a high price tag and sometimes questionable accuracy.

Implementing a modern verification solution can address all of these challenges, saving you money, time, and hassle.

What to look for in mortgage verification technology:

The vendor’s access to high-quality and reliable data sources and whether or not they retrieve data in real time
The vendor’s coverage and, even more importantly, conversion rate
A secure and compliant data exchange that protects your borrowers’ sensitive data

Leading providers in verification technology:

Argyle leverages direct-source income and employment data to automate verifications for 90% of the U.S. workforce—and they boast a market-leading conversion rate of 55%+. Lenders save 60-80% on verification costs compared to manual efforts and verification databases like TWN.
Truework incorporates a variety of verification methods, from an instant data network to payroll connections, digitized income and employment documents, and smart employer outreach flows.
Atomic allows borrowers to connect their payroll accounts directly to authorized lenders’ applications, so they can securely access verified income and employment data.

Loan closing

Many borrowers have no desire to drive into a branch to sign stacks of paper in order to close their loan. Instead, a modern closing experience collects digital signatures and allows borrowers to complete the loan closing remotely.

Fully remote closings (if your state allows remote notarization) are more accessible for borrowers who don’t live near a branch, and they enable you to increase your market share. Hybrid closings let the borrowers sign some documents in advance and only come into the branch for documents that require a notary. Or, if you have borrowers who want to come into the branch, make it easy for them to schedule an appointment with a loan officer.

These days, there are plenty of loan closing technology vendors that can help you offer the maximum possible flexibility.

What to look for in loan closing technology:

The option to close on a device like an iPad, so you can travel to the borrowers’ home or another location rather than having the borrowers come to you
The option to let borrowers electronically review and sign some documents in advance
Efficiency and automation, especially for post-closing tasks and compliance checks
Secure storage of your electronically signed documents

Leading providers in loan closing technology:

nCino Mortgage Suite offers a fully remote closing experience that allows borrowers to eSign from their computer, laptop, or mobile device.
Stavvy is a remote online notary (RON) point solution that you can use to speed up the signing process.
ICE Mortgage Technology provides advanced settlement and post-closing solutions, which allow lenders to send documents electronically and have them recorded with the county immediately after closing.

Analytics

Fintech mortgage solutions can not only help with loan origination, underwriting, and closing, but some technology can also give you deep insights into your borrowers, efficiency, risks, and costs per loan.

While some lending tech companies may have built-in analytics, you can also use separate platforms designed for in-depth analysis, or you can connect your mortgage data with other internal systems.

Some analytics models are powered by machine learning algorithms and AI. In those cases, insights and recommendations will evolve and improve as the product ingests more of your data.

What to look for in analytics technology:

Easy to use, self-serve technology, so you don’t need to rely on someone with technical expertise to access insights
Connectivity to different internal systems, such as your core accounting system, CRM, and other lending platforms
Real-time monitoring, dashboard visualizations, and proactive recommendations
Insights that can be tied to either a clear increase in revenue or a decrease in costs

Leading providers in analytics technology:

nCino offers turnkey mortgage analytics solutions that give lenders a comprehensive, data-driven, and real-time view of performance across the entire mortgage pipeline.
5X Solutions brings together loan origination with your business’s financial and accounting data to offer KPIs, predictive analytics, and pipeline management for your mortgage line of business.

AI

Artificial intelligence is all the buzz in many industries, including banking. There is potential for AI from fintech companies to enhance everything from mortgage operations to decision-making. In the highly competitive U.S. mortgage market, AI can be a competitive advantage.

If your financial institution is looking to implement AI-based solutions, it’s important that your chosen vendor adheres to regulatory requirements. Federal agencies have made it clear that the use of artificial intelligence must be in compliance with federal law, particularly consumer protection and anti-discrimination laws.

Many lending tech companies have raced to add AI to their existing products. You’ll want to evaluate specific use cases and determine if your bank or credit union can benefit from these tools.

What to look for in AI technology:

Transparency in data sources and the quality of data used, so you can explain your business to regulators
Security and safeguarding of sensitive customer data, as this is a concern for many lenders looking to adopt AI technology
Bias mitigation so that the AI solution doesn’t perpetuate or amplify existing biases in mortgage lending decisions
Output accuracy, whether it’s used internally or customer-facing

Leading providers in AI technology:

Effectiv is a one-stop solution to prevent fraud and reduce risk across your entire organization.
Engageware leverages generative AI in the form of a conversational chatbot to answer customers’ questions, qualify potential borrowers, and book appointments with a mortgage lender.
Zest provides tailored underwriting models, so you can safely expand creditworthiness and make faster credit decisions with more accurate risk prediction.

No mortgage product should stand alone

Whether you’re focused on improving the customer experience or operational efficiency, any technology upgrade should integrate well with other products you use. If you invest in financial technology and its integrations with other products are limited, you could offset any gains you might otherwise make.

Many of the fintech solutions listed here are part of larger suites, embedded within well-established industry platforms, or have APIs you can use for connectivity. While they all solve specific pain points for mortgage lenders, they also fit into the larger mortgage origination process within banks and credit unions.

The right fintech mortgage partnerships can equip you to provide an exceptional customer experience while maintaining operational efficiency. It’s only a matter of prioritizing the products that will bring the most value to your mortgage lending department—and keeping a technology wish list for future investments.

Learn more

Argyle delivers verification of income and employment (VOIE) within seconds, is an approved data provider for both Fannie Mae and Freddie Mac programs, and integrates seamlessly with popular POS and LOS systems like Encompass® by ICE Mortgage Technology®, nCino, Floify, Dark Matter, and more.