Have you ever heard of fintech? Fintech is one of the fastest growing industries for venture capital money. What exactly is it? Financial. Tech. Fintech. It’s computer programs and software that powers banking financial services.
In mortgage lending, fintech is primarily used for digital loan applications, mobile apps, and automated marketing systems. Fintech has been around for several years but was put in the spotlight when push-button mortgages started being advertised.
It’s a rapidly growing industry because lending companies and consumers both are interested in more cost effective and streamlined processes as it relates to getting a mortgage. The challenge is that the lending industry is so complicated; different programs, lending guidelines, compliance and regulations. It’s not that fintech can’t keep up, but there isn’t a one-stop-shop software that lenders can use for everything. It’s kind of like getting a tattoo, once you get one, you tend to get more.
The same goes for lenders and fintech. Once a lender makes the leap into this space, it often realizes it may need multiple solutions to achieve what it wants … efficiency and cost effectiveness. But multiple solutions add costs for the lender and create a lot of confusion for users (consumers and lending employees).
So, then what is an ideal situation? It’s using a combination of some simple technology, plus talented employees. While Rocket Mortgage might be perceived as a tech-powered lender, it’s also known for having some of the highest costs and process inefficiencies (leading to blown closing dates) in the industry. Why? Because the company invests so much into advertising and technology instead of people.
Fintech should be used by lenders if it’s kept simple. Empowering consumers to start a digital loan process, as well as having access to streamlined communications (document management, email threads, process updates) is a great space to stay. It gets complicated when lenders try to automate too much.
So if you’re worried about robots taking over the world, here’s some good news. For now, consumers still need to rely on talented loan officers and processors – PEOPLE! – who are tasked with identifying and explaining certain parts of the loan process (origination, underwriting, and closing). There are too many guidelines and regulations in play, even for Watson.