The Customer Effect

The mortgage industry (finally) moves online

  • 75 percent of home buyers would use online mortgages if they knew they could speak with someone when needed.

  • "I was frustrated by how offline, opaque and inefficient the mortgage application experience was,” said Rajesh Bhat of Roostify.

For home buyers, the process of securing a mortgage is long and nerve-racking with lots of paperwork.

“When I went through my home purchase experience I was frustrated by how offline, opaque and inefficient that experience was,” recalled Rajesh Bhat, cofounder and CEO of Roostify, a white label solution that allows mortgage originators to create digital experiences for their customers.

“Anywhere in the world, buying a home remains something that is very paper driven, facilated by many intermediaries and often times, you don’t have a good idea what those parties are doing,” he added.

In the process of purchasing a home, a consumer (or his data) will have to interface with a real estate agent, an appraiser, a loan officer, a title search company, title insurer and a loan provider.

These frustrations led Bhat to think of a better way to manage home purchasing. After studying the industry for over a year, while keeping his day job as a management consultant, he founded his company.

Roostify offers originators the technology to build a consumer-facing one-stop shop for the mortgage process with the ability to integrate additional products through an API.

Roostify is part of a small, but growing subset of fintech companies tackling inefficiencies in the home purchasing process.

Some of the newer players, like LendingHome or LandBay, try to replace current originators. Both are peer-to-peer home lenders. Sindeo and Blend Labs help customers through their mortgage applications by providing information or streamlining data collection and processing. SoFi, known more as a student loan provider, is now also active in the mortgage market, offering online applications for mortgages.

There is a clear demand for good digital experiences in applying for residential mortgages.

In the US, about 75 percent of home buyers said  they would be comfortable completing the process online as long as they knew they could speak with someone when needed, according to Wells Fargo’s “How America Views Home Ownership” survey.

According to the 2016 Mortgage Consumer Survey conducted by the Canada Mortgage and Housing Corporation, nearly three-quarters (72%) of mortgage customers looked to various online sources to find out about options and features.

According to Bhat, incumbents are being pressured by their customers to rethink the mortgage process and its traditional user experience. Quicken Loan’s Rocket Mortgage — which promised that home buyers could get approved for a mortgage in 8 minutes — was a big catalyst for that process.

“They spent a lot of money advertising it,” Bhat said. “It created a sense of urgency in the industry. The feeling changed from ‘this is the future’, to ‘this is inevitable.’”

As this sense of urgency increases, the mortgage industry is looking at ways to improve the service it gives customers. “In the financial services industry, product and pricing are no longer differentiators, customer experience is,” claims a recent white paper from Oracle Financial Services. “Especially, a frictionless customer experience throughout the customer lifecycle,” the authors add.

Updating the age-old process of a mortgage application isn’t an easy task for originators. New trends might conflict with old IT systems and organizational structures. Consumer demand, pressure from challengers and a thriving ecosystem of third party vendors such as Roostify, can help facilitate that change.

 

Photo credit: aag_photos via Visual hunt / CC BY-SA

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