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Why 2021 is a Key Indicator of Your Lending Organization’s Health

Key Indicator of Your Lending Organization’s Health

2021 has been a year like no other in terms of the housing market and consumer behavior.

Fueled by low mortgage interest rates, PPP loans, the rise of tech-powered real estate buying/lending, and the work-from-anywhere trend, consumers are making significant decisions about where to move, who to borrow from, and what to do with new capital.

  • The number of home sales increased 45% year-over-year in May of 2021 alone, as first-time home buyers flooded the market. 
  • Close to 8 million PPP loans were processed over the course of the year. 
  • Real estate technology solutions continue to boom (with a growth rate of over 1000 percent in past years)  and customers now expect their lending institutions to have automated solutions at all stages of the borrowing process.
  • New regions of the country are seeing unprecedented growth as workers can settle anywhere. Being able to serve new segments of the market is more critical than ever before, creating a huge opportunity for local lending institutions. 

Competing with large financial institutions and online-only players can be especially difficult for smaller institutions and alternative lenders, but only by looking at your current processes and systems can you capture your piece of the lending pie.

If you didn’t make adjustments to how you did business last year to take advantage of the above trends, you still have an opportunity to capitalize on these seismic shifts heading into 2022. Here’s how.

Take a Brief Glimpse Into the Rear-View Mirror

Did your number and value of loans go up over the past few years? Fannie Mac now estimates $3.9 trillion in mortgage originations this year, up from their previous estimate of $3.5 trillion. 

If your lending volume has flatlined between 2020 and 2021, you need to take a careful and critical look at the factors that are having an impact.

Are your rates competitive? Consumers now price-shop from their desktops, laptops, tablets, and even phones, but rates are now table stakes in the lending process.

Speed is important to today’s consumer. Technology-fueled decision-making has led to a higher level of impatience. If people can’t find the answers they need immediately from a website, get a return call from a lender within 24 (or even 12) hours, or close quickly on a loan, they’ll move on. 

Service is vital to today’s consumer. The consumer experience is more important than ever before. People want answers to questions at the moment they need them and to be treated as valued customers. Word-of-mouth remains important. Now more than ever, it is accelerated and expanded via social media. If someone has a bad experience with your institution, the whole world (literally) is likely to know. 

In 2021, financial institutions’ readiness for dealing with PPP loans had an impact on their brands’ image. If your institution botched its PPP process and couldn’t help customers in their moment of financial need, you probably don’t have a shot at winning back that business when someone is looking for help with a higher-ticket (and more lucrative) deal.

The 5 Things You Can Do as You Head Into 2022

Reflecting on 2021 will give you a clearer picture of what you need to do as a lending institution to improve your financial performance, attract new customers, and keep the ones you already have.

Look carefully at these aspects of your business:

  • Trend-tracking: If you missed out on the four key trends of 2021, how will you stay on top of market shifts in 2022?
  • Customer needs: Borrowers today are not necessarily who they were yesterday. Do you really know your target market?
  • Competition: What are other lending institutions doing to serve customers that you aren’t?
  • Technology: From your website to your loan processing systems, did you fully leverage automation to increase speed and customer satisfaction?

Gather your senior management for an objective and honest assessment of 2021 performance — beyond the spreadsheet. As you’re establishing budgets for systems and training, now is the time to be honest and self-reflective. Consider the following 5 focus areas:

View the world through the eyes of the consumer.

Mystery-shop the borrowing process that your institution currently has starting with the first search on “mortgages near me.” Be sure to shop for your competitors too. Does your institution look small and dated? Is it responsive to today’s younger and tech-savvy consumer?

Examine your service.

Pay special attention to how easy finding answers on your website is. How quickly can you get answers to questions through FAQs on your site or your phone systems?

Pinpoint some of your big wins in 2020 and showcase them throughout your marketing.

Smaller institutions may not have the budgetsfor flashy advertising, but you can use technology to deliver a unique and compelling customer experience, leveraging testimonials in your messaging.

Are you spending enough on training?

Look at your current team and make sure they are equipped to answer questions quickly, accurately, and directly (and with a smile in person, online, or in their tone on the phone).

Establish a clear roadmap for technology upgrades.

Automation is no longer just a job for your CTO or IT department. It powers every aspect of sales and service today.

Make this discussion a top priority for your management team. Make sure you’re addressing how technology can help humanize and grow your lending process. Honesty, creativity, and consumer-focus will be key!

As you finalize your 2022 plan, if you’re interested in learning how ATTUNE automates and digitizes the lending and home buying operations, get in touch with us here.