Can Design Thinking Save Traditional Lenders from Threat of FinTech?

(Abhinav Asthana is senior product manager and global head of mortgage consulting at Wipro Gallagher Solutions, a Wipro Ltd. company, a provider of end-to-end technology products and services for mortgage, consumer and commercial lenders. WGS technology products include its flagship NetOxygen Loan Origination Systems and mobile lending technologies. For more information about Wipro Gallagher Solutions, visit www.wiprogallagher.com.)

Over the past two years, while traditional lenders have had their heads down in compliance matters, non-traditional lending entrants and financial technology (fintech) firms seized the opportunity to leverage new technology and customer experience–thinking to create compelling new approaches that transform how financial products are packaged and delivered.

Now, as lenders emerge from the foggy regulatory waters, they can clearly see the challenge ahead: how to remain relevant with tech-savvy borrowers and profitable in the face of new competition.

However, the disruptive nature of fintech is an unprecedented challenge that cannot be met using strategies of the past. It requires the lending institutions ask bigger questions about the current mortgage lending model and what needs to change to keep tech-driven and “millennial” borrowers engaged. While this may be a big undertaking for many lenders, the application of design thinking will set lenders on the right path to competitive advantage.

What is Design Thinking?
The concept of designing something is not new; however, the thinking behind a design can sometimes get lost. The idea of designing something–a product, a process, a service–is too often reduced to the visual and technical aspects of design, which perpetuates the misconception that “design” is meant only for subject matter experts or product developers, and unreachable by the average person.

Tim Brown, president and CEO of globally recognized design firm IDEO, provides this definition on its website: “Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology and the requirements for business success.”

In a sense, design thinking is design rebranded. It offers innovators, businesses and individuals the opportunity take design back to a place of authenticity. If you re-read the definition above, you’ll note that design thinking indeed uses disruptive insights, future vision, experience roadmap, experience design and then implementation to create new solutions and solve problems, however, it does so while continuously returning design teams back to the core purpose–the human experience.

Businesses that apply design thinking principles will continuously explore how a design impacts the user, whether the user is a customer or an internal employee. That empathy and search for real solutions to customer problems is what ultimately leads to product/ solutions that are designed with care and intention and add value to the lives of users/customers.

Why today? Why Mortgage?
Application of design thinking offers the mortgage industry an unparalleled opportunity to design product-service experiences and deliver exceptional mortgage journeys to borrowers of every generation. Today, the experience of buying a product is as important as the product itself; most borrowers expect fast, simplified, convenient, and easy to understand solutions, experiences, and answers. Borrowers expect an experience with their mortgage lender to be as simple and intuitive as an interaction with their credit card provider.

As borrower expectations extend beyond categories, successful solutions must move beyond silos. A strong understanding of these parallel shifts enables financial institutions to deliver solutions that move beyond functionality to an experience people love, share and do business with. Knowing this, and knowing the complexity of a mortgage transaction, lenders can quickly come to the conclusion that borrowers will select a mortgage provider (or fintech lender) that can take a fragmented, long, frustrating mortgage process and make it more enjoyable; even delightful.

The mortgage industry is making progress by placing increased focus on the borrower experience; from eClosings to mobility and data automation. Even the “Know Before You Owe” regulation is built around the idea of ensuring the borrower knows what they are getting into before they close which helps rebuild some of the trust that was lost during the mortgage crisis. But do these solutions go far enough? Have we, as an industry, truly explored the borrower journey with empathy and asked the right questions to ensure we truly understand and solve the frustrations? The application of design thinking provides us with that opportunity to have those eureka moments that will allow us to deliver the combination of experience-driven process that moves beyond categories to deliver a meaningful, valuable and competitive experience to your borrowers.

To gain a more in-depth understanding of design thinking, please join us this Monday, April 4 at the Mortgage Bankers Association’s National Technology Conference & Expo in Los Angeles as we participate on a panel, Designing for the Consumer Experience. We will discuss practical application of design thinking and borrower journey engineering in the mortgage process. The panel discussion takes place from 1:00-2:15 p.m. PT.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)