Return on Experience = Return on Investment

CHICAGO–For lenders, delivering a good customer experience represents a significant opportunity to drive competitive advantages–but also presents bigger hurdles.

“Return on Experience is the new Return on Investment,” said Joey McDuffee, head of sales and marketing with Wipro Ltd., Palmetto Bay, Fla., at the recent MBA National Technology in Mortgage Banking Conference & Expo. “There is a shift from transaction-centricity to customer centricity in mortgage lending. Customers want to feel like they are more than a series of transactions. They expect more from their lenders and they want greater engagement with loan officers.”

McDuffee said lenders must look at the entire value chain of the mortgage process “so that you can have a cohesive strategy going forward and a customer for the long-term.”

Ahmet Hacikura, partner with Oliver Wyman, Chicago, said extensive research with customer focus groups shows that customers perceive the mortgage application as just a slice in the entire homeownership process. While customers look at the big picture, lenders tend to focus on just the application and mortgage process.

“There’s a lot of anxiety on the customer’s part–and that’s even before the loan application,” Hacikura said. “The advice and tools they get from lenders tends to be pretty limited, which adds to the anxiety. The mortgage has the potential to enhance this life event with customers, but too often it doesn’t. There’s a lot of opportunity both before and after the loan process for lenders.”

Sanjeev Malaney, CEO of Capsilon, San Francisco, said lenders much reach out with high tech–and high touch. “Your focus must be, ‘how do I create a customer for life?'” he said. “It takes a lot of work and a lot of love.”

Pranav Kiran Parekh, vice president with Discover Home Equity Loans, Riverwoods, Ill., said because home buyers purchase homes so infrequently, they often remember the painful aspects of previous processes.

“And if they’re going through it the first time, it’s just confusing and difficult,” Parekh said. “The expectations they have now are influenced by their routine transactions they do today: they purchase airline tickets without going to a travel agent; they can order groceries online. They don’t understand why there is so much friction in the mortgage process.”

Hacikura said current customer interfaces are insufficient. “It’s important for things to come together quickly, and the key is to have a smooth process from the beginning,” he said. “That way customers don’t fall through the cracks and staff doesn’t point fingers at each other.”

Malaney agreed. “If you can’t deliver consistency, then all of your front-end processes don’t mean anything,” he said. “You have to start with an all-over strategy before developing tactics.”

Parekh noted that the application process is so complex that “at some point, the customer has to have some human interaction. It’s important that when those interactions occur, they are smooth and employees have all the information in front of them via technology so that they can resolve issues quickly…all these services we apply in a self-service atmosphere have the same applicability for when we interact with the applicant directly.”

Malaney said the time is ripe to move to a more technology-centric model. “If you asked someone about self-driving cars two years ago, you would have gotten a lot of skepticism,” he said. “Today, cities are conducting tests and looking at eliminating traffic from their streets.”

Malaney noted many companies are investing to a more tech-centric model, but they must continue to keep the customer in mind. “In the next 24 months, I expect a number of lenders to deliver a fully automated mortgage loan process,” he said.

Parekh said lenders must adapt to consumers’ habits. He noted his work schedule coincides almost exactly with the hours that his local dry cleaner is open, which impedes his ability to get his shirts clean.

“Most lending operations have loan officers available from 8: 00 a.m. to 5:00 p.m.,” Parekh said. “That is not being responsive to what customers want or need today.”

So, how do you know if you’ve successfully delivered an optimized experience to the customer?

Hacikura said customer satisfaction surveys is not enough. “It should ideally result in better pull-through in the process,” he said. “It may also reflect itself in better employee management in attracting and retaining people. It becomes a holistic factor.”

Malaney said it’s also about building a brand. “It’s about consistency,” he said. “You have to rally your troops around a mission and deliver on it consistently.”

“If you’re thinking in terms of operational measures, you can measure speed from discrete points of transmission,” Parekh said. “You can look at that and ask, ‘am I delivering a product with less friction, with higher conversion rates?’…how many times is someone touching the file? And in the end, when you want feedback from the customer, you can take things one step further and ask for a recommendation and following up to actually get a recommendation.”

To reach this ideal goal of customer experience, Malaney noted technology providers “appear to be excited about the future. This is the most exciting 18 months that I’ve ever seen. We’re still not doing a lot of things right, but we’re getting there.”

“If you walk among the exhibitors here at the [MBA Tech] Conference, you see a lot of vendors making a lot of progress in solving problems,” Parekh said. “It’s truly impressive the amount of depth and knowledge that they have. More importantly, the challenge is around culture, receptivity to change. That doesn’t come from the vendors, but how we change our culture and align goals to transform change.”

“It all goes back to the concept that an optimized experience is timeless,” McDuffee said. “That emotional engagement is the piece we need to work on more.”