Fannie Mae: Mortgage Lenders Shift Focus to Enhancing Consumer Experience

Fannie Mae, Washington, D.C., said to remain competitive, lenders are streamlining business processes, improving the consumer experience and investing in human capital.

The company’s Economic & Strategic Research Team surveyed lenders about their 2017 business priorities and risk concerns, based on results from its second quarter Mortgage Lender Sentiment Survey, in which lenders reported subdued mortgage demand growth, a pessimistic profit margin outlook and strong concerns about increased competition.

The survey found mortgage lenders are refocusing their efforts to address challenges of the post-crisis era–in particular, providing a better experience for consumers.

Key findings:

–Most lenders expect more industry consolidation this year, possibly from mergers and acquisitions or by other lenders exiting the business.

–To remain competitive, lenders indicated that their top business priorities in 2017 are streamlining business processes, improving the consumer experience, and investing in human capital.

–Very few lenders cited cutting costs and investing in data analytics/business intelligence as top priorities.

–Compared to three years ago, lenders now are significantly less likely to say compliance and loan repurchase concerns have grown.

–Delivering a seamless end-to-end consumer experience across all channels is becoming critical given increased competition from traditional players and disruptions from emerging players.

“Lenders’ current priorities and concerns reflect the shifting need to address challenges of the post-crisis era,” said Fannie Mae Chief Economist Doug Duncan. “In particular, the need to improve the consumer experience looms large for mortgage lenders. Given increased competition from traditional players and disruptions from emerging players, it is becoming critical for lenders to deliver a seamless end-to-end consumer experience across all channels. Today’s consumers have learned to expect a simple, transparent, and pleasant experience from customer service leaders such as Amazon, Netflix and Apple.”

However, Duncan noted the way forward for lenders to realize an improved consumer experience could be challenging. “Lenders cited significant barriers to implementing new technologies, such as system integration difficulties and high costs,” he said. “Additionally, data analytics and business intelligence capabilities are critical for identifying the gaps and opportunities in delivering a seamless consumer experience. However, very few lenders were focusing on this area. These challenges might be insurmountable for some mortgage originators and could explain why lenders say they expect more industry consolidation in 2017.”