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3 Changing Market Conditions That Mean You Need a Modern Tech Stack for Lending

21 Mar 2022
modern tech stack for modern lending

Digitization has changed consumer behavior and transformed entire industries, including mortgage lending. Faced with these shifting currents, mortgage lenders might be wondering, “What is modern digital banking?” and “What tech stack do banks use?” Current trends can shed light on both of these questions and help lenders understand how innovations like document processing automation can advance their businesses. Here are three changing market conditions that indicate it’s time to adopt a modern lending tech stack.

1. Rising Confidence In Digitization

Although there was a time when some consumers were hesitant to do their daily business online, it has long since passed. According to research from McKinsey, 75% of U.S. consumers have tried different stores, websites, or brands during the pandemic. Sixty percent of them expect to integrate these new brands and stores into their lives going forward.

Even older generations that once harbored reservations about technology have become proficient in using it during this period. A recent Ericsson survey found that nine in ten seniors claimed that their devices and internet connectivity helped them a lot during the crisis, in one way or another, in their daily life. For example, they appreciated how technology made it possible to virtually visit with friends and family, get groceries and supplies delivered, and access healthcare.

Having experienced the benefits of digitization firsthand, more and more people of all ages have the necessary confidence to do their daily business online. This trend has positive implications for lenders that use a modern tech stack. Prospective applicants are more willing to trust the digital mortgage process than ever before, and they’re more likely to favor a lender who offers them a convenient and safe digital application process.

2. Need For Scalability

When lenders start to question what a modern tech stack is, chances are they already know that consumers increasingly prefer to do business with companies that have digitized their services. Lenders may also wonder how a modern tech stack can help them meet consumer expectations. What they might not yet have considered, however, is how a modern tech stack benefits themselves—especially when it comes to scaling the business for future growth.

Mortgage lenders rely on flexible processes to carry out their operations. At a moment’s notice, lenders may need many more or fewer workers. Using automation to scale lending operations can help them escape the recruit-lay off cycle to maintain appropriate staffing levels for originators, processors, and associates without incurring cost overruns.

Lenders that take advantage of document process automation are also ideally positioned to meet the moment when a large volume of applications comes in, confident that they can ingest and digitize origination documentation quickly without compromising accuracy. This way, whether applications are spiking or just trickling in, lenders can rest assured that they always offer a responsive customer experience. With the strategic advantage of a modern tech stack in their corner, forward-thinking financial institutions can maximize future opportunities for growth and strengthen their competitive position in the lending space. They will also have an easier time recruiting and retaining talented lending professionals who value working at an innovative organization and don’t want to waste time on tedious, paper-intensive lending processes.

3. Mobile-first Behavior

Mobile devices now play a central role in our daily lives. Many, if not, most people reach for their smartphone right after waking up, and they rarely put it down until they fall asleep. According to App Annie’s State of Mobile 2022 report, the average mobile phone user now spends a third of their daily waking hours using their phone. The pandemic accelerated existing mobile habits, which solidified in 2021. Finance app downloads jumped from approximately 4.6 billion in 2020 to roughly 5.9 billion in 2021, indicating a pronounced interest in mobile finance—particularly among Millennials and older consumers.

What does this mean for lenders? For starters, mobile phone cameras can serve as an effective document capture on-ramp for borrower documents, if lenders offer an easy to use, mobile friendly portal. If your lending process is still largely paper-based, you won’t be able to reach potential clients where they spend the majority of their time. People expect the companies they do business with, including lenders, to offer convenient mobile-friendly services instead of burdening them snail mail and a slow, error-prone application review process. If a mortgage lender doesn’t use a modern tech stack, it will soon find itself at a competitive disadvantage when compared to fintech lenders that use modern lending processes powered by automation and AI.

Experience the Benefits of Modern Lending with a Modern Tech Stack

Lenders that haven’t yet digitized their lending processes still have a powerful opportunity to meet changing expectations for a mobile-friendly application process and scale their operations as needed. Ocrolus can help automate the mortgage process, accelerating mortgage decisions with trusted data for more transparency.

Ocrolus provides mortgage automation software that can help accelerate mortgage decisions with trusted data for more transparency.