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Unleash the Power of Data-driven Decisions in Lending

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The pandemic has impacted every aspect of financial services, moving transactions to digital platforms, and forcing organizations to rethink back-office processes that have been in place for decades. While disruptive to ‘business as usual,’ this transformation has modernized outdated products, policies, and procedures while improving the customer experience.

Digital mortgages become an industry-wide reality as lenders meet borrowers’ expectations by offering a remote and automated experience during changing times.

According to Ellie Mae’s Millennial Tracker, millennial homebuyers with dramatically different expectations around technology and ease of use compared to previous generations accounted for over 60% of purchase loans in July 2020.

Changing Customer Behavior and Expectations in the New Reality

As consumers across the globe adjust to the new normal, there is a significant variance in consumer sentiment and behaviors. Recent research from McKinsey reveals that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks, and companies have launched digital outreach to customers to make flexible payment arrangements for mortgages and loans.

Firstly, consumer expectations are getting reshaped as the world emerges from the pandemic. Consumers are also getting increasingly aware of credit access means, and enhanced uncertainties are amplifying risk perception. It may also lead to better personal finance management practices.

Secondly, there have been some rapid technological advances, led by the ever-increasing penetration of smartphones and data proliferation.

Thirdly, the regulatory is increasingly getting favorable, with laws increasing, providing an impetus to the digital lending market.

A Mandate to be Bold

Digital lending is now a cornerstone of the ‘new normal,’ making it a critical focus of every institution as consumers adapt to pandemic-related changes in virtually every aspect of their lives. However, going digital is no longer enough in consumer lending. This is the time to act boldly. Beyond applying’ digital lipstick’, show your inclination towards innovating entirely new digital offerings such as artificial intelligence (AI) at scale across your business while deploying design thinking. By leveraging next-gen technology, financial companies can significantly cut down costs and serve a comprehensive array of consumers with innovative products and services.

Even before the pandemic, the digital channel was becoming primary— or, in some cases, the sole—channel for consumers to engage in essential lending functions. Many lenders have made a significant investment in technology and digital transformation initiatives, yet only a few managed to develop a long-term competitive advantage from these investments.

Recently, the Mortgage Bankers Association (MBA) found refinance activity was up 168 percent, amidst the pandemic, even as The Wall Street Journal reported an 8.5 percent decline in sales of previously owned homes for the month. Also, October Ellie Mae Origination Insight Report data revealed interest rates dip below three percent and refinances reached 60 percent of total closed loans.

It is more important for lenders than ever to have an advanced, compliant, efficient, customer-friendly approach for mortgage origination now and to deal with the consequences of this crisis as well.

Mortgage Origination- Out of legacy and Into the Future

Technology has undeniably reshaped customer expectations. And a global pandemic has elongated remote workforces thin while increasing demand as more consumers seek to consolidate debt and refinance in these unprecedented times.

Amidst this, one such process that needs overall improvement is mortgage loan origination. The main three challenges in the mortgage origination process that lenders typically face are cost, consumer expectation, and time to market.

However, when the mortgage origination process is automated end-to-end, lenders can minimize the chance of manual error, promote customer cross-selling and retention, and cut down the risk of compliance violations— all while significantly reducing operating costs.

Transforming Digital Mortgage Experience with Tavant

Our solution, FinDecision is a component of Tavant’s AI-powered digital lending suite of products, VΞLOX, that improves loan quality while enhancing the overall loan origination experience. FinDecision is a core component of its straight-through processing and automated underwriting of loans. It provides lenders the means to improve loan fungibility and operational best execution without sacrificing any efficiency. It enables loan officers and back-office teams with data and augmented intelligence for making an informed selection of AUS while maximizing loan performance in the secondary market.

FinDecision is a stateless Open API service that can be invoked from any commercial/homegrown POS and LOS.

FinDecision is already integrated with Eille Mae Encompass and provides lenders seamless servicing offering for AUS services, allowing them to identify the loan that is most favorable to their borrower while cutting costs and closing loans faster. It provides an automated, single-click approach to achieving loan fungibility across agency automated underwriting systems, as well as private investors. FinDecision uses machine learning and process automation to submit loan data with a single click to automated underwriting systems, enabling lenders to see the full view of operational benefits available to their borrowers. It validates Fannie Mae’s and Freddie Mac – AUS response and generates a detailed AUS comparison report for the lender. This validation process integrates with both Desktop Underwriter (DU) and Loan Product Advisor (LPA).

FinDecision helps lenders to deliver superior loan origination experience for borrowers, loan officers, and underwriters through expanded product choices, lower costs by judicious use of appraisal waivers (eliminate hundreds of dollars in borrower’s costs), and faster speed to closing (reducing loan application to funding cycle times by days and weeks).

The solution helps in increasing transactional ease, improving operational efficiency, and automating workflow by comparing & contrasting LPA vs. DU findings side-by-side. Users can run Tavant’s FinDecision service and get the AUS comparison reports for appraisal waivers and rep & warrant reliefs within Encompass. It also provides dynamic classification and grouping of income, assets, and collateral findings at the borrower and loan level.

What Next? 

The pandemic seemingly provides a sudden glimpse into a future world, one in which digital has become essential to every interaction, forcing organizations to speed up the adoption curve.

The fintech industry is reasonably versatile and has enough expertise to adapt to the new reality. In these changing times, every fintech industry sector needs to mobilize around improving value and a customer-centric approach. At the same time, moving away from the traditional approach to credit scoring can help both customers as well as lenders.

2021 has witnessed a significant shift to a new paradigm powered by collaboration between traditional lenders & modern Fintech players. Staying ahead in this race to innovate, the lending industry will significantly prioritize the customer experience while providing them with the delight they deserve.

Watch the demo of FinDecision here to gain more insights. 

To get a walkthrough of how we achieve a touchless mortgage experience, please call at 866-9-Tavant or email us at [email protected].

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