Mortgage clients have more ways than ever to apply for a mortgage today. They can apply online, or via a phone center representative, they can talk to a loan officer referred by the realtor or walk into a local branch. It's the client’s choice, and the method that clients feel comfortable with interacting with a financial institution to make this important decision has become very fragmented. I don't think that a financial institution has to be all things to all people, but you need to play in more than one channel to make the most of your opportunity.
Direct Mortgage Lending
Direct Mortgage Lending via the internet or call center is increasingly becoming the channel of choice for customers. In a recent Forrester survey, 33% of purchase clients and 42% of refinance clients applied for their mortgage online. Quicken has been a driver in this channel as they’ve dominated the call center origination and now have moved directly into online origination via “Rocket Loan”. While succeeding in this channel requires a significant investment in technology it can pay off handsomely in higher spreads due to lower cost of acquisition. Phone center LO’s who support this channel typically receive far less commission then their Outside Loan Officer brethren who are paid for “hunting and gathering”.
Quicken, Guaranteed Home Loans and other pure mortgage originators invest heavily by using direct mail, online, TV and radio advertising. Banks have an unfair advantage in that they already have the trust of their clients and significant data in which to identify clients in need of a mortgage. Banks are increasingly leveraging this data to provide clients with timely offers around mortgage and home lending. By monitoring clients we can provide offers for home purchase through the use of batch pre-screen offers to clients that have shown behaviors that indicate that they are likely to be applying for a mortgage. Even more effective, there is the capability to present offers to clients in near real-time that are triggered when a customer puts their home up for sale on the Multiple Listing Service, or when there has been a mortgage on inquiry on their credit report. These offers can be presented to the client across multiple channels; online, e-mail, postal mail, and through call center or branch personnel. This type of lead generation is not only effective, it addresses a common complaint of customers that Banks don’t understand or anticipate their needs.
Outside Loan Officers
Outside Loan Officers who focus on originations generated from leveraging their book of business and Center of Influence’s (COIs) have the ability not only to provide a consistent flow of new originations; they also bring new clients to the Bank. Typically, these loan officers have strong relationships with realtors, attorneys and accountants who refer them clients based upon their relationship. These loan officers tend to generate a steady flow of purchase business due to their close ties to the real-estate community. Building a stable of Outside Loan Officers is a bit more challenging than some of the other channels as these loan officers are aggressively sought out in the market place and you normally have to pay up for this talent with higher commissions which negatively effects your spread. On the positive side, these loan officers typically focus on jumbo mortgages with large outstanding balances and with short-terms that stay on the balance sheet.
Retail Bank Branches
There is a great deal of opportunity to generate mortgage originations from branches. Having the right loan officer dedicated to the branch is critical to the success of the branches. It’s true that you will get loan volume by just having an Outside Loan Officer cover a branch, but you may be challenged in truly penetrating that branch’s client base. A Branch Based Loan Officer should cover just 2-3 large branches and they should be fully committed to those branches. What I mean by “committed” is that their activity should be focused on the staff within the branches as well as the clients domiciled in the branch. It takes time and effort to get a branch capable of sustained success in mortgage. Branch Based Loan Officers will need to be able to the following:
Coaching- Branch Based Loan Officers will need to help branch staff incorporate mortgage into their needs based sales conversations with customers by helping them with those open ended questions that identify mortgage opportunities. If you have pre-qualified mortgage opportunities “pop up” on Bank CRM screens, the Branch Based Loan Officer should be able to coach around transitioning that into a mortgage conversation. As part of their coaching, they should participate in the branch sales meetings and daily huddles to reinforce successful sales practices around mortgage.
Client Introductions- When Loan Officers are in the branch they need to feel comfortable introducing themselves to clients that are meeting with a Bank staff member at their desk. It’s a great way to generate new business and the show coaching aspect of it helps improve the skill of the banker.
Lead Dispositioning- Loan Officers in the branch should be given the same kind of leads that a phone center loan officer receives but for the branches that they are assigned. Trigger leads for clients putting their home up for sale on MLS or a recent credit inquiry should be pushed to the Loan Officer in the branch for follow up. When there are mass pre-qualified programs, they should organize call nights for the branches so that branch sales staff and Loan Officers can follow up on those leads.
Lastly, not all branches are created equally. While it may make sense to have Loan Officer cover 2-3 large branches in a certain geography, having coverage of small branches doesn’t always make sense and these should be assigned to the phone center who can partner with the branch. Segmenting branches will assist in maximizing the efficiency of your Branch Based Loan Officer coverage.
Recommendation
Play to your strengths when choosing the channels that you will invest in. Make sure that the ones that you have are being maximized until you can invest in another. The journey that clients make in obtaining a mortgage is complex with buyers using a mix of digital and human touchpoints. Being successful in any channel will rely on your ability to consistently provide a great client experience in person, online or on the phone.