In recent years, most people within the mortgage industry have recognized the necessity of embracing technology and innovation. As with so many industries, having the strongest relationships and the best reputation is no longer the sole recipe for success (although it is, of course, still very important). Technology is now widely recognized as a key driver for growing and sustaining a business, and forward-thinking mortgage professionals who have embraced FinTech are reaping the benefits.
“There are a number of different tools that FinTech has provided to mortgage brokers, mainly applications and websites that increase efficiency and transparency for brokers and, ultimately, their clients,” says Brad James of Fundever. “A great example of how FinTech has changed the mortgage business occurred in 2006 when Davis & Henderson launched Filogix, the system that brokers use to communicate effectively with banks.”
Other examples of FinTech innovations in the mortgage brokering space include online mortgage calculators, electronic application market places, customer relationship management (CRM) tools, and document generation software. “FinTech in enabling brokers to better use their time and provide better information to the clients,” James says. “It also allows them to differentiate themselves from banks.”
There’s no doubt that FinTech is catching on both globally and here in Canada. “In 2014, investment from private capital in FinTech companies was US$12.21 billion, an increase of 201%, compared to 2013,” Christine Duhaime, executive director of the Digital Finance Institute, said in a recent report. “In 2015, FinTech investment grew 75% to US$22.3 billion, and over 1,100 FinTech deals were announced.”
And the banks aren’t about the let themselves be left behind. In fact, they’re one of the biggest FinTech investors globally. “In 2015, banks in North America spent US$62.2 billion on external IT and that number is expected to increase in 2016 to US$64.8 billion, surpassing half a trillion US$ globally in 2017,” the report said. “For core processing alone, banks will spend an estimated US$35 billion in 2017.”
James has seen the expectations of clients change over the years and fears for brokers who are reluctant to embrace technology. “When somebody is used to being able to email their babysitter money, book their vacations online and instantly communicate with anyone around the world in real time, that expectation flows through when they’re trying to get a mortgage,” he says. “If you’re reluctant to move along with technology, to keep up with ever changing customer expectations, you are certainly going to be left behind.”
President of Mortgage Architects, Dong Lee, has seen technology simplify the home closing process. “Technology has also allowed brokers to embrace a slew of CRM technologies to help them keep in touch with their customers and streamline processes to share responsibilities and process mortgage transactions more efficiently,” Lee says.