“Many origination and servicing processes are still slow, manual, labor-intensive, and fragmented— in other words, ripe for disruption” McKinsey & Company
Truer words were never spoken than when McKinsey & Company published the statement above in a trends report on the mortgage industry.
Borrower communications continue to leverage legacy approaches and systems despite the availability of alternatives. For most mortgage servicers, the processes associated with creating and updating borrower communications are slow, cumbersome, costly, and inefficient. In a recent MBA Webinar when over 150 attendees were asked “What do you see as your biggest challenge with borrower communications?” the two top answers were “How long it takes to create and update communications” as selected by 39% and “The process is very manual” as selected by 33% of the audience. An intense regulatory environment and thin margins are two reasons why mortgage servicers are behind many of their financial services counterparts in terms of leveraging technology to drive efficiency and modernize customer experiences. But the days of “if it’s not broken, don’t fix it” are long gone and mortgage servicers are increasingly under pressure from both consumers and new school digital-first competitors to transform the way they manage communications.
“Digital-first subservicers have gained traction over the past two to three years for their ability to use technology to increase efficiency, improve the client and end-borrower experience, boost retention, and strengthen compliance”
The COVID-19 pandemic forced rapid digital transformation on many aspects of our lives from educating our children, to shopping for groceries, and even to interacting with our financial services institutions. It’s been widely recognized across sectors that the pandemic accelerated digital transformation substantially, with organizations accomplishing projects in weeks and months that would normally take years.
For the most part, consumers found a way to function in what so many referred to as the “new normal” and as we move forward, things aren’t necessarily going to revert to how they used to be. Consumer expectations and modes of interaction forced on us by the pandemic have had an ongoing impact on consumer behavior.
Research published by McKinsey indicates that about 60 percent of both purchase and refinance borrowers would be open to completing their entire mortgage application online, without phone or in-person support. While this research relates to origination, mortgage servicers can most assuredly assume that if borrowers are comfortable acquiring their mortgages online, their expectations around the mortgage servicing will be that those processes are also performed digitally. This is where digital sub-servicers have a distinct advantage over traditional print-oriented counterparts. Leveraging digital-first technologies and processes that have been adapted to support regulatory requirements – they can respond to customers faster, with less cost, across the customer’s channel of choice.
That fact remains though, that while a large portion of consumers are ready to completely embrace digital communications, many still want to rely on traditional methods of interaction and communications to support what is the biggest purchase and investment they will make in their lifetime – their homes.
As traditional Mortgage Servicers grapple with the added pressures of a changing market and consumer landscape, they face the reality of having to address the inherent inefficiency in the way they operate today. Whether borrower communications are managed completely in-house or if much of the process is outsourced to a print service provider, the reality is the same. Traditional servicers and their suppliers are too reliant on manual processes and legacy systems including Microsoft Word or Excel, home-grown tools, basic letter writer packages, or even legacy customer communication management solutions. To compete in the new reality, Servicers need to rethink and modernize key areas of their communications operations and the supporting tech stack.
A good starting point for Mortgage Servicers is to examine key areas of their communications operations that create the biggest areas of wasted time, excessive cost, and inefficiency. In this article, we will explore the 5 biggest sources of inefficiency in borrower communications:
One of the most impactful changes a Mortgage Servicer can make is changing the way content is managed. At first blush, content management processes might be dismissed as being too “in the weeds” to have a material impact on efficiency, but it is a foundational element that if managed well (or improperly) has a ripple effect across other key processes.
Typical borrower communications processes rely heavily on content being authored in Microsoft® Word®, emailed around for review and approval to various teams and ultimately being emailed to IT or an external service provider for implementation into another system which will combine the content with customer data and layouts to produce the finished product. This process relies heavily on the document – both in the steps before it goes to layout and after. Destination systems rely on templates, typically one per document. We refer to these processes as being document-centric. One communication requires one document and one template for each channel. To use more than one channel, will result in a template being added per channel.
Document-centric approaches are inherently inefficient as they don’t allow for the sharing of duplicate templates and content between communications and channels. Each individual communication is managed as a distinct, disconnected entity. Modern solutions enable organizations to share both templates and content (images and text) across communications to drive efficiency and centralize control. Imagine having a URL or phone number that needs to be changed across dozens of communications. Typical approaches and systems would require teams to open dozens of documents and redundantly make an edit to each of those documents. Intelligent content hubs enable content to be managed in a modular way as components (blocks of content, fragments, or images) to be shared across communications and centrally managed. That URL or phone number would need to be edited once and the update would instantly appear across all those documents. This not only accelerates updates, but it reduces the risk of human error.
More sophisticated content sharing can be found in the use of variation management for similar communications that share the same basic layout and in many cases content components. These variations might vary by purpose such as customer correspondence communications, or by region for state regulation variations as an example, or even by brand. Again, there is significant efficiencies gained with content sharing in this paradigm that are simply not possible with a document-centric approach.
Fully communicating the power and flexibility that a modular content management approach vs a document-centric one can bring to your communications operations is impossible to cover in a single blog. But it is worth examining the impact on efficiency gained by centralizing content in an intelligent hub with sharing and re-use. The simple fact is, breaking free of the document paradigm can reduce change cycles from weeks to minutes and can eliminate redundancy across the board.
The adoption of new communications channels has been an ongoing challenge for many in financial services – and their print service providers. The typical approach when a new channel has been adopted has been to hire an expert(s) who knows the channel and stand up a separate system to manage it. Content and communications for that channel is managed in a mirror process to the other channels supported in the organization. This has resulted in the costly proliferation of duplicate and similar content across an array of systems designed to manage print, email, SMS, Web, etc. Think about a simple case of a single regulatory piece of content that needs to exist in several communications across those channels. That content is manually applied by different individuals in those systems. That redundant work effort is the very essence of inefficiency and wasted time, not to mention the risk that repetitive, fragmented processes like that pose to compliance.
In order to set themselves up for the future, Mortgage Servicers need to not only move away from document-centric approaches, but they need to eliminate the redundancy that results from updating the same content across multiple communications channels. By leveraging a centralized content hub that can support all your channels, you can not only drive out inefficiency, but gain greater control across the customer experience across channels and compliance.
Look for a solution that abstracts the content from the presentation layer. By managing content separately from the channel and communication it’s destined for, you will achieve greater flexibility in the use and re-use of that content and be prepared for any required changes to your borrower communications based on future regulations. Ideally any chosen content management solution will support your communications in two ways:
Support for traditional, composed print communications alongside email, HTML, and even SMS and newer channels to ensure you can leverage these in the future, even if you aren’t there today. These solutions will provide access to print composition and HTML templates to provide a full communications solution that integrates the content with customer data and layouts. Ensure packaged integrations are offered that enable you to connect to your existing digital delivery systems with minimal effort.
Support for a headless customer communications management (CCM) approach that is API-centric. Through an API call, other digital solutions will “call” the content hub to access the appropriate content for presentation that is determined in a digital endpoint. This will enable development teams to leverage the content for richer online experiences, mobile applications, even chatbots and IVR/IVA applications.
By ensuring your approach to content management employs both composed communications and headless CCM approaches you will be set to efficiently control communications across all channels – now and in the future.
Too much time is wasted with IT or service providers as they schedule the work to be done, implement content, generate proofs and tests, and send back and forth. Typical updates require 2.5 change cycles, which inhibits the agility of communications teams to be responsive and fast. One bank client cited an average of 65 days and $150,000 to make updates with a core service provider who was managing the implementation of their content into borrower communications. That’s a lot of time and money.
Mortgage Servicers should look for solutions that offer a no-code approach to implementing content across a variety of channels. By enabling non-technical users to create and update content, targeting rules and layouts with clicks not code, business teams can regain control over their borrower communications across channels. This would enable business teams and communications teams to take ownership of much of the time-consuming update and creation cycles, while still working with their print service providers to execute on the actual printing and delivery and their IT teams to manage the digital delivery systems. This business process change creates a better balance between teams – enabling the business to update and create new communications with speed and agility while enabling the tech teams and printers to focus on what they’re good at.
Too often, content reviews are conducted by emailing Word files between the communications team, legal, compliance, and translators. This leaves the communications teams with very little control over timelines, and status and a non-existent audit trail. The pitfalls of this manual approach are many, not the least of which is the time it takes the complete the process. When digital channels are added to the process and the volume of documents being emailed for review increases substantially, things only become more complex.
Mortgage Services stand to benefit significantly by centralizing authoring, reviewing, and approval processes in a single system. The adoption of a cloud-based solution can support collaboration between teams, quality assurance tracking as well as reporting and auditing so that your teams can get the control they need and always know where things stand. Look for a solution that enables workflows, task assignments and reporting to be configurable to fit your organization’s unique requirements. Robust quality assurance capabilities including side-by-side document comparisons, on-the-glass annotations, and task assignments help teams to not only quickly spot where changes have been made but ensure that the right set of eyes are placed in any content in question. Reporting and auditing capabilities are essential and ensure you know exactly what the final version is with all the necessary associated timestamps and approvals.
Customer service representatives (CSR) handle dozens of inquiries and calls a day from borrowers looking for information and help with their mortgages. Efficiency, fast response times, and accurate information and communications are essential ingredients to succeed in the role. More often than not, these teams don’t have ready access to standardized borrower communications in a way that enables them to both respond quickly and accurately, as well as contribute to a positive borrower experience.
The days of sending CSRs to a shared server with a set of Word files to create documents and correspondence in response to customer inquiries are in the past. Or at least it should be. Operations and loss mitigation teams need greater control over what gets sent out. CSR teams need more efficient ways of communicating with their customers and targeting the right content to them.
Interactive communications solutions enable customer-facing teams to leverage communications that are centrally managed by operations and loss mitigation teams in a content hub. These solutions integrate with the CSRs core borrower management system or CRM solution (such as Salesforce) to leverage core customer data in the creation of the communication. Working within their primary system, a CSR would select the kind of communication they need to send, answer a few key questions in an interview screen, and have a purpose-built communication dynamically assembled featuring the right content and customer data. Tailored, accurate communications can be generated in minutes that are ready to present to the customer across their channel of choice as appropriate. When suitable, CSRs can also achieve one-to-one personalization through a custom message added via a controlled editing experience. This not only enhances the borrower experience but provides the control operations needs with the speed that the CSR and customers want.
Finding the right solution to manage your content, one that supports borrower communications needs today and in the digital-first future is essential. Look for intelligent content sharing capabilities between communications and channels, business-user content authoring, integrated approval workflows, QA capabilities, and flexible options for managing content for both composed communications and in a headless CCM manner. These capabilities are critical to saving you time and money – today and tomorrow.
Also, think about how you will migrate to the new environment. This step often presents a substantial challenge and is daunting for teams. Solutions leveraging Artificial Intelligence (AI) exist today that can automate the migration of content to a new environment, accelerating and streamlining the shift from a document-centric fragmented operation to a centralized, modular content management environment.
To learn more about the benefits of an intelligent content hub for your borrower communications, contact us.
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