Next-gen tech speeding up the home loan approval process
Buying a home is one of the most significant purchases of a person’s life, and one that has long been burdened with excessive administration requirements and a slow and steady ‘death by paperwork’. However, next-generation technologies like Artificial Intelligence (AI), blockchain and biometric authentication are changing the game for borrowers and lenders alike.
This new breed of technologies, also including cloud, APIs, machine learning, and big data analytics, have already had a remarkable impact on the mortgage industry globally, and this impact will only become more apparent in the coming months and years.
Reducing the time required to complete the application process for borrowers, which up until very recently may have taken weeks or even months, and transitioning that process to an online format are perhaps the first disruptive steps in overhauling the business of providing mortgages.
Some lenders across the region have heartily embraced technology and are now able to offer significantly faster home loan approvals (some as quick as 10 minutes). However, major pain points still exist for consumers beyond that initial approval.
Technology to ease consumer pain points
For many borrowers, the worst part about buying a new property is the excessive amount of paperwork that needs to be completed. Whether it’s proving your identity, providing evidence of your financial situation, or agreeing to legal requirements, borrowers are currently faced with an often-daunting number of forms to complete and sign. This goes even for those borrowers securing digital-only mortgages – the forms may be online, but they still need to be completed and assessed manually.
As new technologies are developed and proven, we can expect to see enormous improvements for borrowers in this space, particularly as AI and biometric authentication technologies begin to be incorporated in more steps of the process. These solutions can drastically reduce the manual requirements around proving identity and confirming financial suitability, while also reducing (in fact, potentially eliminating) the risk of human error in the process.
Increased efficiency and improved transparency
As with banking consumers, who now take for granted the speed, agility, and convenience that tech-enabled banking delivers, today’s borrowers expect faster, easier, and more convenient mortgage solutions to be offered by lenders.
Blockchain technology, which has been a corporate buzzword for many years, is now coming out of the crypto shadow and into its own, and has the potential to truly disrupt the mortgage industry, offering greater transparency, security and overall efficiency for all sides.
As it evolves, we expect to see a far greater use of blockchain technology within the digital mortgage sector, where it can streamline the application process, automate the transfer of mortgage ownership, and reduce the risk of fraud.
AI is another trending buzzword, with this tech used primarily to automate tasks like underwriting and risk assessment, helping lenders to process applications more quickly and more accurately. It can also be helpful in personalising the mortgage experience for borrowers, enabling them to find the right mortgage for their specific needs. Biometric authentication – which uses unique biological characteristics like fingerprint scanning, facial recognition, or voice recognition - can be used to verify the identity of borrowers, helping to reduce fraud, speed up the verification process and improve security for both borrowers and lenders.
As these exciting new technologies mature and consumer demands and expectations evolve, it will be the banks and lenders who truly embrace the potential of next-generation technologies, are built in the cloud, and harness the power of open APIs that will come out on top in the new mortgage landscape.