5 Ways FinTech is Changing the Mortgage Industry

5 Ways FinTech is Changing the Mortgage Industry

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Financial technology, commonly referred to as fintech, is designed to improve and automate the user experience of financial services. Fintech helps companies, business owners, and consumers manage financial operations with specialized software and algorithms for computers, smartphones, and devices. Originally, fintech referred only to the technology used on backend systems for financial institutions like banks. But more recently, it shifted to encompass a wider variety of consumer-related services, including education, fundraising, investment management, and the mortgage industry, to name a few. Because of its ability to streamline several financial processes, fintech positively impacts several industries, overhauling antiquated practices and modernizing financial processes. Companies looking to take advantage of these advances can create in-house solutions or even use fintech software development services to keep pace with industry innovation.

1. Digital lending and automation 

With the mortgage and lending industries moving the borrower experience increasingly online, in-person paperwork and document collection are becoming a process of the past. With the introduction of fintech for digital lending and automation, the on-screen process is getting easier, faster, and more accurate. Fully digital mortgages involve more than online applications or the ability to sign disclosure or documents from afar. The paperless mortgage process taps into extensive automation functionality, making each step of the borrowing journey efficient and straightforward from the initial application to servicing the loan. For lenders, fintech streamlines the origination process. It shortens closing times, dramatically decreases the time spent on data entry, and allows for more work done in less time and with less hassle. These digital mortgage tools also free up time to focus on marketing and growing your business. The benefits don’t stop at the lenders' desk, either. Borrowers prefer the digital mortgage experience because of the quick applications, automated information, and the option to stay home, where they can easily access any documentation or files they need. Fully digital platforms sometimes leverage RPA (Robotic Process Automation), a type of automation technology that uses software robots to perform repetitive, rules-based tasks. These tasks can include data entry, data processing, and even report generation. RPA technology enables financial institutions to streamline their operations, reduce errors, improve efficiency, and lower costs. RPA in financial services is also highly scalable, meaning it can grow with your business as you expand operations. Financial services businesses can focus on core competencies while leaving time-consuming tasks to automation. This technology can be applied to a variety of financial services processes, including loan processing, account opening, fraud detection, and regulatory compliance.

As the digital lending landscape continues to evolve, real estate syndication stands to gain significantly. Syndication involves multiple investors pooling resources to undertake larger real estate projects. Integrating this strategy with digital automation tools can streamline processes, from investor onboarding to transaction management, reducing the hassle traditionally associated with property investment. Borrowers and lenders alike can appreciate quicker, simplified applications and transactions, facilitated by technological advancements. This modern approach ensures that real estate syndication is not left behind in the fast-paced digital transformation, promising a future where investment processes are smoother, quicker, and more user-friendly.

2. Open banking 

Open banking refers to the practice of securely sharing financial information between banks and other financial institutions with a customer’s consent. This process aims to increase competition and improve customer service by allowing third-party providers to offer innovative financial services and products using the customer's financial data. Overall, open banking is intended to improve the efficiency, transparency, and security of the financial system by giving customers greater control over their financial information and facilitating the development of better options. Open banking is not currently a requirement in the United States, but efforts are underway to promote adopting it nationwide. Some US banks have already implemented their own open banking initiatives, allowing customers to share their financial data with third-party providers through APIs. However, the regulatory framework for open banking is not yet fully developed in the US, and there are ongoing discussions about the appropriate balance between innovation and consumer protection. With that in mind, implementation in the US is likely to be a gradual process, with continued collaboration between industry stakeholders and regulatory agencies. With the introduction of open banking in the UK, the switch to online banking accelerated, with trends rising from 30 percent in 2007 to 76 percent in 2020. As of 2020, more than 3 million consumers and businesses in the UK were using open banking products. This trend proves that future success and growth in the mortgage industry correlate to the lender’s ability to implement opening banking tools.

3. AI and Machine Learning 

Chatbots, forecasting, and credit assessment are just a few ways machine learning helps lenders improve accuracy and increase efficiency by automating manually daunting tasks while lowering costs. AI and machine learning are making huge changes in several industries, and the mortgage industry is no different. According to a recent survey, 55 percent of executives believe AI will make their firm and the entire mortgage industry more competitive, and 59 percent have made AI’s impact a key focus in strategy and planning. When used for credit compliance, machine learning requires careful management. While it can feel too rigid and drawn towards reinforcing bias, advanced, cutting-edge solutions counter this industry concern. The more a lender knows about a borrower, the better they’ll be able to assess their eligibility for a loan. Fintech can manage risk analysis while discovering the best way to analyze a customer profile. This ability ultimately leads to more accurate, efficient, streamlined decision-making processes.

Embracing AI in debt collection is like adding a high-tech arsenal to your financial toolbox. Traditional debt collection can be labor-intensive and often feels like looking for a needle in a haystack. Picture replacing hours of manual work with automated processes that manage contact with debtors and track down due payments. Now imagine having a system that can sift through vast amounts of data to predict who will most likely pay, and tailor communication strategies for each debtor. AI can even empower chatbots to handle first-line interactions, reserving human intervention for intricate negotiations. This doesn't only streamline the collection process, and it makes it more human. It's a way of collecting dues while improving relationships with customers - a win-win scenario for businesses

4. Blockchain

Some consumers may think blockchain is synonymous with cryptocurrency, which is not the case. Blockchain technology is a decentralized, digital ledger that facilitates secure and transparent transactional records. It was first introduced in 2008 and is the technology that underpins cyptocurrency like Bitcoin, however, there are other applications outside of that. Blockchain technology has the potential to significantly transform the mortgage industry by streamlining and automating aspects of the mortgage process, improving security, and reducing costs. Here are a few examples:

  • Blockchain-based smart contracts can automate some steps of the mortgage process, including loan origination, underwriting, and closing. These contracts can execute automatically once certain conditions are met, such as the completion of a property inspection or the receipt of a down payment. This can save time and reduce the risk of errors and fraud.
  • Distributed ledger technology can improve the security and transparency of mortgage transactions by providing a tamper-proof record of all relevant data, such as property ownership records, loan payments, and title transfers. This can reduce the risk of fraud and errors and also help to expedite loan approvals.
  • Smart contracts can potentially reduce costs by limiting the need for intermediaries like title companies and banks by automating the manual paperwork process.
  • Fractional real estate ownership may also be further facilitated by blockchain. While fractional ownership already exists today, blockchain can democratize access to real estate investments and allow smaller investors to participate.

As exciting as these advancements may be, blockchain is not a widespread technology in the mortgage industry yet. Companies face a wide array of regulatory and technical challenges that will take time to address before we see these concepts in action. On the other hand, crypto is a more current reality. Over the next three years, one-third of mortgage lenders will likely accept cryptocurrency as mortgage payments. That number is set to increase with the growing use of crypto, but is likely to be impacted by more recent volatility.

5. Big data

In today’s financial market, data and analytics are vital tools. Mortgage lenders without defined data and analytics strategies are likely missing opportunities to scale, control costs, and mitigate risk. By becoming increasingly data-centric, lenders are capable of processing loan applications in a more sophisticated and comprehensive manner. Big data enables them to dive deep into customer profiles on a micro level, thanks to tools that scan databases and public information like social media posts. Lenders can mine these sources of information to better understand their customers, their financial behavior, and the likelihood of them keeping up with payments. The ability to further analyze a potential borrower's habits and economic history directly impacts lenders, helping with cross-selling and mortgage fraud prevention.

Other ways technology is changing the game for buyers

The tools, products, services, and references available to lenders continue to increase rapidly with the growth of fintech and its incorporation into the mortgage industry. Below are other innovative and engaging ways fintech is changing how buyers interact with the mortgage lending industry. Harnessing the power of artificial intelligence, fintech is paving the way for instant access to an array of business ideas and models, equipping buyers with unique insights and customizable solutions to navigate the complex landscape of the mortgage industry more efficiently.

The process of choosing a buyer's agent has now been streamlined. Through sophisticated algorithms and data-driven platforms, potential homebuyers can now find an agent who aligns with their specific needs, preferences, and communication styles. It's no longer just about word-of-mouth or billboards; technology provides buyers with detailed reviews, past transaction data, and even virtual meet-and-greet sessions. This holistic approach ensures that buyers find the right fit, adding another layer of confidence to their home buying journey.


Fintech is also rapidly changing the insurance industry, allowing insurers to be fully digital and expand their services and active customers. InsurTech refers to the use of technology in the insurance industry, which has begun to transform the experience for insurance agents, claims adjusters, and homeowners. InsurTech is an increasingly popular choice for homeowners because of its ability to improve the customer experience. User experience-driven software and programs simplify managing policies while reducing costs for insurance companies and their customers. InsureTech has made the insurance process easier for consumers, enabling them to conduct research, complete competitive analysis, and conveniently purchase coverage online.

Digital home services and all-inclusive platforms 

For homeowners, emerging technology can now facilitate all home service needs in one platform. Instead of storing all of your policies, home service providers, and home information in different documents and apps, all of that can happen in one place on your phone. This is a revolutionary concept for homeowners, reducing the time spent managing their household, payments, accounts, and claims. These all-in-one platforms offer consumers and homeowners an enormous value proposition, offering unmatched convenience and hyper-specific choices.

Project Management

Project management for finance plays a pivotal role in the finance sector's digital transformation, driven by fintech innovation. Agile frameworks enable faster loan processing, enhanced customer experience, and efficient stakeholder collaboration. Robust project management tools streamline workflows, automate repetitive tasks, and ensure compliance, reducing errors and improving efficiency. Also, effective project management ensures seamless integration of new technologies, such as AI and blockchain, optimizing risk assessment, fraud prevention, and data security. As fintech reshapes the mortgage landscape, project management emerges as a strategic enabler, facilitating growth and delivering value.

Final thoughts

Fintech will continue modernizing and changing the mortgage industry in the coming years. The ability to streamline processes, free up lenders’ time, and provide borrowers with accurate, easy-to-digest information regarding their mortgage and homeownership is a game-changer. Incorporating fintech into your current processes is a surefire way to stay ahead and scale your lending business successfully.