Purchasing a home is a stressful event. Between the interest rate environment, costs, and drawn-out closing processes, homebuying takes a toll. What isn’t often talked about is the ongoing stress homebuyers face after the keys are in hand.
After closing, servicers are at the helm, managing loan payments from consumers and ensuring those payments are passed on to the appropriate parties. On the back end, servicers must prepare and send statements, collect mortgage payments, manage payment records, update loan balances, communicate payment info to tax authorities and insurers via escrow accounts, and manage delinquent accounts.
On the front end, customers expect to view mortgage information and make payments online. In many cases, the customer-servicer relationship is strained due to a poor customer experience (CX), which creates a complex web for borrowers to navigate as they embark on one of the most important journeys of their lives.
A poor CX translates to increased costs for servicers, who must field rising customer service inquiries and spend additional time and resources on manual administrative tasks on top of everything else. The average number of servicing customer inquiries jumped by 60% between 2018 and 2020, from 11.8 to 18.9 per loan. This impacts servicing costs, which are steadily increasing, rising nearly 12% from 2019 to 2020. The cost to service a loan in 2020 was $160 – and customer service costs accounted for nearly 17%, or $27 per loan.
Younger generations value speed, convenience, and top-tier customer service. Many servicers are not equipped with the right technology to deliver.
These costs will continue to rise, especially as younger generations mature into the next stage of life where homebuying becomes a priority. These generations value speed, convenience, and top-tier customer service. Many servicers are not equipped with the right technology to deliver.
Both in-house servicers and third parties are identifying these emerging trends – and those on the digital forefront are making changes. By adopting flexible, AI-driven technology that streamlines and adds value to loan servicing systems, servicers are taking strides in winning back their reputations among today’s borrowers and growing their business in the process.
Servicers Have Not Prioritized Digital Experiences
In a nutshell, the servicing industry has been notoriously servicer-focused. It is not known for its high rate of customer satisfaction, nor has it been quick to embrace digital self-service.
But with changing times come changing priorities – priorities that today’s homebuyers, namely millennials, have communicated are paramount. Millennials (people born between 1981 and 1996) expect servicers to offer the convenience and speed afforded them in nearly every other aspect of their lives. They are attracted to brands and financial institutions that offer a wide range of digital channels that cater to their needs. Consider the following statistics:
- According to the Digital Banking Attitudes Study by Chase, a whopping 98% of millennials use a mobile banking app for anything from viewing account balances to paying bills and depositing checks.
- According to Adobe’s “CXM Index”, nine out of 10 people ages 18 to 34 reported they would respond to a bad online customer experience with action, whether it be telling friends, no longer doing business with the company, or posting reviews.
- When it comes to financial services experiences, in particular, roughly three-quarters reported satisfaction from accessing financial information on a website (75%) or mobile app (76%).
- Millennials expect better digital experiences; just half were satisfied with how websites anticipated their needs. The lowest-rated experience was “When I log into my bank’s website, I am taken to my most visited page right after I log in.”
Millennials expect servicers to offer the convenience and speed afforded them in nearly every other aspect of their lives.
Unfortunately, many servicers are still operating on old ideas and misaligned incentives that yield poor customer service where borrowers feel simultaneously locked into bad service and locked out of fruitful communication and features.
Considering that millennials will account for roughly 28% of homebuyers in 2023 – and also represent the greatest percentage of first-time homebuyers – these shortcomings must be addressed.
The bottom line is that servicers are stretched thin when it comes to addressing top customer concerns. Consumers are looking for better ways to address issues with their servicers, a more personalized experience, and a more intuitive digital experience.
How AI Enables Customer Centricity
Millennials are looking for an Amazon-like experience when it comes to mortgage servicing. They want digital options with all the information available in one place, on demand. To keep up, servicers are taking a more customer-centric approach – and leaning into artificial intelligence (AI) technology to get the job done. Specifically, AI-powered portals enable tailored digital experiences that boost engagement, improve customer experience, and provide up- and cross-sell opportunities.
Improved Digital Self-Service and Personalization
With an AI-powered digital customer portal, servicers can enhance the customer experience by orders of magnitude. Imagine a smart landing page that changes based on customer behavior, loan activity, and servicer communications.
Servicers are already buying into this technology, offering customers personalized experiences based on their own activity. With machine learning tech that constantly evaluates customer and servicer data, this type of portal can deliver the most important and frequently requested information at first glance, whether that is the option to make a payment, loan information, or bill details.
With an AI-powered digital customer portal, servicers can enhance the customer experience by orders of magnitude.
With dynamic buttons, users will be served information and options that are most pertinent to their needs based on their behavior. For example, a “Go Paperless” CTA might appear on a user’s next login. Upon completing that action, the button would be replaced with a different, personalized option. This eliminates the need for users to navigate through menus and drop-downs (though both can still be available) to find their most-used pages. It’s a dream scenario for millennials and other borrowers alike.
Additionally, AI and ML can predict customers’ most likely actions and trigger notifications and opportunities based on a customer’s current situation. Perhaps the payment amount increased due to changes in escrow. The portal might prompt a user to review her payment page, which would include an explanation of the changes to billing for the month. It’s smart options like this that greatly reduce service center calls.
More Targeted Opportunities for Cross-Selling and Retention
Smart customer portals also predict, personalize, and streamline the best offers for users, whether they are offers for lower rates or relevant products. Borrowers that show interest in their equity pose an opportunity to cross-sell HELOCs. When a user visits their home equity information page, they could receive a customized congratulations message along with information on how a HELOC might be used.
The ability to keep customers engaged within the customer portal is essential for servicers with origination capabilities who want to align business opportunities with interest rate cycles. Leveraging AI to digest and understand customer data – and translate that data into new opportunities – ultimately helps servicers perform better in any interest rate environment.
Reduce Operational Costs and Customer Complaints
Perhaps most significantly, AI-powered portals present opportunities to reduce customer service calls by serving educational information and answers to questions in an upfront way. This eliminates the frustration that some users feel from spending time scrolling and clicking through complex site navigation, building trust, credibility, and goodwill instead.
Integrated chatbots can handle general FAQs with broader information about escrow and other lending topics – or even answer specific questions about a specific user’s loan, like when payment is due. AI enables chat functionality to remove ambiguity and resolve unclear queries to get to the heart of the issue quickly.
For example, a user may ask about the current balance. Since there may be multiple balances associated with the loan, the chatbot can gain clarity by asking follow-up questions like “Did you mean the current escrow balance?”. And a simple “Does this help you?” follow-up question ensures that the customer’s question has been adequately addressed. If not, the chatbot can ask the user to rephrase the question or offer customer support contact information after two unsatisfactory responses.
Improving customer satisfaction is about more than answering questions; it’s about partnering with homeowners on their journey.
Offering the chatbot experience on every page of the portal 24/7 means customers always have access to answers. Chatbots can also provide redirection within the site, directing users to a link where they can make a payment or to another relevant page based on the query.
Improving customer satisfaction is about more than answering questions; it’s about partnering with homeowners on their journey. Servicers can prompt positive actions from users by offering support and information about their loans. Displaying loan payment progress illustrations and encouraging borrowers to continue to make timely payments is just one way servicers can promote positive experiences and boost customer engagement.
And AI opens up a world of opportunity to get creative in how servicers support borrowers on their journey. The key is to offer a sense of true customer service and support by enabling borrowers to access everything they need from one place: a smart customer portal.
All of this functionality represents the next wave of technology in mortgage servicing. The best part is that this type of AI-backed customer portal can seamlessly integrate on top of a servicer’s existing system, making it an easy lift and a no-brainer.
The Future of Mortgage Servicing
There’s no doubt that this next era of mortgage servicing will be customer-focused because it has to be. Millennials and younger generations that will soon buy homes have no tolerance for lackluster experiences that are deficient in personalization and insight. They desire a one-stop shop that caters to their needs in real time.
The benefits of smart customer portals extend beyond Millennials and Gen Z, offering borrowers of any age the ability to easily get the information and answers they need. And servicers benefit, too. AI enables faster, more efficient processes and communication while reducing human error and missed opportunities. Staying relevant in the current mortgage servicing evolution will require a forward-looking, digital-first strategy. Most importantly, it will require servicers to place customers where they belong: front and center.