When President Thomas Jefferson commissioned Lewis and Clark's "Corps of Discovery" in 1803, he had already heard unconfirmed tales from beyond the far western American horizon. Now Jefferson wanted to know for certain: What were the sources of the Missouri and Columbia rivers? Were they the same or separate? How friendly--or hostile--were the Native American tribes? What animals, plants and minerals could be found there? Such knowledge was vital, Jefferson noted, "for the purposes of commerce." * In less than 20 years, the Internet has grown from a playground for computer geeks into a key player on the stage of global commerce. But in the world of mortgage origination, some lenders have embraced the Internet while others have shied away. And as far as we at Mortgagebot know, no one--until now--has truly known the reasons why (or why not).
So we decided to find out.
Know thy market
Since 1997, Mortgagebot has provided bank and credit-union mortgage lenders with Internet--based, point-of-sale (POS) technology for automating the mortgage application, pricing, approval and disclosure process. And with nearly 1,000 banks and credit unions using our products, we're pleased to say that we're the leader in our market.
But there are many more than 1,000 American banks and credit unions that do mortgage lending, and for years we have wanted to know: To what extent are non-Mortgagebot clients involved in the Internet? Do they even offer an online mortgage application? If they do, what motivated them to implement a solution? And if not, what's holding them back?
Some say the Greek philosopher Socrates is the source of the aphorism, "Know thyself." If Socrates had been a marketing specialist, he might have said, "Know thy market." At Mortgagebot, we're serious about understanding our market, so we set out to do just that.
So after a detailed vendor evaluation, we selected Great Neck, New York--based Lieberman Research Group, a nationally recognized market research organization, to discover the answers to our questions. We commissioned Lieberman Research to conduct a detailed telephone survey of the nearly 2,400 banks and credit unions nationwide that: 1) do mortgage lending; 2) have assets greater than $100 million; and 3) are not Mortgagebot clients (see sidebar "Background and Methodology" for more about Lieberman Research and the survey).
The 330 financial institutions that the Lieberman team actually surveyed comprise a solid statistical sample from which definitive conclusions can be reached.
As far as we know, this is the first survey of its kind to be done by an independent research firm on this topic.
In this article, we lead you through an overview of our journey of discovery into a new horizon. We hope you'll agree that what the survey reveals is interesting, compelling--and even surprising.
A major shift in mortgage origination channels: Online is growing fastest
Not too long ago, most people applied for a mortgage loan by meeting with a loan officer. And while many consumers still prefer that personal touch, it's no longer a single-channel world.
Today's borrowers have many other mortgage point-of-sale channels open to them. They can use a lender's website to apply online. They can apply by phone through a call center. Or they can meet face-to-face with a branch--based service associate.
Today's borrowers want the same fast and efficient application experience regardless of which channel--or channels--they use to apply, according to The Silver Lining in Lending: Turning Doubters into Online Believers, a May 2008 study by Annette Tirabasso and Kimberly Spears, published by Deloitte Development LLC. And competitive mortgage lenders are learning that they must deploy efficient, integrated automation across multiple channels to provide the service borrowers expect.
That attitude is clearly reflected in our survey results. …