The U.S. residential mortgage application process can get pretty complicated for borrowers, lenders, and servicers. That’s why anything that can make day-to-day procedures more efficient is welcomed with open arms. As processes went digital, speed, ease, efficiency, and accuracy increased dramatically.

The past few years the mortgage industry has entered a new age of digital transformation. This has been spurred by innovations in financial and operational technology, a demand by homebuyers to make applying for a home loan less complicated, and the pandemic forcing lenders and borrowers to work remotely.

Today, finding, applying for, and closing home loans can each be done electronically in just minutes in most cases. That’s a huge benefit for borrowers, but even more for lenders and servicers who face a daunting amount of digital “paperwork” for every loan.

Companies continue to search for inventive products to streamline origination and servicing methods, and tech companies are rising to the challenge. Here are some current and emerging trends that are revolutionizing the industry.

Finding, Closing, and Servicing Home Loans Virtually

Even before COVID, an increasing number of homebuyers were spending time going digital searching for the right home loan. Now, almost everyone researches options and best rates online before making a decision. It’s faster and more convenient than driving from location to location or sitting on the phone. That’s why lenders and servicers need to offer the latest technology designed to make finding, applying for, closing, and servicing home loans as simple as possible.

With today’s technology, companies can create websites and mobile apps tailored for exceptional user experiences and on-demand service. They should include interactive options like loan search and compare, mortgage calculators, and a secure application platform. To offer more personalized service, loan officers and servicers can leverage texting, chat, and meeting platforms to help borrowers face-to-face.

The ability for borrowers to interact digitally helps increase revenue and reduce operational costs. A positive experience promotes customer satisfaction, which increases the potential for repeat business and referrals. Virtual transactions are also more cost-effective for companies. Not having to meet borrowers in person reduces the number of staff and the need for additional office space.

Improving Data Processing with Artificial Intelligence

Artificial intelligence (AI) and machine learning (ML) are two components that offer the most potential for radically changing technology. They help machines “learn” to be smarter through algorithms that simulate the ability to think like humans and improve through experience. That can provide huge benefits for the mortgage industry.

Lenders and servicers have to manage an incredible amount of data and transactions every day. Integrating AI with home loan applications and other processing tools enables users to automatically recognize and understand important data and documents faster. This functionality helps increase productivity by streamlining steps and ensures accuracy of document/information review.

AI also helps recognize and pinpoint patterns in customer behavior and habits. By knowing what their customers are looking for, lenders and servicers can increase sales by recommending and providing more personalized services.

According to a 2021 survey on the state of AI by consulting firm McKinsey and Company, 56% of the respondents reported they adopted AI in at least one function. That’s an increase of 50% since 2020. The top three use cases were service-operations optimization (27%), AI-based enhancement of products (22%), and contact-center automation (22%).

Securing Transactions Through Blockchain Technology

The biggest risks facing mortgage transactions are fraud, security, and privacy. Blockchain technology is quickly becoming an answer to those concerns by making it hard to access and alter sensitive digital records by unauthorized personnel.

The technology works by duplicating and encrypting transactions, and then circulating them through a network of computer systems on a “blockchain.” This essentially creates a decentralized record that isn’t controlled by one specific financial institution.

This technology has already been adapted for cryptocurrency, yet the benefits can be applied to other services, including mortgage origination and servicing. By decentralizing the data, it makes transactions much more secure. Plus, even though data is spread across a network and public, it’s anonymous and encrypted, so it protects privacy and builds trust with borrowers.

Using blockchain technology also increases efficiency and reduces operational costs by streamlining the process. Mortgage loans can be completed in just minutes, rather than days like with most standard transactions. For the lender, it helps reduces manual tasks, and eliminates the need for vendors and third-party providers.

Innovation Will Continue to Change the Industry

Tech companies will continue to create innovative new tools to aid lenders and servicers. As options expand, mortgage professionals looking for a competitive edge will continue to embrace and leverage them in every aspect of their business.