Skip to main content

The latest Insights Report takes a look at how much and where lenders are investing in digital technology and provides guidance on making the most of their investments

February 20, 2020 – GREENWOOD VILLAGE, CO – Residential mortgage lenders are spending more on technology to improve the origination process for borrowers, but are not seeing the return on investment (ROI) they would like, according to  STRATMOR Group’s  latest monthly Insights Report.

The February Insights Report features STRATMOR Senior Partner Garth Graham’s article “Digital Transformation: The World According to Garth,” where Graham looks at how much —and in what areas — lenders are spending on digital technology, and discusses what they can do to maximize their investments.

Over the past five  years, lenders have implemented digital technologies at a rapid pace, according to STRATMOR’s 2019 Technology Insight® Study. For example, more lenders are using text messaging to communicate with borrowers, and more are using Fannie Mae’s Day One Certainty tools. Both of those technologies are designed to give borrowers a faster, better mortgage loan experience.

Yet, the results of STRATMOR’s study show that total technology costs remain a small percentage of lenders’ overall costs, Graham notes. Large banks have significantly increased their tech expenditures, but technology accounts for just 16 percent  of their total spending. Other mortgage lenders spend even less: Technology accounts for less than 9 percent  of total spending at large independent mortgage banks , while midsize independents spend less than 5 percent  of their total outlays on technology.

“There’s a lot of talk about how much money is being invested in digital mortgage technology,” Graham writes. “The reality is that tech spend today represents a relatively small fraction of the total cost of loan origination.”

And lenders are not fully satisfied with the technology investments they have made, especially in those areas where they have focused their spending, namely lead management/CRM and point of sale (POS). “While progress is being made, there are roadblocks — some of them self-imposed — preventing lenders from getting the most out of their digital mortgage investments,” according to Graham. “What we bought, and are using, doesn’t match our needs or our expectations.”

According to STRATMOR’s Technology Insight® Study, the biggest obstacles lenders say they face when it comes to their pursuit of digital technologies are system and vendor integration requirements. In a very close second is the difficulty lenders face getting loan officers to change processes and behaviors. “That’s really the problem,” Graham says. “It is one thing to buy and implement technology; it’s quite another to get people to use it. User adoption is the key to your success.”

Mortgage lenders pay their loan originators a considerable sum of money to bring in business and keep pipelines full,” Graham notes. “They also increasingly invest in technology to make the process better and improve the borrower experience. And yet, if lenders cannot get their loan officers to change, digital mortgage adoption lags, along with technology ROI.”

“Even if you invest in the latest and greatest digital technology, you won’t be successful unless you also make sure that your people are well-equipped to work with the new technology and you set up a well-designed process so you get adoption by the users,” Graham concludes. “The three P’s — People, Process, and Product (or technology) — are what drives change, and all must be managed together or your investment in digital technology won’t pan out.”

In a second article, Technology, Revenue and Borrower Perception, MortgageSAT Director Mike Seminari looks at the importance of measuring customer satisfaction after implementing a new technology. “Once a new technology is implemented, most lenders fail to measure whether it has improved customer satisfaction,” Seminari says.

“A rocky borrower experience with new technology can immediately affect revenues in terms of a loss of referrals and poormouthing of the company to prospective customers,” Seminari writes. “Ultimately, the voice of the customer will tell you whether your investment of time and money in new technology was worth it.”

Seminari outlines ways that lenders can measure customer feedback on their consumer-facing technology.

Click here to download the February 2020 edition of STRATMOR Insights Report.


About STRATMOR Group

STRATMOR Group is a leading mortgage industry advisory firm that provides a range of programs and services designed to counsel lender CEOs and senior executives. STRATMOR serves more than 250 companies annually, providing strategies that increase growth and improve profitability in sales, marketing, technology, operations and mergers and acquisitions. The company leverages comprehensive, propriety data and key insights gained through extensive experience in the mortgage industry. STRATMOR is well known for its financial models and its collaboration with the Mortgage Bankers Association in the PGR: MBA and STRATMOR Peer Group Roundtables Program. Find out more about STRATMOR on its website at