By Ray Birch
DOWNEY, Calif.—What can a “frictionless,” easy-to-use and fast online mortgage application do for a credit union?
A lot, according to Financial Partners CU here, which reports members are completing applications in less than 10 minutes as opposed to days; many more apps are getting completed as fewer applicants bail out of the process early; the mortgage pipeline is filling up, and the CU’s Net Promoter Score is rising.
CEO Nader Moghaddam cited those benefits and others he said have resulted after Financial Partners made a shift in July of 2018 to an online mortgage application program from Blend, ditching what had been largely a paper-based mortgage application process.
“It's a software that allows for a much more user-friendly way for the consumer to take advantage of the mortgage application process,” Moghaddam told CUToday.info. “Right now, there is such a competitive environment, and people don't have enough time anymore. They want to do things fast. The market is dictating that we have to have a digital solution.”
Less Than 10 Minutes, If…
Moghaddam said the $1.4-billion Financial Partners has taken what was once a cumbersome loan application process and reduced the time needed to apply for a mortgage to less than 10 minutes–when a member has all of their information ready to upload.
“Plus, this is much more secure method of receiving members’ data,” added Moghaddam. “They upload their data online through a secure portal. Whereas in the past, much of the information had been e-mailed to the credit union. And, people can upload all their information from their home or from the office at a time that's convenient for them, day or night.”
Since the new program has been in place, Moghaddam said the biggest benefit is far fewer borrowers are dropping out of the application process before completion.
“In the past we'd complete about 53% of the applications, with about half leaving due to the slow process,” he said. “With the new system, now we are completing 78% of the applications—that's a big change and a big difference to the bottom line.”
Boost in Score
Nader Moghaddam
Members, too, are telling the credit union they think more highly of the new system.
“Our Net Promoter Score our around the mortgage process used to be in the low 80s, now it’s 96; a really solid number. So we are seeing many more completed applications and our Net Promoter Score has significantly increased,” he said.
What’s also a good sign is the credit union’s mortgage pipeline has doubled in recent months.
“Some of that might be seasonal, but a lot of it is due to the new process,” Moghaddam said. “We now have about $40 million in pipeline.”
The CEO said that the new streamlined application process is allowing Financial Partners to frequently guarantee to the borrower the loan will close within 15 days.
A ‘Big Step’
“That is a big step for us,” he said, adding the faster decisions and streamlined process do not add risk to the CU’s mortgage lending portfolio. Moghaddam explained the faster decisions are being made because borrower data is being received more quickly, and that Financial Partners has yet to change its approval processes, such as increasing the number of loans subject to auto-decisioning.
“This has absolutely changed the user experience, the application experience,” said Moghaddam. “The work that needs to be done now is to smooth out the transition between the application and the loan decisioning. We will smooth that transition soon, and by mid-summer, the height of the mortgage season, we will be in great shape.”
One of the most positive aspects of the new process, according to Moghaddam, has been the reaction from members who had applied for a loan using the prior system, and then again using the new solution.
“They tell us how much they love the new application and how they appreciate the credit union saving them time,” he said.
Full-Time Team Installs System
To input the new system took 90 days, with a team of five on the project full time, said Moghaddam, who declined to share costs for the upgrade.
“All around, this has been a great move for our credit union,” he said. “In additional to all the other member and credit union benefits I cited, the new system has also increased our ability to handle mortgages. Our capacity is up by more than one-third, which is a lot. Previously we did about $400 million annually in mortgage originations. Last year we did $560 million, and that wasn’t even on a full year with the new system.”