In an increasingly digital world, technology is driving a profound shift in the attitudes, behaviors and preferences of today’s consumer. We’ve seen a rapid, fundamental change in what consumers expect from technology across industries such as retail, music and travel. Now, this evolution has entered the financial services arena, with digital capabilities adopted in home and auto lending, and more. While some industries and consumer services have very obvious integrations with technology, personal finance and homebuying require more of a balancing act. Homebuying is a complex matter—and one that can overwhelm some people since it likely represents the biggest purchase they will ever make.
Thus we must offer clear, easy-to-use digital information and tools even as we fulfill buyers’ needs for personalized guidance. Consumers need the freedom to choose when they want to use a digital tool versus when they speak to an expert: Not all homebuying experiences are the same.
To help us understand the desire for technology in home finance, we must first examine why consumers find a digitally-evolved ecosystem attractive. Nowadays, one can’t imagine a world where we are unable to check in to a flight online or look at Amazon to compare prices while shopping in a store. In fact, we rely so heavily on technology that when we encounter an industry or service that has not evolved, we find ourselves contemplating all the efficiencies and client satisfaction they could achieve—if only they made that leap.
“Can’t imagine a time when” moments even apply to homebuying, such as when a prospective purchaser opens an app to look at prices instead of poring over the newspaper real estate section. Soon, technology will become such an integral part of home finance that we will question how we researched loan options or found a lender that’s the perfect fit in the pre-digital era.
As the homebuying process changes, technology sits at the core of that transformation. As industry leaders, it’s our job to look ahead and flag the things we can do to make the process easier for our clients. That doesn’t just mean developing new technologies, apps or online tools simply for technology’s sake: It means building our ecosystems in a way that makes working with us smoother and easier. It also means finding processes that blend user-friendly tools with human knowledge and know- how to get the client to their ultimate goals—an exciting new home for their family, a lower interest rate or shorter term on their existing home, or even a home equity line of credit to accomplish other goals.
A taste of the consumer appetite
Understanding consumer appetite not only means embracing what they want, but also how they want to get it. While many buyers do much of their pre-homebuying work online, there was until recently an abrupt shift when it came time to start the mortgage process. Prospective borrowers might find a few online applications that were nearly as onerous as the traditional paper application or would receive a large stack of paperwork. We are addressing this today—and quickly—to meet our clients’ needs. The 2018 Homebuyer Insights Report found that Americans are more comfortable with digital and mobile technologies in the mortgage process than one might think. In fact, 52 percent said they would apply or have already applied for a mortgage digitally. We know this number is only going to grow.
To those who frequently leverage technology, researching real estate professionals online or using apps to prepare for homebuying may not feel like a major transformation, but let’s put it into perspective. In 1981, 22 percent of homebuyers read newspaper ads to find a home according to the National Association of Realtors. Fast forward more than 35 years, and research found more consumers would prefer using mobile and emerging technology when buying a home: for example, a real estate app or website (71 percent), a video tour of a home (48 percent) or an open house using virtual or augmented reality (36 percent). These figures show us the comfort homebuyers have with adopting digital tools in every step of their homebuying journey.
Human interaction meets digital action
Companies across many industries are evolving their business models to serve up the right mix of human and digital interaction, which reflects the balanced blend of technology and personal attention consumers look for today. April 15 has become less intimidating for many, thanks to the evolution of online tax services that enable consumers to complete their taxes themselves and with confidence.
Still, if they do encounter any challenges or have a question, experts are available to assist. For home finance, prospective buyers can look to Bank of America’s Digital Mortgage Experience, which walks customers through their home loan choices and gives them a guided mortgage experience, including the opportunity to discuss their loan choices with a lending specialist. Homebuyers should enjoy an expert’s personal touch and the do-it-at-your-own-pace ease and simplicity of technology.
Of course, changes in technology and the human-digital mix also mean keeping up with evolving regulations. "Mortgage leaders understand the value of the time spent training staff about the latest regulations, and when the courseware is highly impactful, it justifies the time and resources," writes BAI managing director Karl Dahlgren in MortgageOrb.
Lenders: Just one piece of the purchasing puzzle
Technology has not only changed the homebuying experience but also how homeowners engage with their communities and within their home.
I recently participated in a panel called “Clicks and Bricks: Conquering the Intersection of Physical and Digital in Homebuying and Beyond.” There I was joined by several experts, including Steve Wymer, vice president of communications and policy for social network Nextdoor. When Steve polled the audience to see how many people knew their neighbors, the very few who raised hands demonstrated exactly what Nextdoor already knew—and is capitalizing on. Nextdoor has created a private social network for neighborhoods that shows how we can bridge the human and technology gap and connect communities in an easier way that addresses today’s unique needs.
Technology is also entering our homes and simplifying everyday tasks. According to NPR and Edison Research, one in six Americans now own a smart speaker—a staggering increase of 128 percent in less than one year. And while technology may cause some social fragmentation in the home as families can now watch their own shows in different rooms, Mitchell Moss, professor of urban policy and planning at New York University (and one of the panel experts) argues that technology has made the home a more productive, engaging space.
It’s time to embrace and seek new solutions that not only make our lives easier but also make us more connected: whether to our neighbors, real estate professionals or financial experts.
Putting it all together: Digital evolution meets banking resolution
Ultimately, homebuying and technology intertwine. The demand for combining digital ease and human assistance has spurred a home finance transformation. As industry leaders, we must maintain our forward momentum. We are responsible for meeting our clients’ needs through digital capabilities and personal touch.
It comes down to this: If we continue to make the mortgage process less cumbersome; if we invite people into it; and if we make it accessible through simple tools and the necessary expertise—then we have the ability to make homeownership a reality. That is, we can help people move in that dream home when we move in the right direction.
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D. Steve Boland is the head of consumer lending for Bank of America. He is responsible for home loans, consumer vehicle lending and global wealth and investment management/residential real estate lending. Boland is also a member of Bank of America’s management committee.