Even amid the mortgage downturn, lenders can create a path to growth, starting with a smart integration and data strategy.

The US housing market has little in the way of good news for mortgage lenders. With interest rates at least twice as high as the 2020s’ historic lows, and home prices seeing little movement from their record highs of a year ago, mortgage origination volumes are expected to drop 15% in 2023 from 2022.

The picture remains bleak for the rest of 2023, especially amid continued economic uncertainty. There’s a path to growth, however, for mortgage lenders that focus on furthering their integration, digitization and data strategies.

By integrating diverse data sources into the underwriting process and using it to gain customer insights, lenders will not only provide faster, better service but also open the door to higher customer retention and more effective cross-selling. More important, they can prepare their businesses to scale when macro-economic conditions become more favorable to volume growth.

Surviving the mortgage downturn

Integrating data and systems is particularly relevant today. As a result of the mortgage downturn, many lenders are facing potential consolidation to ensure their survival. In addition, workforce reductions are threatening to stall their efforts at technological innovation.

The one-two punch will leave lenders with a patchwork of redundant and legacy systems that hampers their ability to connect data across silos for a comprehensive customer view.

Integrating these systems is a gamechanger because it lays the foundation for a customer-centered data strategy. Most lenders have already begun to build an API-driven infrastructure. By uniting their customer relationship management platform, point of sale platform and loan origination systems, lenders can offer a full-service customer experience that provides competitive differentiation.

For example, with an integrated digital platform, mortgage applicants could enter information, upload relevant documents and grant access to third-party data sources. They could also electronically sign disclosures and mortgage and closing documents. With these integrated capabilities, lenders’ processes and platforms can provide a digital-first experience that rivals fintech lenders’ tap-and-swipe mobile apps.

Taming the complexities of underwriting

Loan officers can also benefit from a streamlined loan origination process. By bringing loan processing to the point of sale system and integrating it with the loan origination system, lenders can originate loans much faster. APIs can pull data directly from third-party data sources, such as consumer credit reports, bank statements and tax statements, so that loan officers no longer have to wait for borrowers to provide that information or manually key it in themselves.

We’ve seen integrated e-signature capabilities save loan officers 30 to 60 minutes per loan request by automating the flow of documents between a cloud-based banking platform provider and e-signature application provider.

Even more underwriting efficiency gains are possible when banks combine integration with intelligent automation, from gathering data to running complex underwriting rules. We partnered with a large US lender that reduced its loan closing cycle time by 37%, a savings of 30 days, by rewiring its mortgage underwriting operations to include automated rules processing.

Lead generation can also improve. With integration, customer leads that come in through digital channels can be automatically routed within the customer relationship management system for prompt, personalized follow-up.

Next stop: Upsell and cross-sell opportunities

Despite the mortgage downturn, mortgage loan servicing is still highly valued because of lenders’ relatively stable servicing portfolios and low delinquency rates. Retaining these customers is key. In financial services, a modest 5% increase in customer retention boosts profits more than 25%.

By integrating systems with consolidated customer data, banks can boost retention by pinpointing the best cross-sell and upsell options for customers.

One option is to offer customers personal loans. For example, aided by new regulations that incentivize consumers’ move to renewable energy, more lenders are pairing mortgage closings with loans to finance home improvements like the installation of solar panels.

With a smart integration, digitization and data strategy, mortgage lenders can gain a twofold advantage: They can not only soften the impact of tough market conditions but also offer a personalized customer experience, boost customer retention and ready their business to scale when macro-economic conditions begin to recover.