It’s All About The Consumer, Pt. 3

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TME-RGudobbaLet’s continue our conversation about how to better serve the consumer. We recognize that the emergence of consumer influence is impacting all the major industries—automotive, health and financial. The consumer is compelling all of them to look at things different. The need to be proactive rather than reactive is critical to the well-being of all. Innovation and technology should be considered as significant contributing factors. The key question is the following: Does technology drive innovation or is innovation driven by technology? Well, the simple answer is YES on both counts.

In the Automotive Industry, the application of radar, back-up cameras and visual display technology increased the safety factors by allowing the driver to monitor conditions without major adjustments in their line of sight and focus. Like any change, it also introduced new obstacles. The down side is that some drivers are now more distracted by cell phones and texting.

To provide another example, the Health Profession continues to make groundbreaking advancements. I read a recent article about a new tool to help pinpoint strokes. Researchers are developing a new medical instrument to enable paramedics to diagnosis strokes in the ambulance, speeding potentially life-altering treatment. Strokefinder is a helmet-shaped tool that transmits weak microwave signals into the brain to diagnose whether it is a bleeding stroke or a clot-induced stroke. The difference is important. The blood thinning treatment given to victims of a clot-induced stroke to dissolve the blood clots could prove fatal if the victim suffered a bleeding stroke.

If we look closer to home, according to a recent article in the M Report, The National Association of Realtors (NAR) set out to answer a very simple question—how much are Realtors spending on new technology for their businesses? Realtors continued to invest in technology for their business in 2013 and spent more than they had in previous years. “Technology has transformed the way Realtors do business, but in real estate, being high tech can never come at the expense of being highly accessible,” said Mark Lesswing, NAR SVP and chief technology officer. “Advances in Smartphones and social media have made it easier for Realtors to stay in touch with their customers, but maintaining a strong, personal relationship with clients is still at the heart of the business.” NAR’s survey found that 94 percent of Realtors use mobile devices to communicate with clients.

Further, a recent article in my local paper documented how a real estate professional is utilizing some cool technology. Here are some excerpts from their web page: “The Ellis Team is proud to announce a new way to market real estate in SW Florida. Technology has changed the way people view TV shows, movies, and content over the Internet. Today companies like Netflix stream TV shows and movies direct to people’s homes or mobile devices. People’s expectations are changing about how they want content delivered. For the first time the Ellis Team at RE/MAX is bringing cutting edge technology to SW Florida and combining it with High Definition video and studio production editing. Video is 53 times more likely to generate 1st page Google ranking over any other form of content. Video provides a 41% higher click-through rate on universal results pages, and keeps visitors on your websites 6 times longer. 73% of sellers say they are more likely to list with an agent who uses video. However, YouTube is filled with videos shot from cell phone cameras and terrible audio. Consumers expect studio quality video, and when you provide that, companies like Netflix flourish. For more information, please go to (www.homesinhd.tv). This is not a paid commercial.

If we look further at the consumer’s openness to use technology, the way the consumer does banking today is considerably different than in the past. Recently the Housing Wire reported that “Banking relationships traditionally begin with deposit accounts, but changes in retail banking, combined with a sputtering economy and the explosion of new technologies, have spawned a new breed of customers who are focused on transactions first. These transaction-oriented customers tend to be young — under 35 — and seek incremental financial value from everyday purchases and interactions versus traditional banking relationships. This group has never experienced high or even normal interest rates, so deposit accounts mean little to them. They’ve grown up with cards and EFTs, not checks. And the Great Recession limited their demand for mortgages, car loans and other traditional loan products. Even when economic prospects improve and interest rates rise, their entrenched transactional habits may prevent banks from establishing traditional relationships with them.

Enabling technology combined with this new mindset has resulted in an environment where financial services are no longer viewed as something primarily provided by banks, but are just another product to be consumed, oftentimes as part of another service. And for transaction-driven customers, a bank is less likely to be the provider than a retailer, restaurant, or other service company. Banks need to recognize that they are competing against other service providers and reorient themselves to acquire transactions first and deposits second. Bank of America released its inaugural “Trends in Consumer Mobility Report”, which revealed that out of 1,000 U.S. adults, 47% admitted they would not last a day without their smartphone. About 85% of survey respondents check their mobile devices a few times a day, the report concluded. Meanwhile, the survey determined that almost two-thirds (62%) of consumers have tried mobile banking. The most common banking activities people use their smartphones for include monitoring account balances and statements, transferring funds and paying bills, and depositing checks, Bank of America found. Bank of America surpassed 15 million active mobile banking customers in 2014.”

The challenge for technology is how to best enable enhancement and change across the population. There is no doubt the younger population is very tech-savvy. Everything is electronic to them. They will ‘text’ the person next to them rather than carry on a conversation. They post to Facebook and other social media sites so all their “friends” know what they are doing. They spend more time watching YouTube then television. They devour the Internet. There is no doubt that the Internet has changed the way of life for all the generations, but separating fact from fiction is still a challenge.

So what lies ahead for the mortgage industry? In spite of all the trials and tribulations, people still list home ownership as one of their primary goals. If we want to focus on technology, let’s center on how the younger generation might approach buying a home. They don’t buy with the thought that they will live there for the next 30 years. The job market today forces them to be mobile, so they want a home that they can afford but still be able to retain their investment if forced to move. They tend to a lot of research on their own before contacting a real estate agent.

The point that I am trying to make is that the mortgage industry will need to utilize technology in different ways to engage the consumer. We will continue this discussion next month.

About The Author

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Roger Gudobba

Roger Gudobba is passionate about the importance of quality data and its role in improving the mortgage process. He is an industry thought leader and chief executive officer at PROGRESS in Lending Association. Roger has over 30 years of mortgage experience and an active participant in the Mortgage Industry Standards Maintenance Organization (MISMO) for 17 years. He was a Mortgage Banking Technology All-Star in 2005. He was the recipient of Mortgage Technology Magazine’s Steve Fraser Visionary Award in 2004 and the Lasting Impact Award in 2008. Roger can be reached at rgudobba@compliancesystems.com.