The Power Of Social Media In Financial Services

Recurring revenue from existing customers is essential for continued success in any industry, but it’s especially important for relationship-based services like banking. Since the housing crisis in 2008, banks have revamped their community reinvestment and outreach programs to rebuild their image and relationships with their customers.

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While the CFPB has traditionally provided an outlet for customers to file complaints, social media has become a powerful marketing tool for brands, and banks and financial institutions are no exception.
Consumers increasingly turn to social media to both leave reviews of companies they love and lodge complaints against policies they don’t like. As a result, public feedback on social media channels are gaining influence over consumer protection in the financial industry.

Changing Tides of Influence

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Given new leadership and recent turmoil at the CFPB, banks and consumers are asking what will happen next for the regulatory body. While it’s unclear exactly how the CFPB will operate moving forward, the question may not be what will happen, but what is already happening?

Social Posts are Publicly Available

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Since social media amplifies both positive and negative feedback, consumers’ dependence on online reviews can greatly impact revenue and customer acquisition strategies. With 91% of consumers regularly or occasionally reading online reviews, reviews have a significant impact on a business’s reputation.

Social media may feel overwhelming at the onset, but when done right, it has the power to position brands as leaders in consumer protection, customer service, and grow a loyal consumer base.

Faster Response

The educated consumer uses the publicity of its reviews as a bargaining tool: banks can either respond quickly or risk their reputation.

Perhaps the most well-known example of this in the banking industry is Bank of America’s attempt to institute a $5 monthly fee for debit card use in 2011. According to reporting from the Washington Post, within a few days 300,000 people had signed a petition against the change that circulated widely on Facebook and Twitter. Another 21,000 people took to social media pledging to close their Bank of America accounts if the changes took effect. Shortly thereafter, Bank of America removed the proposed fee.

It’s easy to see this need for immediate response times as a burden on banks. However, it’s also an opportunity for banks to differentiate themselves from the crowd with public examples of responsive customer service.

Consumer Protection in the Social Media Era

Banks and other financial institutions should redouble their efforts and attention on the power of social media in consumer protection and customer service. In this age of constant connectivity, consumers hold the power to influence many industries, including financial services. Incorporating customers’ use of social media into a financial institution’s best practices demonstrates reliability and accountability, and in return gains their customers’ trust and loyalty – a win-win for all.

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As Personal Loans Rise, A New Era Of Lending Emerges With Take-Backs

According to recent data from TransUnion, the size of the personal lending market has more than doubled over the last five years. The reasons for this staggering growth can be attributed to a number of factors, but most notably, it has been a result of higher total employment coupled with rising household incomes. Megabanks, fintechs and alternative lenders have dominated this increase in personal lending, and as a competitive reaction, TransUnion predicts that we will likely see more personal lending activity from community banks and credit unions. The challenge for them, however, will be how they differentiate their lending experience.

Interest Rates & Speed No Longer Enough to Attract Borrowers

Historically, loan products have all looked the same, leaving community financial institutions with little to compete on. In fact, most institutions have focused on rate and speed of application process, which is necessary to staying competitive based on what consumers have indicated as primary drivers of choice, but these are not the only factors driving their decisions. We know that rate ranks among the most important, with minimum monthly payment following close behind. Application experience and fast lending decisions are also important, but they are not what drives a consumer to choose one institution over another.

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In a recent report, “Reinventing Consumer Loans: How Community Based FIs Can Win the Millennial Lending Market,” released by Cornerstone Advisors, Ron Shevlin, Director of Research, emphasizes the need for community financial institutions (FIs) to find new strategies to better compete with large banks in the lending markets. While many mid-size FIs believe they have superior rates and service, millennials, for instance, are often selecting the megabanks and large regional banks they already bank with for their borrowing needs.

If community-based FIs can no longer differentiate themselves based on price, and borrowers are finding less value in application ease or speed of approval, how should FIs attract borrowers? The answer, as Cornerstone discovered, is that community FIs can compete by offering loan features that improve the borrower’s experience during the life cycle of the loan.

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New Take-Back Concept The Key to Differentiate Loan Products

Cornerstone outlines three tactics in its report, which include providing flexible credit terms, bundling accounts and offering access to future funds – a new concept called a take-back loan. A take-back loan allows borrowers to pay ahead to reduce debt, but take that extra back if they need it, eliminating the fear of parting with ‘extra money’ while also enabling the borrower to make better financial decisions like paying down debt faster.

Access to a borrower’s own extra payments or take-backs is important, but actually seeing the impact of those changes is critical. Combining this concept with a sleek, mobile dashboard allows borrowers to manage debt by showing the loan’s status instantly. One step further – borrowers can also see the impact of payment changes before making them, giving them even more control and enabling them to make better financial decisions.

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For the FI, the take-back functionality coupled with a mobile user interface not only provides a competitive advantage during a time when lending becomes more competitive (rising rates), but it also reduces the risk of delinquency because the consumer is able to make better financial decisions – better for FIs, better for consumers, better for the economy.

Consumers Love This Concept

According to a recent consumer study conducted by Kasasa, nine out of ten consumers prefer a loan where you can take extra payments back over comparably prices loans. Moreover, 98 percent of consumers say they would refinance existing debt at the same rate to get the take-back functionality. Consumers also say they are willing to put more money into a loan and willing to pay more for the ability to take back extra payments if needed. Clearly, rate, minimum monthly payments and speed are not the only factors consumers are considering when shopping for loans.

Megabanks and alternative lenders do not offer take-back loans at all, giving traditional lenders a true competitive edge. Instead of talking to prospective borrowers about having the cheapest rates, now they can talk about something completely new and unique.

As the personal lending market continues to get more competitive, offering a lending experience that allows borrowers to take back extra payments and then see the impact – something megabanks and other lending competitors do not offer – is a game-changer that will only fuel greater growth.

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How Did You And Your Vendors Score?

A regular review of existing relationships with vendors and a look at how a company measures up on managing service level agreements (SLAs) could prevent unwanted surprises and fees as well as ensure a company is in compliance with federal regulations. This exercise will also give companies a chance to review SLAs with vendors. While SLAs are important for all products and services provided by vendors, it is particularly important for the tax services industry because it directly affects borrowers as well as exposes lenders to penalties and interest fees. This review also gives a company the opportunity to determine if the right tracking tools are in place to accurately prove performance results. These are all necessary internal and external practices in this advanced regulatory age.

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Now is the perfect time to review and re-evaluate a company’s processes with internal and external partners. Doing so will provide an opportunity to document and discuss the need for any process and control improvements. Vendors should be excited to partner with a company and make improvements wherever needed. If they are confident in the service they are providing, vendors should have no problem proving that they are the right partner. If they are hesitant to have these discussions, perhaps the company should consider other servicing options.

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Below are a couple of examples to ignite some thought around reviewing SLAs for tax outsourcing practices. Companies should consider what is being monitored along with the controls. More importantly, these points will require a company to think about current processes and controls and how they will support future efforts.

Evaluation example number one – delinquency and research task processing

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>>Determine if the internal team or vendor is processing your delinquent and research items in a timely manner and what provides proof.

>>Determine if the internal team or vendor are “touching” research-related items the day before, or even worse, the day of the SLA expiring. (Note about SLAs: If an item is not “touched” until the day of the SLA expiring, there is a risk of missing the SLA because it could not be resolved the same day due to agency dependencies. So if the vendor or department “touches” the item the last day of the SLA and they cannot resolve the item AND they mark/count the item as “uncontrollable due to agency dependencies,” this would be false or incorrect reporting because it was controllable and failing to review the item until the last minute should count as a fail.)

>>Determine whether the team or vendor is reporting such items as meeting the SLA out of their control due to agency dependencies. If so, can this information be validated?

Evaluation example number two – quality control

>>Consider what percentage of the total population is being reviewed for quality

>>Look at whether the internal team or vendor is able to provide the loan detail for items being reviewed.

>>Determine if they analyze the detailed reasons for the errors and track improvement of these errors going forward.

Additionally, some other things to consider are whether the SLAs truly measure the quality of a vendor’s performance. Are you asking the vendor the right questions? Is the vendor providing meaningful data? If not, this would be a perfect time to determine what the missing elements of their reporting are. A vendor should support these conversations, give a company the opportunity to discuss and partner with them to find solutions that provide results. With some effort and discussion, vendors can directly assist with a reduction in fewer homeowner frustrations and escalated matters.

Not only should a company question any missing elements of vendor reporting, but companies should also hold their business partners accountable for reporting details. While it may not always be easy and may require some follow-up on a company’s behalf, companies need to ensure the data is accurate and provides the oversight to know how vendors are truly servicing a portfolio.

Companies have a right to know and should ask vendors for proof, along with details, showing that the items are being researched and resolved within your standards or expectations. Remember, a servicer’s role is to protect its portfolio and homeowners. Be informed by ensuring the vendor is providing meaningful data and reporting. Now is the time to dig deep into the details and ensure you have a clear understanding of the information that is being provided.

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Working Together, We All Win

As anyone who has hailed a cab, booked an airline ticket or purchased goods online can attest, technology has the ability to transform established industries, seemingly overnight. Yet other industries appear immune to the impact of technology, with customer experiences that appear frozen in time.

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Heading this dubious short list would be the healthcare and mortgage industries, which bear interesting similarities. Both represent a significant share of the economy, impact a majority of the population and feature a customer experience that is ripe for change. So why isn’t it happening more quickly?

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Some would point to the complexity of each industry’s “delivery system.” In the case of healthcare, coordinating the activities of employers, government agencies, insurers, providers and life science companies, each with their own processes, is clearly challenging. In reality, it is likely the approach to change that is to blame for the slow pace of innovation. In each industry, early efforts to “reinvent the wheel” typically involved a single player seeking to develop and deliver a revised end-to-end process, with technology a key enabler. Unfortunately, these early efforts ultimately collapsed under their own weight, given the required cross-industry expertise and investment.

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This end-to-end approach was quickly followed by the emergence of specialized point solutions, each aimed at a specific component of the industry value chain. In healthcare, this took the form of patient engagement apps and in mortgage, the borrower mortgage application experience. While promising on their own merits, addressing only one component of the issue does not solve the larger problem. It still takes an average 40+ days to close a mortgage.

Fortunately, a “third way” has emerged.

In healthcare, firms such as Change Healthcare are integrating their own best-in-class point solutions, such as secure transaction processing, with those of their partners to create a seamless, end-to-end process and a superior customer experience. Within the mortgage space, Capsilon is adopting a similar approach, investing to integrate best-in-class partner solutions, such as Optimal Blue’s pipeline and rate lock management APIs, with its own. Here the integration of Optimal Blue’s rich feature set with Capsilon’s loan officer portal enables loan officers to perform more of their day-to-day tasks within the intuitive and user-friendly Capsilon platform. The net effect? Loan officers are able to run real-time pricing and loan scenarios, and can instantly lock rates, making it possible to complete an application and issue a pre-approval in half the time, delighting borrowers and real estate agents alike.

The “moral of the story?”

Those who are willing to collaborate with and leverage the expertise of partners, while investing the time and effort necessary to create a seamless, integrated solution, will be successful. Like-minded technology leaders will ultimately provide tremendous value to the borrower and drive the mortgage industry forward.

In such a collaborative environment, we all win.

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Home Prices Less Affordable Than Historic Averages

ATTOM Data Solutions released its Q2 2018 U.S. Home Affordability Report, which shows that the U.S. home prices in the first quarter were at the least affordable level since Q3 2008.

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The report calculates an affordability index based on percentage of income needed to buy a median-priced home relative to historic averages, with an index above 100 indicating median home prices are more affordable than the historic average, and an index below 100 indicating median home prices are less affordable than the historic average.

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Nationwide, the Q2 2018 home affordability index of 95 was down from an index of 102 in the previous quarter and an index of 103 in Q2 2017 to the lowest level since Q3 2008, when the index was 86.

“Slowing home price appreciation in the second quarter was not enough to counteract an 11 percent increase in mortgage rates compared to a year ago, resulting in the worst home affordability we’ve seen in nearly 10 years,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile home price appreciation continued to outpace wage growth, speeding up the affordability treadmill for prospective homebuyers even without the rise in mortgage rates.”

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Home prices rising faster than wages in 64 percent of local markets

Nationwide the median home price of $245,000 in Q2 2018 was up 4.7 percent from a year, down from 7.4 percent appreciation in the first quarter but still above the average weekly wage growth of 3.3 percent. Since bottoming out in Q1 2012, median home prices nationwide have increased 75 percent while average weekly wages have increased 13 percent during the same period.

Annual growth in median home prices outpaced average wage growth in 275 of the 432 counties analyzed in the report (64 percent), including Los Angeles County, California; Maricopa County (Phoenix), Arizona; San Diego County, California; Orange County, California; and Miami-Dade County, Florida.

Lowest home affordability indexes in Flint, Denver, Santa Fe, Nashville

Counties with the lowest home affordability indexes in Q2 2018 were Genesee County (Flint), Michigan (70); Denver County, Colorado (72); Adams County (Denver area), Colorado (73); Santa Fe County, New Mexico (73); and Wilson County (Nashville area), Tennessee (75).

Among 40 counties with a population of at least 1 million, those with the lowest home affordability indexes in Q2 2018 were Travis County (Austin), Texas (77); Alameda County (San Francisco area), California (81); Santa Clara County (San Jose), California (82); Oakland County (Detroit area), Michigan (82); and San Francisco County, California (83).

Highest share of income needed to buy a home in Bay Area, Brooklyn

Nationwide an average wage earner would need to spend 31.2 percent of his or her income to buy a median-priced home in Q2 2018, above the historic average of 29.6 percent.

Counties with median home prices requiring the highest share of average wage earner income were Marin County (San Francisco area), California (133.2 percent); Kings County (Brooklyn), New York (123.1 percent); Santa Cruz County, California (121.5 percent); Monterey County (Salinas), California (100.3 percent); and San Francisco County, California (97.2 percent).

Counties with median home prices requiring the lowest share of average wage earner income were Wayne County (Detroit), Michigan (13.5 percent); Clayton County, Georgia (13.7 percent); Rock Island (Quad Cities), Illinois (15.8 percent); Saginaw County, Michigan (16.4 percent); and Richmond County (Augusta), Georgia (16.4 percent).

Median home prices not affordable for average wage earners in 75 percent of local markets

An average wage earner would not qualify to buy a median-priced home in 326 of the 432 counties (75 percent) analyzed in the report based on a 3 percent down payment and a maximum front-end debt-to-income ratio of 28 percent.

Counties where an average wage earner could not afford to buy a median-priced home in Q2 2018 included Los Angeles County, California; Cook County (Chicago), Illinois; Maricopa County (Phoenix), Arizona; San Diego County, California; and Orange County, California.

Don’t Slack Off Now

It’s tempting to slack off during the dog days of summer, but content marketing doesn’t take a vacation. If you want top dog results, the time to assess your efforts is now.

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According to John Hall, in his article “This Is the Perfect Time of Year to Assess Your Content,” summer is the perfect time to kick back, hang at the pool, and leave behind any worries you might have about the future of marketing.

Even if your audience members take time off for travel of their own, summer doesn’t mean you get a free pass on your content. While you keep doing what you’re doing and just wait for the next budget cycle to make any real changes to your content strategy, your competitors are building their brands and climbing to the top of your audiences’ minds.

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Content is a dynamic part of your marketing strategy. You’re going to need to check up on your performance and make tweaks to your plan more than once a year, and summer is a great time to assess your efforts and correct course if you need to.

By now, you should have at least a full quarter’s worth of data on your content marketing strategy to review. You should know how close you are to achieving the goals you set and which areas have presented the biggest challenges so far.

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Not only do you have enough usable data, but you also have a competitive advantage when it comes to getting your content published.

Online editors across industries and niches need more contributed content in June, July, and August than almost any other time of year. You can meet editors’ needs, engage your audience members, and contribute to your goals, all at the same time, if your strategy is set up correctly.

And if those aren’t reasons enough to keep up with your content and assess your plan, ask yourself: Would you rather know whether your content is effective now or when it’s budget time and you don’t have the results you need to lock in those dollars?

Content strategies rely on a lot of moving parts, and actually assessing your effectiveness can be challenging, especially if you don’t have anything to guide you through it.

To get started making changes that can impact your company for the rest of the year, follow these three tips:

1.) Retrace Your Steps

Go back to your original strategy and the goals you set. What metrics did you say you would track? How are you doing on that front so far?

Maybe your goal is lead generation. Did you meet your lead gen goal for the quarter? Or are you creating lots of content without seeing many leads? You could have seen good social shares this quarter and grown your Twitter following by 20 percent, but did your content actually help you reach the lead gen goal you set for it? Start by comparing your performance to the goal you want to reach.

2.) Diversify Your Content

Company blogs play a vital role in any content strategy, but if you lean on your blog to do all the work of a diverse content mix, it’ll be nearly impossible to see the results you want.

Content is a toolbox, and you have so many tools at your disposal: blog posts, sure, but also press mentions, email marketing, guest posts, and more. Your blog can’t do it all alone. Great content strategies use different types of content for different goals, so consider what you’ve tried so far and whether it’s actually working, then test adding new content deliverables to amplify your results.

3.) Stretch Your Work Further

Developing content is one thing, but using it properly is a whole other animal. Are you distributing your content and building links? Do you have a plan for how to go from content production to increased revenue or brand awareness? Do you have the tools you need to scale?

Don’t stop at content generation. Put in the work to expand the reach of your content. From paid amplification to email marketing to SEO audits, invest in your content to get the maximum return on your investment.

Marketers have a responsibility to keep an eye on their content’s performance all year, but summer is an especially good time to dig deep. Use the data you’ve collected, identify the gaps in your approach, and correct course for a more effective strategy throughout the rest of the year.

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Investor Increases Loan Amounts To $5 Million For Multiple Non-QM Programs

Verus Mortgage Capital (VMC), a full-service correspondent investor offering residential non-prime lending solutions, has increased loan amounts to $5 million for several of its non-QM programs, and higher LTVs for interest-only loans. VMC has increased loan amounts for:

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>>Investor Solution Full Documentation, Self Employed and Foreign National programs, from $2 million to $5 million, starting at $75,000.

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>>Credit-impaired borrower loans from $2 million to $5 million, starting at $100,000, through the Credit Ascent program.

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>>Higher-balance loans offered with alternative documentation for self-employed individuals from $3 million to $5 million, starting at $150,000 through the Prime Ascent program. Prime Ascent interest-only loan LTVs increased from 80% to 85%.

“At Verus Mortgage Capital, we’re dedicated to building the non-QM market. We are committed to offering lenders flexible funding options for underserved borrowers who don’t fit into the conventional profiles,” said Dane Smith, President of VMC. “Right now, non-QM lending is a huge opportunity for lenders to grow their businesses and provide solutions to fill a very real void in our industry.”

Founded in 2015, VMC is a non-QM correspondent investor backed by Invictus Capital Partners, an investment firm. VMC purchases loans in all 50 states and the District of Columbia and focuses solely on the non-QM market. It offers correspondent lenders a wide range of home financing products for credit worthy borrowers.

The Washington, D.C.-based company, with operations located in Minneapolis, has purchased just under $2.4 billion in expanded, non-QM loans since its inception. In addition, through its affiliates, VMC has completed five rated securitizations.

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Getting Closer To Full eClosings

Pavaso, a mortgage technology provider, has introduced a remote online notarization feature (RON) to its Digital Close eClosing platform. RON will enable users to conduct the mortgage closing session remotely—including notarizations. Pavaso is the developer of a truly digital mortgage enterprise solution platform that incorporates both lender and title participation.

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Pavaso’s development of its Remote Online Notarization tool provides its users the ability to conduct the entire closing (including notarization) using a single electronic portal through the Digital Close Enterprise eClosing platform.  Other systems require additional technology, integrations or multiple portals to conduct a complete, notarized closing. The feature was developed in direct response to the rapidly growing interest at the state level in allowing remote notarization. Currently, remote notarization is legal in Texas, Virginia, Montana and Nevada. Several more states, including Indiana, Minnesota and Tennessee, have passed laws or are expected to pass laws introducing remote notarization in the next year as well.

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According to Nancy G. Pratt, Vice President Partner Relations & Government Affairs for Pavaso, the addition of RON to Digital Close will empower users to notarize documents (where allowed by law) electronically and online—even when physically separated from the signer of the documents. The feature provides convenience to all parties without having to forego the use of experienced closing agents. Pavaso’s RON tool provides a faster, easier connection process for consumers as well as instant access to a recording of the notarizations.

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“RON is yet another powerful indicator that times are changing in the mortgage and settlement industries,” said Pratt. “Consumers are demanding more flexibility in choices – it’s no longer just a wish for flexibility in choices —they demand them. Pavaso’s unveiling of RON ensures that the consumer will now be able to experience the convenience, transparency and simplicity of a digital closing no matter where that consumer (or closing agent) might be situated.”

The Pavaso Digital Close platform delivers efficient, accurate closings by preventing errors at closing, including over signing, missed signatures and more. This, in turn, delivers a smooth, faster closing for consumers while reducing costs for mortgage lenders. The collaborative platform brings title and lender documents together for digital signature and allows consumers access all documents anywhere, on any device, prior to closing. Pavaso’s Digital Close platform provides flexibility in closing by facilitating hybrid closings as well as complete eNote and eVault transactions.

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