A growing number of US-based retail banks are ramping up their
investment in lending automation. Not only are the banks enjoying
savings from lower labour costs, the lending process is being
speeded up and, as Charles Davis reports, the
initiative taps into customers’ enthusiasm for self service


Self service is all the rage in many facets of
US life: consumers find their grocery lanes replaced by kiosks,
their movie ticket window turned into a machine, and even cabbies
nowadays frequently point to a do-it-yourself terminal when it’s
time to pay.

The automation that has marked the payments
side of banking for years is now finally making its way to the
lending side of the ledger, as a number of banks are finding that
loan applicants want to handle a lot of the front-end chores
themselves in exchange for greater speed, and perhaps a slight
reduction in rate.

The most paper-intensive loan of all – the
residential mortgage – is the focus of most of the innovation, led
by firms like Mortgagebot, which allows loan applicants to handle a
lot of the paperwork and data collection themselves, right in the
branch or online.

Self-serve borrowers can check interest rates,
obtain pricing and fee information, then complete and submit
mortgage applications online without requiring loan officer
assistance at all. A complete mortgage application, from
origination to closing, without tying up branch personnel at all,
frees bankers to sell.

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A number of US banks, including Bank of Idaho;
Bank of Galesville, Wisconsin; First National Bank of Catlin,
Illinois and a number of other community banks and credit unions
report growing loan volume due in large part to greater automation
and online pre-screening that is reducing the time it takes to get
pre-approved for a home loan from hours to minutes.

At the Bank of Idaho, Larry Bell, vice
president and mortgage loan chief, said that self-service has
resulted in the bank bringing loans from start to finish 22% faster
and increasing loan officer productivity by 67%.

Averaging $140m in loan volume per year, Bank
of Idaho holds 11% of the total loan volume in its market.

“We’ve been amazed by the fact that online
lending – really automating the entire system – changes everything
about our lending operation,” Bell said.

“We’ve been surprised by how many applications
we now get between midnight and 6am, for example.

“Over the last 60 days, half of our
applications have been online, and a good percentage of the others
were done online in the branch, so it’s really changing the way we
do business.”

Mortgagebot has licensed its Power Site
do-it-yourself mortgage product to more than 1,100 banks and credit
unions nationwide. A partnership with Avista, a cloud-based storage
solutions company, gives Mortgagebot clients access to document
imaging, storage and workflow solutions.

Mortgagebot handles the front-end
point-of-sale automation, while Avista tackles the back-end loan
origination system. The companies, both owned by parent company
D+H, can now automate the mortgage process from origination to

A companion product, Mortgage Marvel, is a
mortgage-shopping auction site that delivers real-time rate quotes
from hundreds of lenders, like Priceline does for hotels. The site
allows borrowers to link directly to their preferred lender, where
they can complete a mortgage application and get pre-approved with
fully compliant disclosures, all in about 20 minutes.

Banks are deploying the system in a variety of
channels, from in-branch kiosks that encourage do-it-yourselfers to
call-centre platforms that enable customers to walk through the
entire loan application on the phone and electronically submit
supporting documents.

Bell said that at the Bank of Idaho, offering
pre-approval for mortgages in 20 minutes or less, helps the bank
compete against Bank of America, Wells Fargo and other national
layers in its own footprint.

“We’ve see a huge influx of people moving to
Idaho from the West Coast, and so many of them banked with national
players there,” he said.

“We needed to be able to look just like them
from a technology standpoint, and by embracing self service, we’ve
been able to do so while also becoming much more efficient.”

Bell, who added that Bank of Idaho also is
considering automating its general consumer loans, originates home
loans from all seven of the bank’s branches, despite having
mortgage lending specialists in just two of them.

Mortgagebot recently released a similar
platform for general consumer loans.

“The beauty of the automated system is that
anyone in any branch can use it, easily, to walk a customer through
an application and get them approved,” he said.

“Matt Cotter, Mortgagebot’s senior vice
president of sales and marketing, said that self-service is growing
rapidly, fuelled by an interesting combination of demographics and
tight credit and low interest rates.

“We’ve seen tremendous growth in terms of both
new clients and volume on the system in the past few years, and we
think much of that has to do with the growing comfort level of the
consumer towards self-service, which came along just as interest
rates were bringing a whole new wave of people into the mortgage
market,” he said.

Cotter also attributes the company’s
never-ending eye for detail when it comes to the functionality of
the system.

“We spend millions of dollars on tweaks to the
system, and sometimes it’s finding the little thing on the site
that makes a huge difference,” he said.

“On one page, we found people inadvertently
hitting the ‘save and close’ button because we had it in the same
colour as the ‘next page’ button and in the same colour.

We moved it a few pixels, changed the colour,
and suddenly conversion rates start going up.”

Mortgagebot is far from alone in the
do-ityourself space: it competes with Calyx Point and PCLender and
a dozen or so smaller firms in the mortgage market and a handful of
larger banks are going it alone with in-house solutions.

Cotter is less concerned with the competition
than with the banks which have not automated their lending business
at all.

“We have 1,200-odd customers, and the
competition probably has around 400 spread across 10 to 12
different companies, so I don’t think in terms of competition,” he

“What I think about all the time is the real
big opportunity is the 5,000 institutions who have nothing at