Meal delivery. Video streaming. Ridesharing. Virtual tours. What do these all have in common? Disruption.
From food and entertainment to transportation and real estate, innovative technology is causing disruptive change in every area of commerce. Disruption has been a growing part of the title, mortgage and real estate industries for years, but not at the rate we saw in 2018. Rapid advances in technology, fueled by consumers’ desire to enjoy more convenience, are driving digital solutions that change the way consumers expect to do business.
Below is an overview of the most common types of technologies to disrupt the housing market last year and why industry professionals are adopting them.
Disruptive Technologies
- E-signing technologies have the highest level of adoption because they’ve been around the longest and prevent costly delays to transactions. When customers can’t come into an office to sign a document, remote signing keeps real estate transactions moving forward. New hybrid digital pens can even transmit pen strokes, so consumers can enjoy digital closings while satisfying requirements for wet-signed documents.
- Remote online notaries (RONs) gained significant traction in 2018. Many states already permit mobile notaries, which electronically notarize documents in the presence of customers. RONs electronically notarize documents from a remote location using a secure web cam session to connect with customers. In 2017, remote notarization was permitted only in Virginia and Montana. Laws authorizing its use went into effect in Texas and Nevada in 2018, and five more states (Indiana, Michigan, Minnesota, Tennessee and Vermont) voted to extend this convenience to consumers this year; although adopted, in some states RON is not permitted until regulations are promulgated.
- Process automation technology is being used to streamline complex processes and improve the customer experience. For example, some lenders are allowing consumers to apply for a mortgage loan online. Those lenders are using automation technology to reduce the amount of information consumers need to provide. Applicants answer a few questions and automation software pulls additional data – like property information, borrower assets, income and credit information – from online sources to complete the application. Customers review final documents for accuracy but enjoy the convenience of initiating the mortgage application process at any time of day, with minimal input.
- Mobile apps give homebuyers instant access to information they can use to make informed decisions and act quickly in a time-sensitive market. Instead of scouring the internet to search for a home, many home shoppers download a real estate app, plug in a few preferences and let the app do the leg work. They can access pictures, take virtual tours and view recent comps; get estimates for mortgage rates and insurance premiums; and contact a real estate agent – all with the touch of a screen.
- Data-driven technologies are rapidly transforming the way industry professionals use data. For example, software as a service (SaaS) marketing tools give real estate agents and lenders access to some of the best data analytics available for the housing market. Good data facilitates faster home sales and helps lenders mitigate financial risk.
- Artificial intelligence (AI) technology, including machine learning, gives machines the ability to make decisions based on prior data or data patterns. Real estate professionals are using AI-based chatbot software, which mimics human dialogue, to give consumers 24/7 access to customer service. According to PricewaterhouseCoopers, financial institutions are also using AI to combat fraud, aggregate data, improve data analytics and enhance predictive modeling.
- Integrative digital platforms are bringing all stakeholders in a real estate transaction together on a single, secure portal to communicate, collaborate and exchange information. This technology is being used to improve efficiencies in the real estate closing process and in property management. By making it quick and easy for everyone to do business, these platforms deliver the ultimate customer experience while providing important safeguards against cybercrime.
Benefits to Industry Professionals
In addition to giving consumers the convenience they crave, disruptive technologies offer title, mortgage and real estate professionals several advantages.
- They help cut costs.
While investing in new technology might seem counterintuitive to cutting costs, that’s exactly what disruptive technologies are designed to do. They automate processes that reduce the time and expense of constant manual intervention. For example, Fintech could be used to help lenders lower the rising cost of originating a mortgage loan. According to the Mortgage Bankers Association, the average cost to originate a loan reached $9,000 last year, with the bulk of expenses attributed to manual processing. - They create new opportunities to generate revenue.
New technology gives providers the ability to leverage massive amounts of data to attract and retain customers. Consumer data can be accessed with consent from existing customers or aggregated from sources like public records or social media. Big Tech companies rely heavily on consumer data to target their marketing efforts. Have you ever searched for a product online and noticed how ads for that product (or similar ones) start popping up afterwards? That’s data-driven technology. Providers also use this technology to maintain relationships with their customers long after the initial transaction ends. For example, businesses can send customers a special discount for their birthday or information about a new product they might like based on their past preferences. - They give providers a competitive edge.
When starting the homebuying process, most consumers look for providers who offer the best rates. However, when products and services are similar in scope and price, choosing a provider often comes down to who can offer the best customer experience. Consumers have always desired tools and services that make it faster, easier and more convenient for them to do business. Providers who use disruptive technologies may tip the scales in their favor by offering customers more convenience, greater efficiency and better transparency than businesses who don’t use them.
While adopting disruptive technologies marks changes in the way title, mortgage and real estate professionals do business, it does not change the expertise we deliver. At Old Republic Title, our customers – in our local communities and all across the country – remain our top priority and technology gives us better tools to serve them. These new innovations also provide a valuable opportunity to enhance our own operations. Every great invention starts with a radical new idea that disrupts the status quo. Fortunately, some of the best things happen when we dare to do things a little differently.
These are the opinions of Eric Lapin and not necessarily reflective of Old Republic Title.
Eric has 25 years of experience in the mortgage industry, which includes origination through servicing, technology, innovation, data and analytics. He is a member of the MISMO Community of Practice for Blockchain Education Committee and a frequent speaker at industry events.