Loan servicing tech market to grow $2.4B by 2024
During the foreclosure crisis of 2008, the industry learned the hard way, how important loan servicing is to all parties in the mortgage chain. Today, U.S. lenders, servicers and vendors face the consequences of the pandemic, alongside an originations boom that demands highly efficient loan servicing operations for the long run.
As a result, the loan servicing software market is growing fast – in the U.S. and around the globe – through automated, easily scalable software. Findings published by ResearchAndMarkets.com show the loan servicing technology market is poised to grow by $2.43 billion during 2020-2024, progressing at a Compound Annual Growth Rate (CAGR) of 12% during this forecast period.
The ResearchAndMarkets Global Loan Servicing Software Market 2020-2024 report offers a thorough analysis of the market size, a trends forecast, expected growth drivers, current and future challenges. It includes vendor market disruption, market segmentation by deployment and geographic landscape.
The report’s up-to-date assessment of the current global market also revealed that its growth primarily is “driven by demand for efficiency in lending operations and the rising cost of loan servicing.”
Among key factors affecting technology application choices across markets, the study identified “a rise in the adoption of cloud-based loan servicing software as one of the prime reasons, driving the loan servicing software market growth during the next few years.”
The vendor analysis section covers the world’s top 25 vendors, such as NEXT sponsors Black Knight Inc. and Fiserv Inc., as well as Applied Business Software Inc., ISGN Corp., LOAN SERVICING SOFT Inc., Mortgage Builder, Nortridge Software LLC, Shaw Systems Associates LLC, Simnang LLC, and Turaz Global Sarl.
To forecast market growth, the report relies on qualitative and quantitative research data from multiple sources of primary and secondary information. Inputs from key participants in the industry include “key parameters such as profit, pricing, competition, and promotions.”
Analysts use the “Five Forces Analysis” approach of identifying: Bargaining power of buyers; bargaining power of suppliers; threat of new entrants; threat of substitutes; and threat of rivalry to evaluate market conditions.
JD Power: COVID-19 exposes servicer weaknesses
An avalanche of customer inquiries set off by the pandemic put mortgage lenders and servicers to the test. What does it take to worsen lender scores? These days, an ineffective website, or lack of proactive communication will do. The good news is that the average servicing industry satisfaction has improved compared to last year, according to the J.D. Power 2020 U.S. Primary Mortgage Servicer Satisfaction Study.
A combination of historically low interest rates, record high unemployment and rising delinquencies are driving more borrowers online and through call centers, while due to COVID-19 there is “very little proactive communication,” the report notes, exposing servicing operation weaknesses that lead to lower overall customer satisfaction scores.
For example, while Quicken Loans is the highest-ranked mortgage servicer for the seventh consecutive year with a score of 854, it fell from 878 in 2019. Similarly, Regions Mortgage ranked second with 846, but down from 848. Huntington National Bank ranked third this year with 827, replacing Guild Mortgage, which ranked third in 2019 with 828.
In 2019 the average for overall satisfaction with mortgage servicers was 777 on a 1,000-point scale, and “at the bottom of the industries studied by J.D. Power.”
“The COVID-19 pandemic has really amplified the gaps in customer satisfaction, digital experience and call center experience that have been a challenge for mortgage servicers for some time,” said Jim Houston, director of consumer lending intelligence at J.D. Power. “Mortgage customers aren’t finding the answers they need online, pushing them onto long customer service queues in call centers and leaving them to hunt for answers on how best to address their challenges.”
So what do consumers want and expect from lenders and servicers?
- More efficient websites – Over 62% of customers visit their lender’s website first but only 28% said it helped them resolve an issue; up to 45% of those who could not resolve their issue online said the issue was resolved after they spoke with a representative, on the phone
- Functional traditional live telephone channels – One-fifth, or 19% of customers said it is not easy to connect via telephone with a live agent. That negative causes a 261-point drop (on a 1,000-point scale) in consumer satisfaction
- Better response to calls from default risk customers – Up to 44% of at-risk customers called their servicer in the last 12 months, at an average of 3.15 times; compared to 25% of low-risk customers, at an average of 2.54 times. As numbers of at-risk customers grow, this group will continue to challenge call centers
- The right number of proactive communications – Analysts noted that, “customers who receive three or four proactive communications per year from their mortgage lender had the highest levels of overall satisfaction,” and gave an average score of 810 – but only 8% of customers received that level of proactive communication. In conclusion, “too few or too many communications cause satisfaction scores to decline.”
- A simple thank you for the business helps – The single greatest effect on customer satisfaction is thanking them for their business. It adds 86 points to lender satisfaction scores.
The report evaluated more than 30 of the country’s largest servicers using responses fielded in March-April from 7,275 customers who purchased or refinanced more than 12 months prior.
WorkFusion named RPA tech leader
Robotic Process Automation (RPA) technology vendors now represent one of the fastest-growing enterprise software segments tracked by researchers and used by enterprises, according to enterprise software market research firm, Gartner, known for recognizing vendor contributions to robotic software development and innovation.
Recently Gartner recognized New York based WorkFusion, a global provider of intelligent automation, as a leader, in the 2020 “Magic Quadrant for Robotic Process Automation” based on “completeness of vision and ability to execute.”
Gartner’s recognition validates our pre-built automation solutions “designed to lower costs dramatically, and in record time, for areas with higher levels of document-related manual and cognitive work across some of the most critical processes in Banking, Financial Services, Insurance, Healthcare and other sectors,” said Alex Lyashok, CEO of WorkFusion.
WorkFusion addresses “critical processes” in banking, mortgage lending, financial services, insurance and other types of enterprises, according to the company website. WorkFusion’s clients include five of the world’s top 10 banks and financial services companies, which use Know Your Customer, Anti–Money Laundering and other solutions.
The right automation approach is to be able to deliver meaningful and measurable benefits to businesses fast, “and without disrupting core infrastructure or systems,” said Lyashok.
As an example, “for organizations in regulated-service industries such as Banking, Financial Services and Insurance,” he explained, the WorkFusion Intelligent Automation Cloud platform “can quickly and easily manage document-heavy processes, and in some cases, can cut costs by 50% within 3 months.”
WorkFusion’s positioning in the Leaders quadrant by Gartner “is a confirmation” of the company’s product strategy, Lyashok said.