In the digital age of mortgage lending, the human touch remains indispensable
In the ever-evolving landscape of mortgage lending, where technology and artificial intelligence have made significant strides, one aspect remains constant and irreplaceable: the human touch. The enduring significance of human expertise and interpersonal interactions in the digital age of mortgage lending remains unaffected. While the industry benefits from automation and data-driven processes, there are nuanced elements of mortgage transactions where human judgement, empathy, and communication are indispensable. Let’s explore these essential aspects, shedding light on the moments that define the art of mortgage lending.
The Power of Observation
Imagine encountering a manufacturer with a pristine banking history, strong financials, and timely paid GST returns. However, upon closer examination of their electricity bill, a different picture emerges. The consumption is significantly less than what’s required for their operations. A person with an eye for detail will understand that the financials are camouflaged, and it’s just a set-up for the optics. It’s in moments like these that a human touch can discern anomalies, ask relevant questions, and address potential issues that data alone might overlook.
Overhearing Debtors’ Conversations
During a client meeting, you overhear a conversation between a couple of debtors sitting in the client’s office, discussing their delayed payments. This human interaction provides invaluable insights into the financial health of your clients and their willingness to address financial challenges, something that automated systems can’t capture.
Personal Client Visits
On enquring with the security guard about the clients’ details, and he doesn’t recognize them, it raises questions that the data can’t answer. The client’s personal circumstances and business reputation are vital factors that require the human touch to assess.
Nuanced Insights
In the digital age, it’s crucial to consider unconventional data points. If you notice too many entries related to online gaming or frequent visits to a wine shop in a borrower’s history, human judgement can help evaluate whether these activities are potential red flags or simply personal interests.
Empathy in the Face of Adversity
Empathy plays a crucial role in lending, especially when a client is facing a challenging situation. A lender’s ability to empathize and understand a client’s difficulties is what differentiates the human touch from automated processes. While a borrower may not be in a favorable situation today, a lender can foresee how providing funding could turn the wheels of their business, viewing them as potential clients worth supporting.
The Role of Intuition
Even in the age of big data and algorithms, there are credit underwriters and decision-makers who rely on their intuition and experience. These individuals can see beyond the data, assessing a borrower’s capability and intent even when the numbers might suggest otherwise.
The Criticality of Personal Discussions (PD)
Personal Discussions, known as PD in the lending industry, are pivotal. Smart underwriters use this opportunity to delve deeper into a borrower’s psyche. They ask questions about cash flow and the intended use of funds, seeking to understand the client’s ability and intent. This human interaction goes beyond financial statements and fosters trust.
Leveraging Networks for Background Checks
Well-connected underwriters utilize their networks to perform background checks that provide insights into a borrower’s creditworthiness. This personalized approach contributes to quality decision-making and better deals for clients.
The Impact of Bias and Misunderstanding
Human judgement may sometimes create bias based on past experiences, impacting decision-making. Misunderstandings during personal discussions can lead to negative perceptions that affect the lending process, especially if the client’s presentation isn’t optimal.
The Challenge of Bias and Third-Party Checks
Bias can hinder decision-making, with cognitive biases influencing assessments. Additionally, third-party checks, such as residence and office verification, are susceptible to negative remarks if not handled correctly, causing delays and potential misunderstandings.
Conclusion
In the digital age of mortgage lending, the human touch remains indispensable. While technology and data-driven processes have their place, it’s the nuanced, empathetic, and insightful aspects of lending that define the art of mortgage lending. Understanding a borrower’s story, leveraging human judgement, and addressing unique situations are all integral to building successful and enduring relationships in the ever-evolving landscape of mortgage lending.
(This article is authored by Himanshu Panchmatiya – Co-Founder – Switch My Loan)
