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J.D. Power warns mortgage servicers not to lose focus on the customer experience

J.D. Power’s annual U.S. Primary Mortgage Servicer Satisfaction Study is out and it's tough news for the industry. Having spent the last ten years successfully rebuilding their business from the ashes of the subprime mortgage meltdown, stagnating customer satisfaction and declining brand perception could force servicers to forgo profits and instead focus on improving the customer experience. With the right technology, those objectives don’t have to be mutually exclusive.
mortgage servicing advice to increase profits and keep customers happy

Each spring, J.D. Power surveys customers of U.S. based mortgage servicers to measure their satisfaction in six factors: new customer orientation; billing and payment process; escrow account administration; interaction; mortgage fees; and communications. The results of the 2017 study are out and the findings are a tough pill for the industry to swallow. After several years of steady improvement, satisfaction has plateaued, with a significant number of customers of the opinion their servicer cares more about profits.

That’s disappointing given the tremendous efforts most servicers have made to rebuild their business following the subprime mortgage meltdown. Much of this work involved complying with a dizzying array of new rules, regulations and regulators at the state and federal level which required a significant investment in staffing and increased cost per performing loan by an estimated 300%. That hardly suggests a focus on profits at the expense of customers.

No matter – perception is reality, and that means servicers must up their game when it comes to customer engagement. What would that look like? In reviewing the findings of the study, Craig Martin, senior director, mortgage practice at J.D. Power says:

“Mortgage servicers have three very clear areas of opportunity to help drive success: effective onboarding, high-functioning self-service tools and call center best practices that optimize customer contact in step with changing customer demographics and needs.”

While addressing those satisfaction opportunities could raise servicer costs even further, it doesn’t have to be that way. Here’s my take on how servicers could best address each of these three customer pleasing imperatives while improving profitability at the same time.


Effective onboarding

The study found that when onboarding satisfaction is high, customers are more likely to use the servicer’s website as their primary communications channel and submit payment via the web. They are less likely to have used a call center, experienced a problem, or paid their bill via check.

To create a better onboarding experience, in addition to sending a welcome packet, consider delivering an interactive voice message to welcome to new borrowers. Automated welcome calls have been shown to be 30 percent less costly than using agents to verify loan details, drive enrollment in automatic payments and gain consent for even lower-cost text communications in the future.


High-functioning self-service

The average satisfaction among borrowers who do not use the servicer’s website is 43 points lower than among those who visited their website in the last 12 months. But in a complex business such as mortgage, finding the right answer is often a challenge.

Implementing an intelligent virtual assistant will improve the self-service capabilities of your website. Virtual assistants can work like a digital persona that delivers personalized, effortless customer service via a human-like conversational interface. When utilizing a natural language interface, virtual assistants can engage with your customers efficiently, consistently and as conversationally as a human employee would to answer questions and assist in using relevant self-service features at a significantly lower cost.


Call center best practices

Among all mortgage customers, 10 percent say their time was wasted during their most recent interaction with their mortgage servicer. Overall satisfaction drops 285 points when customers believe their time is being wasted. Among those who believe their time was wasted, 66 percent indicated having waited five minutes or more to speak with a customer service representative.

Since most servicers use an IVR to initially answer calls, it makes sense start there when addressing this issue. If more borrower’s problems can be resolved in the IVR, fewer callers will experience a long wait for an agent. I recently published an article in Servicing Management offering a “crawl, walk, run” strategy for IVR modernization that helped one large servicer improve call containment by 27 percent and save a projected $1.5 million annually.

If you are looking to improve the borrower experience, put these technologies to work. Then when the 2018 J.D. Power study is published next summer, you’ll not only move up the satisfaction rankings, you’ll have saved enough money in your operational budget to celebrate the achievement.

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For more tips on improving customer satisfaction while lowering costs, check out these whitepapers from Forrester Research and McKinsey & Company

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Brian Moore

About Brian Moore

Brian Moore, senior principal, industry solutions of Nuance’s Enterprise division, brings more than 30 years of experience in financial services, mortgage and collections operations and technology to the company. He is also our resident compliance expert, advising companies on the TCPA, FDCPA, TSR and other regulations impacting customer engagement.