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CUs banks expect online-lending growth but barriers exist
MEQUON, Wis. (7/1/10)--Credit unions, which take one-fifth of their mortgage applications online, said they expect their online applications to grow to 31% of total volume--a 55% increase--according to a survey Mortgagebot released Wednesday. The survey, conducted earlier this year by Lieberman Research Group, analyzed 330 American financial institutions--including 79 credit unions--regarding online lending technology. It confirmed that online mortgage application volume is expected to more than triple by 2013, Mortgagebot said. While 18% of lenders surveyed said they offer an online application, about 82% of credit unions surveyed said they are very or somewhat familiar with online lending technology. Roughly 71% of institutions said they envision needing to offer the technology to borrowers, and 46% said they are actually evaluating or planning to evaluate the applications. Two-thirds said they would implement a solution before 2012. The survey results contradict traditional attitudes that view the Internet as a poor substitute for personal service, Mortgagebot said. Among the lenders surveyed that already offer or are planning to offer a smart, interactive mortgage application, well over half--and nearly two-thirds of those with $500 million or more in assets--said their primary reason for going online is to better serve borrowers. The need to improve efficiency came in a distant second, Mortgagebot said. “Today’s borrowers prefer the Internet as a delivery channel for financial services, including mortgages,” the company added. “Lenders that are fully engaged with their borrowers realize that to compete in 2010 and beyond, they must meet borrowers at their preferred point of sale.” The survey also verified the importance of providing a consistent “borrower experience” by using a single technology solution to integrate all of a lender’s mortgage point-of-sale channels. About 56% of credit unions said they see point-of-sale mortgage technology playing an “extremely important” role in their mortgage businesses soon. Several barriers exist to using online lending technology, according to American Banker (June 30). Credit unions and banks cited concerns about the cost of adopting such technology, the fact they are dealing with a number of regulatory issues and protecting borrowers’ security. Mortgagebot, Mequon, Wis., provides mortgage lending solutions to financial institutions such as credit unions. Those surveyed were not Mortgagebot clients and represented institutions having more than $100 million in assets.
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