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Swipe right on digital mortgages, according to Bank of America consumers

Stuart Lauchlan Profile picture for user slauchlan April 17, 2018
Online mortgages or online dating? The U.S. consumer is more likely to swipe right on the former than the latter apparently.

bank of america
More U.S. consumers are comfortable with the idea of applying for a mortgage online than they are with the idea of online dating.

That’s the headline-friendly conclusion from Bank of America’s recent Homebuyers Report, which surveyed 2,000 U.S. adults who currently own a home or plan to in the future during January and February. It came up with a finding that 32% of people polled were OK with doing mortgage business on their mobile devices compared to only 20% who were happy swiping left or right in search of love.

The report finds that nearly all U.S.first time buyers reckon that tech is now enabling every stage of the home purchasing process from researching (98%), getting a mortgage (94%), and negotiating and buying (92%).

The reason for BoA highlighting all this is is its launch of the Digital Mortgage Experience to guide clients through the mortgage process via its mobile app or website. Auto-populated features mean clients can, theoretically, receive conditional approvals on the same day.

With advanced application pre-fill capabilities, clients can have many aspects of their mortgage application auto-populated, significantly reducing time and effort. According to the product pitch:

The Digital Mortgage Experience provides full customization throughout the process to best fit users’ unique needs, including:

  • Access to lending specialists – With just one click or a phone call, clients can consult a professional lending specialist every step of the way. Lending specialists can even pick up an in-progress application and assist the client in completing it.
  • Personalized loan terms – Users can consider a variety of loan options and combinations and select the features that matter most to them, including flexible monthly payments, closing costs and loan terms.
    Ability to lock interest rates – Users can lock their rate or leave it open to lock later.
  • Flexible application process – Clients have the ability to save an in-progress application and return to it at a later time.
  • Seamless integration with Home Loan Navigator – Once submitted, users integrate with Home Loan Navigator to track their loan, view action items, upload documents, and review and acknowledge disclosures, all from their mobile device.

In many cases, clients will receive a conditional approval that very same day, according to the bank. Michelle Moore, Head of Digital Banking, boasts.

It’s the latest example of our high-tech, high-touch approach to serving clients.

Digital account

Moore’s comment reflects the growing portfolio of digital services and assets that BoA is rolling out. These include:

  • Expansions of its mobile car shopping tool that enables clients to search 1 million cars in inventory from more than 2,400 auto dealers nationwide. In Q1, 67,000 customers utilized the auto shopping app, twice as many as Q4. Overall, auto loan stores digitally accounted for 50% of all auto loans originated directly with customers.
  • Enabling small business clients to apply for a Business Advantage Term Loan or Business Advantage Credit Line from the BoA mobile banking app and, which offer a loan product tool that helps small business clients find the right loan for their needs, and a monthly loan payment calculator.
  • The roll out of Erica, a digital banking assistant which offers customers the use of cognitive AI learning “to help them better live their financial lives”.

There are some strong stats to indicate that BoA’s digital commitments are paying off:

  • BoA now has more than 35 million digital users across all services.
  • 25 million customers access their accounts through mobile devices. Over the past there months customers logged into the mobile banking app 1.4 billion times to either transact or shop.
  • Digital payments for the past three months stand at $365 billion, now accounting for more than 50% of total payments of $682 billion.
  • The volume of mobile deposit transaction now represents 24% of all deposit transactions, equal to volume of more than 1,200 offline financial centers.
  • Appointments made through digital devices to meet with a bank expert now stand at 35,000 a week.
  • Sales via digital devices now account for 26% of all sales.

It’s all travel in the right digital direction, according to CEO Brian Moynihan:

Our job is management and the team was to be the best there is at digital banking, mobile banking, et cetera, across all the platforms. We have been investing heavily for many, many years. This mobile platform just didn’t arrive it in the online platform. This is a billion dollars of investments across probably last six years or something like that to get there in terms of building it out So no matter who comes in, our job is to be more confident and more capable than anybody whether there are competitors in the traditional industry or new competitors. And that’s why we continue to upgrade the capabilities and driving it. And so think about what we’ve done.

And it’s delivering valuable operating efficiencies:

The digital movement of money is half the money moved by consumers today. It’s all adding positive pressure. It’s not going to be immediately changed. It’s not going to immediately change. It’s allowed us over the last 10 years ago to go from 6,100 branches to 4,400. It’s allowed us to increase ATMs and effectiveness at the same time bringing the overall cost down for them. So $1.4 billion mobile logins this quarter - this first quarter versus $1 billion last year - allow us to have 20% sales in that business, allow us to have 20%-odd checks deposit in that business, all that saves us efficiency.

The challenge now is to get the balance right between online and offline, he adds:

At the same time, we still have 850,000 people coming to branches every day that need to have highly qualified capable people servicing, so investing in those sales professionals. And so you have to be able to do both and do both well. It’s just that these techniques, whether it’s ATM capabilities, whether it’s the digital devices, mobile device capabilities that allow you to do more value-added tasks in the branches than we used to do, which was just to deposit checks and things like that. So deposits at the branches can tend to trend down and go up in mobile. But it’s a trend that will continue over many years.

That said, helping customers to make appointments in branch more easily is also a big push:

We’re getting tens of thousands appointments per week. But people set an appointment on a digital to come in which allows us to staff more appropriately.

Moynihan points to Erica and to a new payment service, Zelle, as examples of digital innovation that provide customers with new functionality to make their banking experience easier:

Erica is a voice-activated Artificial Intelligence agent. And you could go in and say, ‘Send Brian $5’ and it’ll come to Brian. So all we can go do that if you want. It’s pretty simple. It allows people to find balances and do things by talking to the computer. It will improve across time. We had 40,000 teammates working on it. But it’s an exciting thing. It’s payback will be over the next decade, but its competitive advantage is high.

If you take Zelle, we’ve processed almost 29 million transactions. So you’re seeing that go on. Digital sales are 26%. These numbers are hard to get comparisons on, but we think that the banking industry generally sub-10%. We think that all of our retailers, even including Amazon in the non-banking space, is maybe in the mid-teens as a percentage of sales, maybe high-teens, but we’re 26% today.

Whatever the stats are, the important thing to remember is that this is a long game being played out in a financial services sector that is being disrupted. Moynihan argues:

I think the point is that, these are tremendous capabilities with major investments that will pay off not only to date, but over time. And I think it’s a good [thing] against all comers, large, small, traditional competitors and anybody outside the industry. Our job is to continue to invest to do it.

My take

Lots of progress it seems. And Moynihan is correct - this is an ongoing revolution in banking and financial services. There’s no ‘job done’ moment to be reached.

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