Independent Banker - June 2019 - 23

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products, says John Cabell, director of wealth
and lending business intelligence at J.D. Power.
" There's a lot of opportunity here, " he adds.
A growing number of providers are coming on
the scene to provide banks with digital lending
solutions for home equity products. Prosper, a
peer-to-peer lending platform, recently announced
plans to launch a new digital HELOC product this
year. Fintech provider Blend has also signed on
more than 20 financial institutions to use its newly
launched digital platform for home equity products.
To be sure, it is rare today to find a community
bank that offers a digital end-to-end process
for HELOCs, even though the technology exists.
Many community banks have chosen to start out
small, automating the process in dribs and drabs.
For instance, First Federal Savings Bank, a
$665 million-asset community bank based out
of Twin Falls, Idaho, has automated the online
application process for all consumer lending
products, including HELOCs. The bank made its
first foray into online applications in 2004 with
mortgages, and it began accepting online applications
for HELOCs in 2014. The bank is now
considering adding e-closings for HELOCs.
HELOCs can delay the process for banks due
to regulatory constraints. Automating applications
saves customers and the bank a significant
amount of time, says Brenda K. Hughes, senior
vice president and director of mortgage and retail
lending at First Federal. Not only is it more convenient
for customers to enter their information
at their own pace, the bank has found there are
fewer data entry errors when customers enter
their own information.
Time is of the essence for both older and younger
consumers, though a digital process could be particularly
compelling to digital natives. " As more
banks are able to originate HELOCs online, it
becomes a competitive edge against those that
cannot, " says Samir Agarwal, vice president for
compliance solutions at Wolters Kluwer.
Not just for millennials
While drawing in younger customers is a laudable
and necessary goal, community banks should be
mindful that most older customers are also well
versed in digital technology. Notably, First Federal
has found that a sizable number of younger
baby boomers want a digitized experience. In the
Quick stat
10
million
consumers are
estimated to
originate HELOCs
by 2022
Source: TransUnion
Cheryl Winokur Munk is a writer in New Jersey.
independentbanker.org Q 23
" As more banks are able
to originate HELOCs
online, it becomes a
competitive edge against
those that cannot. "
-Samir Agarwal, Wolters Kluwer
bank's experience, however, the process generally
works best for customers of all ages when there's
a combination of human and digital interaction,
Hughes says.
This echoes the findings of J.D. Power's 2019
U.S. Home Equity Line of Credit Satisfaction
Study. Despite rising use and satisfaction with
digital channels in virtually every other aspect
of retail banking, satisfaction is lowest among
HELOC customers who gather information
entirely online versus those who gather information
in person or via phone only, and those who
used both online and in-person channels.
Papadopoulos advises community banks that
they can have their cake and eat it too. " Just
because you invest in automated loan origination
does not remove your client from ever seeing you
again, " he says. " You can have a hybrid model
where a customer can start an application online
and come into the branch to finish the process. "
Some banks may be concerned about integrating
a new digital lending platform with their old legacy
system, but this generally is not an issue, says Dan
Putney, managing director of mortgage solutions at
Finastra, a financial services software provider.
In Finastra's Fusion Mortgagebot solution
case, it can integrate with almost all legacy systems,
making building a digital lending platform
simple from the bank's perspective, Putney says,
adding that it only takes about 90 to 120 days for
Finastra to get a bank's website fully up and running.
And banks can choose whether to start out
slow by rolling out only home loan products like
HELOCs or they can choose to digitize multiple
lending products at one time.
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Independent Banker - June 2019

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