Digital mortgages will be a major trend for banks in 2018. In the first quarter alone, Bank of America and SunTrust Banks both unveiled their digital mortgage platforms, with SunTrust being the most recent.

“If you look at the housing industry, it has always been a slow adopter of change back to the days of Fannie and Freddie,” Bryce Elliott, SunTrust Banks mortgage chief technology officer, told Bank Innovation. “But over the past 20-to-36 months the populations of folks that want to invest in buying homes is growing and rapidly. And the home lending industry is focusing on digitalizing their footprint. About three years ago it was talk. Last year was about gaining momentum. And this year is just focusing on driving it to market.”

The Atlanta-based SunTrust recently unveiled SmartGuide Mortgage, a digital platform that allows consumers to complete their mortgage application entirely online in half the time of a typical mortgage application. The actual platform will go live in the next few weeks. Like many of its peers, SmartGuide uses data and artificial intelligence to automate the application process. Through the platform, as on Bank of America’s, customers can take pictures of documents that the bank does not have on file. The platform also gives consumers the option of speaking with a loan officer through a chat or phone, if needed.

Bank of America launched its digital mortgage platform earlier in April with similar features (check out how it works here).

Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup are other major banks that currently utilize digital mortgage platforms.

The functionality of digital mortgages have not yet attained the end-to-end comprehensiveness of other aspects of digital lending, such as SME lending. One reason for this is the regulatory requirements around closing a mortgage loan.

DIGITAL MORTGAGE STARTUP

“One of the largest regulatory hurdles is the document,” David St. Geme, product lead at Blend, a digital lending technology provider, told Bank Innovation. “A physical notary must be present at the time of closing a loan, and that’s a pretty overwhelming process. Where we want to move in the regulatory industry is virtual notarization. Right now, we can do the entire data and document collection online, but how can we go from mortgage shopping all the way to closing online, where we can use video chat or e-signature to close the deal?”

Based in San Francisco, Blend is a digital platform that can enable banks and other financial services companies to use data to automate the loan application process. Blend has worked with several FIs to create their digital mortgage platforms. Some of these banks include SunTrust Banks, Wells Fargo, U.S. Bank, Camden National Bank and Mountain America Credit Union.

But St. Geme thinks a regulatory change will happen, and perhaps soon.

“Customer demand for a digital solution has increased tremendously — that’s the first real shift — and lenders are seeing the need to invest in these digital tools,” he said. “And that’s not because they are thinking digitalizing mortgage loans will ‘get us ahead,’ but rather it’s something they need to do to stay up to speed.”

Since its launch in 2012, Blend has seen the number of its bank clients increase. The fintech works with FIs through the FIs’ existing mortgage system, or through plug-and-play applications, he explained. There are other bank and credit unions in the pipeline for Blend, but St. Geme would not disclose names, yet.

As for SunTrust, the hope is that with the new digital application process, the bank can increase the rate at which it typically closes a loan. Elliott told Bank Innovation that through the SmartGuide platform, the bank was could close a loan in “as little as 11 days, when traditionally it would take about 55 days.”

Another benefit for banks to get on the digital mortgage bandwagon is the potential to increase origination volumes. Elliott did not comment on this, but it seems logical that the greater the speed of closing a deal, the more deals get closed, and that means higher loan origination volumes, especially given that — as Blend’s St. Geme said — more people are in the market looking to buy homes right now.

Based in Atlanta, SunTrust Bank, operates mainly across the Southeast and Mid-Atlantic states. The bank had total assets of $206 billion as of December 2017.