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5 Things to Consider When Choosing a Digital Mortgage Vendor

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Cloud Banking PlatformDigital TransformationMortgage


key points
  • Choosing a digital mortgage vendor can be difficult, but investing in a digital solution is vital in staying competitive within the mortgage industry.

  • Finding a seamless, end-to-end platform can be simple with the right strategy.

  • Follow these five tips for researching and choosing the right vendor for your financial institution.

Choosing the right digital mortgage vendor can feel daunting. Mortgage lenders must consider not only their own business needs, but also federal regulations that impact how they manage and access their borrowers’ data. In an increasingly tech-heavy mortgage environment, lenders are navigating new digital solutions to fix old problems.

But with these exciting new breakthroughs comes the possibility of data compromises, disjointed products, and compliance problems.

How can lenders successfully vet vendors? What are some indicators that a mortgage vendor is well-positioned to deliver operational efficiencies while adhering to appropriate compliance standards? We’ve put together a list to help lenders better research potential vendors.

1. Data Management and Security

Lenders should consider how potential vendors address privacy and data security. One green flag lenders should look for is a Service Organization (SOC) 2 Type II certification. This certification is created by an independent third-party auditor that evaluates how a company safeguards customer data, and how well those controls are functioning. Vendors who obtain this distinction have implemented the appropriate tools to protect the confidentiality, availability, and integrity of their customers’ data.

Another important security measure is regular penetration testing. Penetration testing are simulated cyber attacks against a system to expose weaknesses and determine whether or not security systems are working as intended.

Lenders should also look for digital mortgage vendors that create and actively adhere to sensitivity classifications. These classifications are guidelines to determine who can view and share potentially-sensitive company data. These types of guardrails are crucial in a company’s data security protocols.

2. Engineering and Product Development

The mortgage industry’s cyclical nature means lenders must constantly adjust to evolving customer needs, competitive pressures, and regulatory requirements. These market fluctuations also mean lenders should seek a vendor whose engineering and product development strategies are nimble.

One such nimble framework is Continuous Integration and Continuous Delivery (CI/CD). While CI/CD has roots in the lean production methods introduced by Toyota more than 50 years ago, software developers are also starting to see its benefits. The CI/CD methodology delivers fast feedback loops, allows errors to be caught quickly, reduces unnecessary software inventory, and lets DevOps teams deploy their work earlier and more often, leading to better innovation and higher morale. Digital mortgage vendors that adopt this approach can minimize the risk associated with implementing new technology, accelerate time to market, and improve the quality of new product enhancements. When vendors have more efficient control over their product development, lenders win.

3. Third-party and Partner Procedures

Lenders should seek a digital mortgage platform that takes the vetting of third parties such as contractors, consultants, clients, and vendors seriously. Proper vetting includes subjecting partners to background checks, initial due diligence, and security assessment to evaluate risk.

A digital mortgage vendor should consider requiring all third parties to follow the same security policies and practices. Annual due diligence reviews, verifying that all third parties follow security policies, are another essential component of vendor management. Digital mortgage vendors must prioritize third-party compliance so lenders can enjoy a secure, seamless solution.

4. Fiduciary Responsibility

Investigating a digital mortgage vendor’s financial standing should be a key component of any lender’s research. Lenders can leverage earnings calls, analyst reports, and reputable news sources to get a better sense of a vendor’s financial health. Digital mortgage vendors that exhibit consistent fiduciary responsibility and growth are more likely to weather the storm during economic challenges and flourish during economic upswings.

These vendors are in a more solid position to continue their investment in research and development which translates into new products and enhancements, ensuring lenders receive ongoing value from their technology investments. When vendors prioritize research and development, lenders gain access to a wider range of dynamic solutions to fit their needs, ensuring a vendor can meet the lender’s expectations as their mortgage business evolves.

5. Reputation

Finally, mortgage lenders should consider the reputation of the vendors they’re researching. Are they well-respected in the industry? Are they admired for their innovation, strong customerrelationships, and experienced leadership? Lenders must be cognizant of how a vendor with substantial mortgage experience across all departments impacts the company’s growth, vision, and solutions.

For example, having access to experienced support staff and designated customer service managers helps lenders quickly address tech issues, add users, and complete training. Vendors that meld cutting-edge technology with expansive industry experience are better positioned to build long-term solutions, anticipate industry turbulence, and deliver white-glove customer attention. Lenders should seek out vendors whose products are built for mortgage experts, by mortgage experts.

Lenders who want to successfully overcome economic challenges in 2023 should evaluate potential vendors with an eye toward data security, innovation, and established leadership. It’s important to remember that all these working parts must function in unison to deliver a solution that benefits the lender’s bottom line while maintaining the highest levels of compliance and legal integrity. With the right strategy and attention to detail, lenders can find avendor that checks all the boxes.

Finding a seamless, end-to-end platform can be simple. Learn more about nCino Mortgage.

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