Financial Technology (FinTech) companies change the hard money landscape every day. These new FinTech firms like Realty Mogul, Patch of Land, Fundrise, Peer Street, Lending Home and others exploit the Internet’s connectivity, computing power, band width and electronic communication patterns to create new markets like peer to peer lending and enhance legacy business’ including Hard Money. Today’s Blog explores 5 Fin Tech elements that have infiltrated the hard money lending and Trust Deed Investment landscape: The 5 top Fin Tech influences in Hard Money Lending (HML) are:
- Social Media Marketing: FinTech’s DNA is in Social Media. Endorsing, influencing, referring, and recommending via Social Media has assisted many FinTech startups gain user and Venture Capital traction. Profitability, scalability, and business model longevity remain concerns in the pure FinTech world, however their transformational technologies and business models have clearly influenced traditional lenders. Hard Money lenders now embrace Social Media, and as the lines blur amongst the top social media sites, wise expenditures and deployment strategies will succeed.
- Big Data: In marketing, Hard Money Lenders continue to gather, analyze, and deploy Big Data based decisions. For example, clicks from targeted email marketing campaigns are being reviewed with borrowers receiving targeted loan program ads as a result. New Digital Marketing companies dissect Google Ads, traditional SEO metrics and results. In borrower underwriting, new data sources provide better data on Background, Credit, income, and employment. In property valuations, Zillow, Redfin, and other Automated Valuation Methods quickly provide increasingly accurate valuations.
- Artificial Intelligence (A.I.): Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Prospector Automated Underwriting systems provide fast and comprehensive decisions for conventional loans. Automated Underwriting for Hard Money Loans, where every loan has a story, remains the Holy Grail. In a TED Talk 2 years ago, data scientist Jeremy Howard noted that Artificial Intelligence (A.I.) already is better in some instances at cancer than expert pathologists are. “We now know that computers can learn to do things that we actually don’t know how to do ourselves…The better computers get at intellectual activities, the more they can build better computers to be better at intellectual capabilities, so this is going to be the kind of change that the world has never experienced before.”
- Tech Savvy: Similar to FinTech Companies, many Hard Money Lenders operate virtually with loosely coupled but tightly integrated systems that support a loan from Origination to Servicing. Cloud computing based Loan Origination Systems are now commonplace with notification, workflow and decisioning technologies that move a mortgage through the approval process. Most HML’s deploy mobile enabled interactive technologies providing customers access any time of day or night. Digital Filing in the Cloud through Drobox, Google Drive, One Drive or iCloud facilitate fast decisions efficient, collaborative processing.
- Customer Oriented Mindset: To compete effectively, hard money lenders have had to focus on the customer more than ever. A variety of loan programs combined with mobile access on multiple devices using self-guided tools, allow borrowers to understand loans better. Constant, personalized communication enables a better customer experience.
The very factors that differentiate FinTech’s from traditional HML firms are often the keys to the success of these morphing “Fintechgrated” HML companies. Further work is needed. More integration, more data, more decisioning with Realtors, Brokers, Borrowers, and Sellers is surely on the horizon. Targeted products like Facebook ads, better and more relevant updating, increased collaboration and faster processing are on their way. I can’t wait!
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