Technology is changing how borrowers do business A survey of lending professionals and IT experts August 2018 Sponsored by:

Executive Summary This research finds that the consumer loan market has changed, and as the market changes new types of lenders are positioned to capture market share. Industry professionals indicate that more than 8 out of 10 borrowers prefer an online loan process. Those same online loan processes are faster than, and taking business from traditional lenders. 72% said getting new technology to market fast is key to combating competitors. Online loan technology needs to be fast, provide user accessibility and supply secure, quality data. Online loan solutions need to be easy to use and adapt for loan professionals. Lenders with flexible and quick-to-deploy technology will be better positioned for ensuing competition. More than 9 out of 10 of those surveyed indicated online banks are threatening brick and mortar lenders today. These traditional lenders are under siege from both fintech and technology juggernauts entering the market. This evolving market is further threatened with possible upheavals from the political arena.

Key Findings Consumer loan market has changed • 81% share that borrowers prefer online loan solutions • 87% indicate online loan processes are faster than traditional processes Traditional lenders are under attack • 85% state online loan solutions are taking business from traditional lenders • 93% reveal online banks pose serious threat to brick and mortar banks • 81% indicate digital and technology companies are better positioned for consumer loan growth Time to market is key • 72% indicate time to market critical for new technology

Detailed findings

81% share that borrowers prefer online loan solutions 9% NO 19% In your opinion, do most borrowers prefer an online loan process over a traditional paper loan process? 9% 81% share that borrowers prefer online loan solutions NO 19% YES 81%

In your experience, does an online loan process typically result in faster loan processing than the traditional paper process? 87% indicated online loan processes are faster than traditional processes NO 13% YES 87%

In your experience, are companies with online loan process technology (i.e. Rocket Mortgage) attracting business away from traditional lenders? 85% state online loan solutions are taking business from traditional lenders NO 15% YES 85%

In your experience, which companies pose a legitimate threat in the consumer loan market? Rocket Loans (Quickens) Amazon Lending Club Loan Depot Better Mortgage SoFi No company posts a threat to the current market 93% reveal online banks post a serious threat to brick and mortar banks

In your opinion, which of the following types of companies have the largest advantage for growing their consumer loan market share? 81% indicate digital and technology companies are better positioned for consumer loan growth Traditional financial services companies adopting new technologies (Goldman Sach’s Marcus, Bank of America’s Erica, etc.) Digital/fintech companies (SoFi, Lending Club, Better Mortgage, etc.) 19% 56% 25% Tech behemoths (Google, Amazon, etc.)

Over the next 12 months, what are the top lending business challenges your company is concerned about? Reducing costs, attracting new borrowers top challenges in market competition Reducing costs Attracting new borrowers Regulatory compliance Retaining loan officers Existing loan process Takes too long Margin compression

72% indicate time to market is critical for new technology 28% 72% Is speed of technology rollout more important than having a customized solution? 72% indicate time to market is critical for new technology 28% No, customization with process integration is more important 72% Yes, getting to market fast is critical

For companies offering an online loan solution, which of the following are key capabilities? Performance (fast and responsive) Performance, accessibility and information quality – are critical for online loan solutions Secure document upload and sharing Customer accessibility from different devices (computers, tablets, phones, etc.) Loan process tracking and notification Connecting to verified borrower data Scalability (supporting 1,000 of users simultaneously) Automatic compliance and reporting Robust integrations to other lending technology Access to APIs for custom integrations

Methodology and participants

Goals and methodology Research Goal Methodology Participants The primary research goal was to understand the current state of consumer loan market and emerging trends. Additionally, the research sought to understand the effects of technology and success of new industry entrants. Methodology Loan professionals and IT experts were invited to participate in a survey on consumer loan processes, technology and competition. The survey was administered electronically and participants were offered a token compensation for their participation. Participants A total of 350 participants having consumer loan responsibilities completed the survey. Participants were from the United States and represented various company sizes.

Companies represented Company size More than 10,000 9% 5,000 – 10,000 21% 50 -500 10% 23% 1,000 - 5,000 37% 500 - 1,000

Companies represented Participant responsibilities? 6% I have infrastructure or software responsibilities supporting loan processes I have oversight responsibilities for consumer loan processes 14% 80% I have direct involvement with consumer loan process

Companies represented Role Front line professional Or admin (business) 1% Front line professional Or admin (IT/technology) 5% 8% Team Manager (IT/technology) 35% Executive (Business) 23% Team Manager (Business) 28% Executive (IT/technology)

For more information About Dimensional Research Dimensional Research provides practical marketing research to help technology companies make smarter business decisions. Our researchers are experts in technology and understand how corporate IT organizations operate. Our qualitative research services deliver a clear understanding of customer and market dynamics. For more information, visit www.dimensionalresearch.com.