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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   July 2019

Mobile Lending is the Next Wave

Borrowers are increasingly demanding digitally enabled financing solutions

Financial-services companies have developed numerous digital solutions to make life easier for retail consumers. Self-employed people in the gig economy can make use of various apps for cell phones — Venmo, PayPal, Cash App and more — that keep track of their payments and expenses while on the road. There are even apps that allow an individual to apply for a mortgage, upload documents and sign disclosures from their phone.

There are few tools, however, for millions of small-and medium-sized businesses — companies that the U.S. Small Business Administration say accounted for nearly half of the nation’s gross domestic product output through the first decade of this century. In this regard, the commercial mortgage industry has been lagging behind.

Mobile lending tools benefit not only the end user and borrower. Commercial mortgage companies that deploy mobile solutions will connect with more potential customers and do more business. What’s more, providing mobile conveniences to commercial real estate borrowers will soon no longer be an option for the few, but a likely necessity for all companies to remain successful.

Falling behind

Consider the construction industry, which serves as a good real-world example of this trend because it is a massive worldwide industry that has fallen behind the times. Global construction output is expected to rise to $12.9 trillion in 2022, according to a GlobalData projection. The U.S. construction industry is estimated to reach $1.4 trillion in output by 2021, the data-analytics company reported.

Given its tremendous size, the construction industry has had ample opportunity to adopt payment tools resembling Venmo or PayPal to simplify its traditionally tedious, costly and outdated payment processes. Tools that manage payment requests or project reports could help make the payments flow more smoothly. As with other industries, however, the construction industry continues to rely on paper-based, decades-old methods of tracking, managing and distributing loan proceeds. Many general contractors are storing and maintaining loan records using spreadsheets in which the data must be entered manually, and paying their subcontractors via paper checks.

This is an inefficient way to do business. Someone has to write those checks and distribute them, whether in person or by mail. Subcontractors must deposit the checks and wait for them to clear. This process is inconvenient for both the general contractor and the subcontractors, as it takes extra manpower to write and distribute the checks, not to mention that paper checks add additional cost and take longer for the funds to become available.

This example also rings true for many other industries. Many types of businesses need commercial real estate loans, but have no digital or mobile tools similar to the spectrum of options available to consumers to help them secure or manage these loans. Small-business lending is a $700 billion market that serves more than 29 million borrowers in the U.S., according to fintech company Abrigo. There is a significant need for mobile tools that can help simplify how millions of small businesses manage billions of dollars each year.

Getting mobile ready

Commercial mortgage companies that fail to implement mobile solutions also run the risk of losing step with their clients and falling behind their competitors. Society becomes more dependent on technology by the year. A new generation is entering the workforce. Millennials, as well as older members of Generation Z who are now in their early 20s, are working and some already own their companies.

These younger generations expect mobile solutions to help simplify their work and stay on the go. The next generation of workers and borrowers will not be satisfied with antiquated and time-consuming processes. Mortgage companies will likely soon have no choice but to offer mobile loan-management solutions for all commercial real estate borrowers.

What’s more, it will not be enough for these solutions to be digital. They must be mobile enabled to meet the demands of today’s market. The mobile platform is already huge. According to the Pew Research Center, 95 percent of Americans own some kind of cell phone, with 77 percent of those being smartphones. One in five Americans are already “smartphone-only” internet users, Pew reported.

Access to mobile technologies is crucial to business owners in busy industries like construction, where much of the work takes place on the job site and not in an office. Builders and contractors can accomplish more in a day when they can do much of their office work outside the office.

It is critical that today’s businesses have access to technology that fits with the demands of their respective industries. With small- and medium-sized businesses making up such a large part of the economy, it is crucial that they be provided with tools that simplify their work and enable their companies to continue to grow. When these businesses have access to mobile tools that fit the needs of their industries, it greatly expands what they are able to accomplish.

It is worth emphasizing that the benefits of offering mobile tools are not only for the borrowers and the end users. Lenders and other financial institutions that provide these solutions will strengthen their relationships with their local small- and medium-sized businesses, and form new relationships.

• • •

When it comes to mobile tools, successful mortgage professionals will provide technological solutions that simplify not only the borrower’s processes, but their own work as well. Lenders, mortgage brokers and other financial-services companies can experience a priceless return on their investments into this technology. And there is no dollar figure that can accurately describe the value of a strong business relationship.


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