BMO Harris Bank is eliminating most mortgage loan officers who meet customers face to face and now directs people who want to buy a house or refinance to its centralized mortgage call center.
The Chicago-based bank said the move – and a new online mortgage application platform coming soon – reflects changing customer behavior trends and actually offers time and ease benefits for mortgage applicants.
“Things evolve, and we have to change with the times and with our customers’ wants and needs,” said BMO Harris spokesman Patrick O’Herlihy.
BMO Harris is not saying how many people have lost their jobs in the move. But a document sent to a laid-off employee shows the switch to call center mortgage applications is eliminating almost 170 positions in the bank’s eight-state market territory.
Overall in the banking industry, visits to branches – including consumers coming in for mortgage applications – are declining, said Greg McBride, chief financial analyst for the personal finance website Bankrate.com. That means fewer mortgage loan officers are needed in branches, he said.
"It's changing because they're not being utilized. We don't use horses and buggies much either, because we have cars. The growth in mortgage applications has been in the digital realm," McBride said. "Use of call centers or video conferencing centralizes the taking of applications and provides a human interaction in a more efficient manner than stationing someone in a branch."
Still, the move to a centralized mortgage banking team at a call center could seem uninviting to some consumers.
For example, use of a call center might seem uninviting to new customers who want to talk in person about their first home loan, said bank analyst Jon Bruss. After their first mortgage, however, borrowers typically become increasingly comfortable working with a bank over the phone or online, he added.
“I think that for the person who is going to be a first-time homeowner and is not well-acquainted with the whole process, a face-to-face (interaction) is valuable,” said Bruss, chief executive of Fortress Partners Capital Management Ltd. in Hartland, Wisconsin. “But beyond that, I don’t think it’s necessarily important.”
Some other large banks, such as Associated Bank and U.S. Bank, still offer mortgage applicants an in-person meeting with a loan officer if they wish, and most smaller community banks do, too.
But as financial technology improves and spreads and consumers become more attuned to it, there’s little doubt that more mortgages are taking place without the applicants first shaking hands with a loan officer.
O’Herlihy said BMO Harris’ switch to a call center isn't less accommodating to consumers.
“From our perspective, there’s some benefits for the consumer,” O'Herlihy said. “You’re going to get immediate availability of a mortgage banker, and that wasn’t always the case in the past. You might go in, and a mortgage banker might be traveling, and you might not get them right away. Now you’re going to get them immediately.”
In addition, “You get quicker responsiveness and turnaround,” he said.
“There will be more expertise under one roof. We’ll have the underwriter, the processing and other mortgage-related expertise all sitting together,” O’Herlihy said.
Some banks still believe it's important to have a loan officer to help in person at branches.
Mark Kraft, a mortgage manager for U.S. Bank in the Milwaukee region, said his bank "has made a cognitive decision to keep a live body – if the customer wants that – in front of them" during the mortgage process.
Kraft said, however, that applicants often can be coached over the phone or in person to use the U.S Bank's "Loan Portal" app to obtain fast approval.
"U.S. Bank wants to help those customers online if they want to be online, on the phone if they want to be on a phone or in person," Kraft said, explaining that a loan officer in a branch can help a mortgage applicant with any of those methods.
Associated Bank also takes mortgage applications on the phone, online or in person at a branch, said Dave Bauer, director of mortgage sales.
"We're not envisioning any dramatic change like some others have announced. We like the way we're approaching it. It gives the customer that flexibility," Bauer said. "That said, a higher percentage of borrowers are applying online. Every year, that goes up. But the majority still come through the branch channel."
O'Herlihy said people who come to a BMO Harris branch to apply for a mortgage will be directed to – right there at the branch, if they wish – dial the call center.
O'Herlihy said BMO also is developing a new online mortgage offering as it moves away from in-person applications.
"We have plans to launch a new online mortgage platform to allow customers to apply for a mortgage from any device," O'Herlihy said. "I don’t have the exact timing, but it’s soon."
He stressed that BMO Harris isn't getting out of the mortgage business and doesn't see less value in branches.
"Our branches are still critically important," O'Herlihy said. "It's just a different way of handling mortgages."