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How Can Digitization and Blockchain Improve the Home Equity Underwriting Process?

Underwriting gets personal: A family matter


“When my friends moved to the suburbs they bought a small fixer-upper, envisioning a beautiful home for their growing family. As they prepared for the new baby, they decided to use a HELOC to finance renovations, including a nursery. They expected a quick and smooth process, but instead faced a frustrating, months-long ordeal with little transparency and delayed funds.

Without these funds, they couldn’t start the renovation for the nursery—and the baby didn’t wait. The slow place and lack of transparency made them feel helpless, and ultimately meant that they were stepping over tarps and dealing with construction noise in their baby’s first weeks home. Why wasn’t the HELOC processing more efficient?”

Oftentimes, the home equity underwriting process for a HELOC prevents folks from getting approvals (and funds) quickly—which can be extra challenging when consumers are relying on the funds for immediate needs like welcoming a new baby home.

The speed and efficient processing of HELOCs could be greatly expedited with  digitization efforts. But how will the digitization of underwriting platforms and blockchain utilization affect the home equity lending process? There are new technologies enabling the HELOC process to be done in one-tenth of the average time. These digital upgrades also enable greater transparency, easier servicing and distribution and better recordkeeping. Here’s how it works.

Digitization of HELOC underwriting

Digitization underwriting platforms reduce paperwork and manual verification, meaning loans are more accurate and are approved quickly.  By utilizing automation and data analytics, lenders can quickly analyze the applicant's credit history, income and assets, reducing the likelihood of errors and fraud. New data sources enable faster and more accurate credit scoring of borrowers. The automated platform also provides instant loan decisions and updates, increasing transparency and efficiency.

Utilization of blockchain technology 

Blockchain technology can provide a secure and tamper-proof record of loan transactions and borrower information, eliminating the need for intermediaries. This improves transparency, efficiency and security throughout the lending process. With blockchain, lenders can share information and verify the accuracy of borrower information in real time, improving the overall loan quality and reducing risk.

Additionally, smart contracts on blockchain can automate and streamline various steps in the loan origination process, such as collateral verification and payment disbursement, reducing operational costs and risks. As the industry adopts this technology more broadly, these benefits will be increasingly realized in servicing and distributing loans.

Improved customer experience 

By digitizing the underwriting platform and utilizing blockchain, lenders can provide a more streamlined and convenient customer experience. Borrowers can upload their financial information and documents online and receive instant feedback and loan decisions.  In many cases, they can grant access to all the necessary information with just a few taps or clicks.

With blockchain, borrowers can also track the progress of their loan application and loan payments in real-time, providing greater transparency and reducing confusion.  The entire process can be completed quickly and smoothly from an attractive mobile app or website. Hassle-free, empowering experiences have customers coming back for more services and telling their friends.

Lower operational costs

Digitization of the underwriting platform and blockchain utilization can also reduce operational costs for lenders. The automation of the loan origination process can reduce the need for manual processing, lowering the overhead costs. Additionally, blockchain can reduce the risk of fraud and errors, lowering the likelihood of losses and reducing the need for costly audits. Together, these improvements significantly reduce the demand on customer service.

Publicis Sapient’s banking modernization and blockchain best practices 

Publicis Sapient is a leader in banking modernization and digital customer experience.  With the development of blockchain and Web3, we have now created and deployed an industry-leading platform accelerator to launch enterprise wallet infrastructure solutions for our clients.

We set up, execute and maintain distributed ledger solutions to complete the most secure and compliant blockchain transactions in the industry. With our decades of experience in digital customer journeys, user interface creation, web design, strategy and engineering, we wrap this technology in signature customer experiences. The core of our work is to determine digital transformation ROI, customer pain points and product partners while defining hypotheses, prioritizing work and creating MVPs. Utilizing data analysis and machine learning, we innovate and provide comprehensive services from proof of concept to industry-leading solutions.

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Zachary Michaelson
Zachary Michaelson
Senior Director, Financial Services