The big winners in the race to build profitable consumer franchises in cyberspace will be those that move quickly to turn transactions into long-term relationships. Mortgage lenders are in an enviable position. What other consumer product has a 30-year life that requires interaction between buyer and seller each and every month?

But mortgage lenders have typically foregone the relationship potential in their zeal to cut costs in what has become a highly competitive business. Loan officers, and the organizations that support them, are understandably focused on The Deal. And once a mortgage closes, there are ten other deals to birddog, 100 more leads to follow, and so on.

Building “relationships” is often delegated to others that don’t have their paycheck determined by the dollar value of mortgages booked that month. The hand-off to others for cross selling can introduce delays and other glitches into the process making it expensive and inefficient.

But Internet-based solutions can eliminate these inefficiencies. Using wired connections to online customers, mortgages can be leveraged into complete long-term financial relationships. Here’s how:

How to Become the Primary Financial Institution of Mortgage Customers

1. Make the refinance process work perfectly.

2. Communicate constantly abut the status of the loan while it’s in process then continue the communications with monthly email loan status reports for the life of the loan (see example, p. 6). Compare the user’s loan to market rates and don’t be afraid to recommend another refi if interest rate conditions merit it.

3. Increase the frequency of your Internet-based interactions by encouraging users to make their mortgage payments at your Web, or via preauthorized deductions combined with email confirmations.

4. At every customer touchpoint, ask a single new question. For example: “Are you satisfied with your mortgage?” or “Are you considering any home improvements?” Combined with the information contained in the application, you will soon build a powerful database of the user’s financial situation and loan preferences. ð

5. Go for the easiest cross sale first. A month or two after the refi closes, preapprove an equity-secured line of credit based on the information in the original loan application. The combination of tax advantages, no loan application, no appraisal, no title insurance, and no hassle, will prove nearly irresistible. Pricing can easily compensate for risk.

6. Add a transaction product to the mix to make it easier to tap the line of credit. It should be free to encourage usage. First choice: a credit card with Web-based statements combined with Web-based pay-anyone bill payment.

Either of these services can be used without requiring the user to endure the headaches of moving their checking account. As transaction product usage expands, your Web gradually takes on a larger role in the user’s financial life. But don’t repeat Countrywide’s mistake of charging $9.95/mo for bill payment. You want users to think of you as more than just a mortgage provider. Don’t price yourself out of the market.

7. Once you begin seeing usage on the transaction services in number six, go for the deposit account sale: money market, interest-bearing checking, or non-interest checking depending on the user. But don’t spin your wheels trying to get users to close their existing checking account. Your “master checking account” can work in tandem with the user’s existing local checking account.

Automated interbank transfers can sweep the lion’s share of direct deposits into your master account. The remaining balance in the local account will allow users to make use of free local ATMs and brick-and-mortar-based services such as depositing paper items, accessing a safe deposit box, and purchasing the occasional money order or cashier’s check.

A really proactive lender could even pick up the tab for the monthly fees on the local account. It might even be a cheaper solution than subsidizing foreign ATM transactions. If all this sounds complicated, it is. But by using Web-based forms and self-service, much of the complexity can be shielded from users.