Case Study: Amen to E-Loans

Joe Kennedy, president and chief operating officer at E-Loan, knows the knot that twists in your stomach every time you have to meet with a loan officer. The existing system is based on the lending institution taking you for all it can get—and there's nothing you can do. Or is there?

"We built a site to get rid of that system—and to make the process more straightforward and efficient for everyone," Kennedy says. It's no wonder that E-Loan (www.eloan.com) now claims 25 percent of the online mortgage market. Web mortgages still account for only about 1.6 percent of all home mortgages. But Forrester Research predicts that amount will rise to 10 percent by 2003. Other analysts place it higher still.

In other words, E-Loan sees room to grow. That growth will come at the expense of conventional lenders. Mortgages are an obvious—and profitable—source of revenue. So are car loans, which is why E-Loan bought Carfinance.com from Bank of America last September.

Borrowers are certainly sold on the convenience of online loans. But fairness is the selling point. E-Loan does the loan shopping for you. "Our business is built around the customer," says Kennedy. "From the first to the third quarters [of 1999], our home purchase mortgages have gone up by 10 percent. Our biggest focus is on delivering great customer service."

Those fed up with the indignities of applying for a loan will sigh a collective "Amen."