Data points to disconnect between technology spend and lender productivity

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FOMO, or fear of missing out, is a type of anxiety that stems from the belief that other people could be having fun or doing better while you are not. Most people are not immune to FOMO and new research from the STRATMOR Group found that mortgage lenders are not immune to this sentiment either.

In response to the question “Are we lacking the latest technology? which is often asked of STRATMOR, a mortgage consultancy company, the company published a new analysis report by Tom finnegan answer this question which is generally on the topic of automation in the digital mortgage space.

“It’s no surprise that executives and managers of mortgage companies are asking this question,” Finnegan said. “We know there is a strong interest in process improvement, which is reflected in the high participation in our operations, customer experience and direct workshops with consumers. The likelihood of declining volumes over the next few years due to exhausting refinancing opportunities, which will put pressure on profits and a premium on efficient trades, is pushing mortgage bankers to seek the best way to earn. income and spend their money.

As the pandemic has helped push digitization, Finnegan says lenders are pondering new technologies for fear of being left behind by other lenders implementing them when they should instead be focusing more. on “giving a technological context through the process and adoption”.

“Failure to make this significant change means they will never get proper feedback on any new technology they implement,” Finnegan said.

Based on data collected over the past 20 years by STRATMOR and the Mortgage Bankers Association, Finnegan found that there was no correlation between a company’s spending on technology and a lower cost of execution per loan or higher net production income for banks and the self-employed.

“We are unable to correlate technology spending with the profitability of production in the retail channel at this point,” Finnegan said. “If there was a technological silver bullet, the supplier of this ammunition would probably be the most successful mortgage software company on the planet. “

Finnegan went on to say that lenders should instead focus on the people who embrace their digital process and through whom they will use them to add value to the borrower, which can guarantee a return on virtually any technology the lender has. chooses to implement.

“That’s not to say that mortgage banks don’t need to stay up to date and on top of what’s going on in terms of technology and processes and continue to adopt improved technology within their businesses,” he said. Finnegan said. “A healthy concern for competition is a key ingredient in staying alert and improving operations. For example, meeting the customer the way they choose – whether in person, over the phone or online – the front end of the digital process has become a table issue in terms of customer experience, which cannot be ignored by lenders of any size. “

“But focusing the lender’s energy on identifying the best possible technologies is actually less critical than focusing on who will adopt and use the tools within the lender’s business and the process by which they will use those tools. tools to add value to the borrower. We’ve seen many instances where a strong, focused staff can overcome somewhat inferior technology, but few or no instances where a weak team can effectively deploy the latest technology.

Rather, businesses should focus not only on purchasing technologies, but also on their full adoption and on implementing process changes that will enable the best use of technology for both the lender and the consumer.

“Lenders who focus on their people and processes first will see a greater improvement in any new technology they implement, whether the Joneses use it or not,” Finnegan concluded. “STRATMOR continues to see the benefits of having an intense focus on the human and process aspects of technology adoption in our customers’ stores, ensuring that existing technology investments are fully utilized and integrated into the process, and that the new technology will work well. to the customer.

A full copy of the report is available here.


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