Blog view: As we continue to work towards the fall conference season, we’ve been getting a lot of messages telling us that we have something new to offer.
This, of course, gets our attention. When it comes to mortgage technology, being “old” is a trap that costs lenders their business.
At our company, we noticed that some companies were promoting new services when in fact they had just updated their marketing materials.
Attempting to compete in the purchase capital market without the latest tools is a surefire way to frustrate borrowers and the real estate agents who represent them.
Our team was in Nashville last month for the Mortgage Bankers Association Annual Convention and Expo. It hosted a roundtable discussion where industry leaders gathered to discuss the new demands the industry is responding to from both borrowers and business referral partners.
New demands are best met, and often only with new tools.
We spoke with industry leaders about what they would like to see when it comes to mortgage technology and what they plan to do with the systems they invest in.
Three key concepts emerged from this conversation.
it’s about experience
The main reason lenders are adopting new loan origination tools today is that it is impossible to meet the expectations of today’s borrowers using old technology. There’s just too much friction in that process, and consumers are spoiled by giant tech companies to see friction as a personal insult.
Leaders have long known the need to improve the borrower experience. Over the last few years, the mortgage industry has made remarkable strides in that direction. But the error tolerance is very low. Borrowers have no patience for poor experiences. They will simply go to another lender.
And they’re not the only ones heading for the exit. In the Purchase Money Market, real estate agents drive the bulk of the mortgage business. They will not work with lenders that do not have the ability to provide a good borrower experience. Why should they?
Of course, it is also important that technology meets the needs of the lender’s employees. Much of the technology that has been deployed over the last few years is designed to improve the borrower experience, and that’s a good thing. It does not improve the experience of employees who are
New technology provides a better user experience. Your team can be more productive. And, perhaps most importantly, it helps lenders attract new employees. At a time when hiring top talent has never been more difficult, lenders cannot afford to continue operating with outdated technology.
it’s about innovation
But it’s not just the experience. It’s also about the ability to create new experiences that help lenders get loans faster and cheaper. This can be difficult in a rapidly changing business. It was less than a year ago when lenders could barely keep up with the volume of loans coming in. Today there are forecasts that suggest the business will shrink in half by the end of next year.
Keeping pace with change requires access to the latest technology and partners who are prone to innovation. When lenders are asked to sign long-term contracts with their technology providers, they lose the incentive to renew tools already sold by vendors. Signing a long-term contract virtually guarantees that the lender will be stuck with a product that has just aged for five to ten years.
The results are clearly visible in today’s industry. Lenders desperately need better tools, yet some large legacy technology providers continue to offer the same old tools.
But it’s not just the technology partners’ own innovation capabilities that matter. Other third party his technology developers are constantly creating new tools. But if the developers of the core system don’t allow lenders to connect in an easy and affordable way, lenders won’t get those benefits.
They are trapped in the past with outdated tools.
it’s about flexibility
Much of the innovation required to remain competitive in the mortgage business occurs beyond the IT department, much of it in the development of new loan programs. Offering something new, or an old product in a new way, gets the attention of both the borrower and their agent, and the lender wins more business.
But this is not possible with older tools that do not offer lenders the flexibility they need.
Each lender is different, from the products they offer, to the geographies they compete in, to how they staff. Mortgage leaders need the flexibility to create their own workflows. This allows you to direct specific loan products to specific routes, removing friction, speeding up the initiation process and reducing costs. The old tools cannot do this.
Outdated technology is a trap that keeps lenders stuck in the past while competitors move forward. It’s more dangerous because lenders often can’t tell by looking at marketing materials whether they’re considering outdated tools that have disappointed borrowers and their realtors for years.
The way to avoid this trap is to demand the best new tools, work with technology partners with a history of innovation, and encourage internal teams to get the most out of every new technology implemented.
Joe Camereri mortgage cadence.