By Andrew Weiss – Partner, Technology Practice at BlackFin Group
No one familiar with the Mortgage Industry disputes the fact that technology is a necessary part of being in this business. In fact, many would say technology is a “necessary evil”; surveys suggest that few lenders are happy with their technology platform, in a recent survey by BlackFin, 70% are only somewhat satisfied with their LOS, indicating there is a LOT of room for improvement. And as expected, most seasoned mortgage professionals see that the business operates an awful lot like to the way it did in 2000 except that costs have gone through the roof.
At the same time, our industry is filled with Vendors who are promising that if a credit union chooses their product, huge efficiencies will follow while innovations like AI and Mobile will make prospective Borrowers flock to your company and make originating Mortgages a snap. So, who needs a strategy? All a Credit Union needs to do is choose the best tech and away we go, right?
Obviously, my description is a little “tongue in cheek”, but the emphasis on choosing Vendors as a substitute for a real strategic plan for technology does pervade our industry. So, let’s talk about what is a Technology Strategy, its relationship to the overall Mortgage Business Strategy, and how one would go about creating one.
A Technology Strategy has several components: it should describe a set of goals that technology will directly impact, the major components required to deliver on those goals, and ways the goals will be measured.
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The goals, and ideally there will be several, frequently include a specific constituency – we will deliver 25% better Member Service, for example – and should ideally strike a balance between being aspirational and being achievable.
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The components should be described in terms of collections of capabilities rather than products. They should recognize and document the relationship between the major components and the goal they support. A given component may support more that one goal, or several components may be required for a given goal.
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Measures are key to a good Strategy not only as a marker of success, but also to refine the implementation if the goals are not being appropriately met. While some measures might be less tangible, as in the Member Service example above, several measures should be as objective as possible including having financial measures.
The Technology Strategy should certainly be reflective and supportive of the Lender’s Business Strategy, but there may be opportunities for the Technology Strategy to augment and even drive elements of the Business Strategy. In the Mortgage industry there are several instances where technology became central to the institution’s plans and business success, the most prominent of which include Rocket Mortgage, United Wholesale, and even the GSE’s adoption of AUS in the late nineties. There are a host of less visible examples as well. That is not to say the organization’s business must be driven by technology, just that as the Strategy is created, evaluating those potential opportunities can be important.
So, how should a Credit Union go about creating a Technology Strategy? First, ensure you’ve got the right cross-functional team pulled together. Firms like BlackFin Group, who have done this many times before, can be an invaluable addition to the team. Make sure you know all the right stakeholders who will be impacted by the Strategy and will need to align to the Strategy when it is developed. And keep an eye on making the Strategy actionable – including choosing Vendors – because the Strategy is only meaningful when it is implemented. Developing a good Technology Strategy does not need to be a lengthy process; the commitment of the core team and access to the stakeholders will define the overall timeframe. As the elements of the Strategy are implemented and as market conditions change, it is a good idea to revisit the Strategy to see if there are opportunities for refinement.
A Technology Strategy is a critical element of a successful Mortgage Operation, so to answer the question posed in the title, everyone needs a Technology Strategy.
Andrew Weiss, Partner, leads the Mortgage Technology Consulting Practice at BlackFin Group. Andrew has been consulting mortgage technology with Credit Unions for over 35 years. Project engagements include advising lenders on selecting the right technology, implementations, and optimizations of tech stacks. Weiss previously served as SVP of Platform Strategy at Origence, was Principal at STRATMOR Group leading the technology practice with industry legend Len Tichy. He was CIO at New Penn Financial, SVP of Strategy for Bank of America and Executive Consultant with Newbold Advisors. Starting his career designing Fannie Mae’s DU platform. For more information contact info@blackfin-group.com