Operational efficiency happens when your team is executing against a strategic plan in the most productive way. Your people, processes and technology are in cadence and you're achieving high performance lending which leads to satisfied borrowers, more closed loans, higher profitability, and all with the highest level of regulatory compliance.
Operational efficiency means that your business runs the way it was meant to run. It means that the firm accomplishes what management has set out to do, and it doesn’t waste resources along the way. In the mortgage industry, this results in satisfied customers, more closed loans, higher profitability, and regulatory compliance.
The two best metrics for measuring operational efficiency are Velocity and Productivity.
In a recent article entitled, The Key to Increasing Your Lending Team’s Productivity. we looked at how knowing their productivity rate helps lenders assess the effectiveness of their people and process. How many loans is your team closing each month? The higher the ratio of closed loans to staff members, the more productive your origination business is.
Two keys to productivity that we looked at were maintaining low labor costs and cross-training employees. But productivity alone does not guarantee operational efficiency.
A team can be highly productive, but if they can't close loans quickly they won't be closing as many loans as they could. They will often lose out to lenders who have higher loan velocity.
In another recent article, 5 Ways High Performing Lenders Set Themselves Apart, we examined the necessity of innovation and teamwork. These are essential if loan velocity is to be both achieved and consistently maintained. It takes good people and the right technology to close loans quickly.
So, what is the key to achieving and maintaining efficiency in the lending business? Productivity depends upon having good people and velocity is often a factor of the right technology. But without a solid, thoughtfully designed process in place, neither productivity nor velocity, on their own, will guarantee efficiency.
Process is the key to operational efficiency.
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