How do we identify innovation in the mortgage industry and how can we use it to make real change for our customers?
Innovation is a powerful word. Say it in a crowded business conference and you will get attention. In our industry, it has been said that innovation powers the bank brand, but what does that really mean?
Working inside one of the leading technology companies in the mortgage banking industry, approaching old problems in new ways and finding new opportunities hidden in plain sight are things we do every day. An outside observer would rightly call this innovation, but up close, it just looks like doing the very best we can for our customers with the technology available today.
Over the past few years, we’ve seen a number of companies take a different approach, seeking to disrupt everything around them and calling it innovation. That hasn’t been a very successful strategy.
Innovation can be a powerful positive force in a company as long as it is applied to a specific driver in the business. If the innovation doesn’t actually improve the bottom-line performance of the business, it’s likely a waste of time and money. If it’s not making a difference in the business, it may be innovation for its own sake.
Consider the activity the mortgage industry has seen around Point of Sale (POS) technologies. New technology aimed at interfacing with consumers at the very top of the funnel and improving the customer’s experience as they completed the loan application process seemed like an excellent opportunity to innovate.
As a result, we saw many new POS technologies created and implemented by lenders who wanted a better experience for both prospective borrowers and loan officers. And that worked, for a group of consumers who were ready to embrace those new online technologies and take advantage of those tools in a refinance environment.
Our research indicates that the borrowers who entered the pipeline through these new POS tools were driven there by LO’s and heavily weighted towards refinances. Time will tell the impact these POS technologies will have in a purchase money mortgage environment.
This is intended to take nothing away from the hardworking mortgage technologists who worked on these tools. They approached an industry problem in a new way and did good work. From the outside, it’s clear they took an innovative approach to the problem. The result, as it was deployed, just didn’t produce the results lenders needed.
Innovation isn’t a new product, it’s a mindset that allows it to be created. That’s the real purpose of innovation in technology development. It’s a mindset that allows developers to be open to seeing old problems in new ways and to seeking out new opportunities for their customers.
For users, the purpose of innovation is to improve their businesses. When it doesn’t do that, the result of the innovation is just a good exercise and should not be implemented.
What does this mean for the banker’s brand? Exactly the same thing. Those who are open to seeing their customers’ problems in new ways and seeking out opportunities to serve them better will have stronger brands and stronger companies.
By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence
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