There are three reasons that lenders are entering into conversations with us now regarding the simplification of their tech stacks.
Over the past 20 years, we’ve seen an impressive amount of new technology developed, refined and made available to business operations. In our own industry of home finance, we’ve seen some incredible advances during this period.
So far this century, our industry has lived through a subprime lending crisis, a global financial crisis, a foreclosure crisis and a global pandemic.
Each of these events created a variety of new demands that resulted in significant industry innovation. Today, lenders enjoy more technology options than ever before in history. And many have invested in them.
The result has culminated in a sort of technology bloat that has saddled lenders with multiple tools that get limited adoption because their use cases overlap with other tools in the lender’s shop.
It’s time for lenders to consider simplifying their tech stacks. Doing so now will save them from having to figure this out when the market returns and their teams are moving too quickly to change.
There are three reasons that lenders are entering into conversations with us now regarding the simplification of their tech stacks. We’ve already mentioned the first one.
Lenders believe they will soon be too busy to make changes
We’ve talked to a number of lenders who say they have reason to believe that the market will open up to more borrowers in the new year. They expect the first half of 2024 to be a significant improvement over the first half of this year and feel that any changes they are going to make in their process should happen before the end of the year.
If they are right and we do see falling interest rates in the new year bring more borrowers back to the table, the lenders with a streamlined loan origination process that delivers customer satisfaction will win more of that business.
With volumes low and the need for efficiency high, this seems like the best time to have these discussions. Which leads us into the second reason we’re hearing.
The need to reduce costs has never been greater
Lenders are paying a historically high cost to originate, and their profitability is low. We have more capacity than we need in the industry today, but lenders are hesitant to let experienced staff go in case the market turns around more quickly than anticipated.
Streamlined workflows and simplified tech stacks will reduce overall costs.
The best tools are now integrated into the LOS
Finally, the best news is that the technologies developed during previous crises have now been improved and proven. Many of them are now integrated directly into the LOS. In the case of MCP, the sales system, product & pricing engine, secondary marketing center and more are native to the platform.
There is a three-step process that lenders can use to begin the process of simplifying their tech stack and streamlining their operations.
There is a lot of work behind this initial process, including making sure the LOS is the best available to meet the lender’s workflow needs and choosing among existing tools the lender may already have that they need for their ideal workflows. But, in general, this work is not nearly as difficult as choosing, vetting and implementing a new core system.
If you’re beginning to wonder if your current tech stack is overly complex, too expensive and not well suited to deliver what you really want for your users and borrowers, we should have a conversation. Making changes now will put you ahead of the game when the market turns.
By Joe Camerieri, EVP, Sales & Strategy at Mortgage Cadence
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