By: Sarah Volling for CBInsight
For Accenture Mortgage Cadence, August represents a month of reflection. August 31st is the end of our fiscal year, marking the unofficial beginning of our forward outlook for the year ahead. The second half of 2014 and the first half of 2015 have certainly been unique for the mortgage industry. The TILA-RESPA Integrated Disclosure (TRID) rule was supposed to go into effect this month, and it is clear that the refinance era is over. This means lenders and technology vendors alike are winding down on their TRID efforts and beginning to look to the future of their business. We like to think of this new beginning as a transformational era; we are sure it will be an era unlike anything we’ve seen before.
Defining this new era are emerging market participants, like Millennials ready to take on their first mortgage, Gen Xers recovering from the recession and Baby Boomers adapting to the technological world we live in. As a result, innovations in efficiency and technology will be more important than ever. This will not be like the cyclical financial landscape we’ve seen in the past; the way that lenders deal with this transformational era will shape the face of lending in the years to come.
In this environment, we believe that two key factors will separate those who succeed from those who struggle.
The first is the ability to go with the flow. Transformation is not something that happens overnight; in the mortgage industry, it is likely to take many years. Think of transformation as a slow-moving wave that eventually finds its way to shore, almost melding into the beach – not the kind that suddenly crashes onto the rocks. The path to accommodate future borrowers looking for mobility and immediacy is not cut-and-dry. No one can predict the rate at which borrowers will demand these enhancements, and some borrowers like the “old way” and will want to stick with it. Along this transformational journey, there will be a need to make numerous tweaks and adjustments.
The second factor is an acceptance that reinvention is the new normal. This is perhaps the harshest reality for many lenders. Old metrics for success will no longer apply as lenders enter uncharted territory. Without tried-and-true metrics to rely on, it’s easy to feel unsure, but it’s essential to stay the course. What will drive process and technology changes if not tried-and-true measurements? The new metrics will be developed by listening to consumers and not making assumptions about borrowers’ needs. Lenders who solicit customers’ opinions, listen carefully and make needed changes will find that reinvention will flow seamlessly.
Transformation of any sort takes time. The institution must undertake its own initiatives in the face of a constantly evolving set of external conditions. Our experience, however, has taught us one sure thing: Proactive – not reactive — steps towards transformation versus reactive steps are the way to go. There’s no reason to wait until the end of 2015 to plan for the future. Lenders should be taking steps today to enter their own transformational era.