As we approach 2020 and budgets become finalized, one uniting theme among mortgage companies appears to be the quest for digital supremacy. What this means is subject to debate. For most mortgage organizations, digital supremacy means an online end-to-end mortgage experience for the consumer. For others, it means utilizing data between systems to streamline operations.
In 2020, it is anticipated that the biggest trend and biggest knowledge/expertise gap for most mortgage companies will center around doing more with data to achieve the sacred goal of digital supremacy. The realization that digital is the default landscape of the mortgage business has reached a consensus, whereas even a few years ago, many mortgage companies were more than a bit dismissive about the need for a digital-first strategy; some even claiming that a true “personal relationship” could not be built in the digital realm.
Still, many executives remain hesitant to invest deeply in digital transformations and initiatives. This hesitancy may be due, at least in part, to a lack of knowledge regarding the expertise needed to develop and execute digital initiatives.
Recent research from the Harvard Business Review (1) shows that revenue and earnings growth are largely negative for companies that neglect digital innovation. How can mortgage companies ensure that they get digital right? Among the first orders of business in this ongoing journey is to understand the data ecosystem which underpins your organization—to establish context. Data is the key, as this is the lifeblood of all the existing systems running the business. Optimization and innovation can then proceed, followed by proper management and leveraging of digital resources.
Understanding the ecosystem
Having a defined future state starts with fully understanding the current state. This can be a daunting task, especially for experienced professionals that have been in business for many years. It should frighten more executives that a full rationalization of existing systems, services, and products has not taken place. Besides the drain on efficiency and costs, opaque ecosystems are the breeding ground for cybersecurity threats.
For instance, at the 2019 Annual MBA Conference in Austin, Texas, a panel of experts discussed details of recent ransomware attacks (2). The panel agreed that traditional firewalls are not enough to protect companies from attacks. Authorities expect that attacks will increase and possibly double in the next year, as they did from 2017 to 2018.
Security and compliance are just two prongs of an effective digital strategy. While both are too commonly overlooked, a failure to consider either or both will have serious ramifications for the organization. No digital platform can be considered trustworthy without the ability to answer the “who, what, where, and why” questions about the totality of an organization’s electronic data. With consumer privacy coming to the forefront and new privacy regulations (like CCPA) top of mind, it’s more important than ever to know where your data lives.
Once a coherent understanding of the existing data ecosystem is achieved, the focus can shift to developing an effective and efficient future ecosystem. While the roadmap to an ideal future ecosystem may differ for organizations based on their level of complexity and maturity, all organizations will need to assess what systems and processes exist, which ones need to be terminated, and which ones will continue to be a part of the digital strategy.
Optimizing and innovating
Reviewing current trends, technology landscape, and new practices are key components in formulating the best future state for any organization. Naturally, enterprise constraints play a big role in determining feasible strategies. Budgets, investors, and stakeholders will greatly influence potential execution pathways.
This critical juncture is where decisions between off-the-shelf vs. build-your-own solutions are made. Organizations will need to navigate through an array of potential consultants, products and vendors. Crucial in this step is clearly defining the future state, to ensure alignment between business units, channels, and stakeholders. Additionally, a business-first mentality is needed to safeguard against superfluous technology initiatives.
Furthermore, data availability and aggregation capabilities need to be addressed. Successful completion of these preliminary steps is a prerequisite for effective automation and analytics. It also sets the stage for truly innovative practices to materialize, including artificial intelligence and machine learning.
Another often neglected area is process optimization. Process review and improvement is a big part of an effective optimization campaign. New technologies lend themselves to improved processes and therefore require a thorough review to ensure the best processes are being optimized. An effective review needs process improvement specialists – including Six Sigma certified experts – to lead these exercises.
Manage and leverage
While there may be intermittent peaks and plateaus on the digital journey, the climb to digital supremacy should be viewed as a steady, gradual march up a mountain. Only the pinnacle of that mountain remains just out of sight.
As a coherent strategy begins to form, a robust management process must be created to leverage the potential of the digital ecosystem. Building and implementation must be followed by a full extraction of value from the innovation.
Too often we see clients who do not fully leverage the potential of their systems and technology. The same level of emphasis placed on planning and implementing a solution should also be placed on the people and processes running the solution. Thus, a plan to ensure adoption and to nurture new behaviors must also be implemented to fully leverage new capabilities.
Digital capabilities within an organization usually require skilled resources to deliver value, so finding the right people is critical. Utilizing knowledgeable consultants can be one way of leveraging new digital capabilities while quickly ramping up the level of competency across the enterprise.
2020 will certainly provide its fair share of surprises. Interest rates will always remain unpredictable—recall the consensus going into 2019 was higher rates. However, one known factor is that as the race towards digital supremacy continues to unfold, companies embracing a coherent strategy will pull ahead.
Creating a clearly defined, yet agile, roadmap is the key to driving successful digital initiatives. By ensuring a clear understanding of your organization’s digital and data ecosystem before innovating and optimizing, you create a solid foundation to build upon when managing and leveraging new capabilities.