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[PULSE] Refi boom lessons: Coronavirus tests lender technology

Mortgage companies forced to adapt or get left behind

Here we are yet again, an unexpected refi boom in the middle of what most had planned and resourced as a 2020 buyer’s market. 

Based on projections from the Mortgage Bankers Association, there will be a 36.7% increase in volume from 2019 closed refinance volume.  And let’s not forget that the MBA is also calling for an 8.3% increase in purchase volume this year. 

Joshua Tatum, Guest Author

So this is the question to ask ourselves, “Have we better prepared from a process and technology standpoint compared to the last time we had this type of application spike?” 

Or, did we get sucked back into hiring as many operations personnel as possible, hoping we can manually keep up with consumer demand? And, what happens after this ends? 

Based on past experiences, we normally see layoffs or organizational restructuring. Let’s call it what it really is, the coronavirus conundrum. The problem of having a massive spike in volume, an absolute change in how and where our employees are working and social unrest within the housing market. 

This leads to a bit of panic and an even deeper desire to either refinance to reduce payment or get the equity out before a drop. 

Over the last few years, most lenders have scrambled or even sprinted towards technology-based shiny objects to solve these very issues we still see today. So we saw a massive lift in our efficiency, right?

From recent conversations with one of the top lenders in the market, I would argue that point. Playing a virtual game of Tetris with vendors and systems we have, as an industry, put ourselves in an interesting corner. 

At the end of the day, the consumer is the decision-maker on who to close with. Looking at an article released by Deloitte (Consumer Insights), not only is the consumer demographic changing but also how and when consumers decide on purchases is changing. The lenders that have found a way to give them a fluid experience in whichever method is best in their minds, wins. If you have found yourself wondering if what you have built truly solves both consumer needs and operational strains, now is the time to make those changes… or wait until the next coronavirus boom. 

The scramble to functional technology

There is a rainbow in the middle of this mortgage boom, and I am not talking about gains in revenue. With millions of homeowners and homebuyers quarantined at home, there is an opportunity to shine a bright light on process technology to fit this scenario. 

It begins with a sense of consumer identity. At a very basic level, we have profile platforms that give consumers a way to place as much information about themselves into a sign-in based system and create an easier way to interact with financial institutions. 

Really solid POS platforms do this today and newcomers, like Finlocker, are paving a different path but still under the same mindset. Other industries tied to financial services have already done this in the form of Clarity, Nerdwallet and even SoFi. Next, we should ensure our manufacturing teams are working effectively, limiting tasks that could be solved with automation and by partnering with companies that use technologies such as computer vision and AI. 

Being able to bring in talent that can easily understand the process without weeks or months of training will reduce the strain we do see from mass volume. The difficult decisions in all this come in the frame of integration/implantation. How do we best deliver such technology in systems we have built over the last decade?

The answer is simply to invest and be willing to change. This means either hiring teams of technology experts, including engineers, that can work through this opportunity, or bring in consultants that can quickly create roadmaps and execute with your stakeholders to accomplish those goals. 

A lot of companies miss out on the productization of technology, meaning we have those Tetris pieces but no solid lines. However, this can be solved by allowing product leaders to step in and work in constant collaboration with the business side of the house to solve those problems. 

Setting up a pivotable process now will pay dividends in the near future and set your company up for long-term success. As a quote from John D. Rockefeller puts it, “Don’t be afraid to give up the good to go for the great.”

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