Panel: Embrace Innovation
As the industry goes through this downturn, panelists at the 11th Annual SourceMedia Mortgage Technology Conference here stressed that this is not the time for the industry to shy away from technology innovation. In fact, all agreed that now is the time to re-evaluate processes and adopt a smart technology strategy to increase both efficiency and market share.
"There's an increased sense of urgency now," said Flagstar Bank's first vice president of lending support, Brian Boike. "People always ask when is the right time to innovate. I liken this to the question: When is the right time to eat well and exercise? The answer is all the time."
But Mr. Boike stressed that technology decisions shouldn't be made on a whim. "You have to use existing technology to measure overall performance. As a lender you have to know your pain points and go after that first."
Nonetheless IT budgets will surely be small this year as compared to years past. "IT spending equals somewhere between 8% and 10% of total volume," noted Jordan Brown, CEO of investment banking and consulting firm MarketWise Advisors LLC. "So, as we see the volume shrink and more consolidation, technology budgets will follow. I see this as an opportunity for lenders to spend in the right areas. Lenders have to be tactical vs. being strategic and look at technology spend as both a short-term and long-term investment to increase overall efficiency."
Despite the fact that IT budgets overall will be down in 2008, Flagstar will be bucking that trend, taking Mr. Brown's advice and will continue to heavily invest in technology this year. "If we see an opportunity we will go after it. Right now we're doing e-mortgages in Michigan and will expand to other states this year. We're also looking to pass our technology onto our partners to make them more efficient as well," he said. But what is the right technology investment to make in a down market? "When the return on investment is there it's the right time to innovate," answered Sharon Matthews, president and CEO of fulfillment and e-collaboration vendor eLynx. "Lenders need to look for short-term ROI that will offer their institution long-term benefits. I see this market as an opportunity for lenders, not a threat. Now is the time to make changes. We don't know how long this downturn is going to last, but when it does turn wouldn't it be nice to be able to look back and say, 'We took the time to improve our processes and overall share instead of doing nothing.'"
Lisa Schreiber, president at LSK Consultants, which focuses on optimization strategy counseling, pointed out that lenders need to be looking at flexible technology. "Lenders should look at where flexibility exists in their current systems. If there is no flexibility now is the time to change. In my prior life as a mortgage lender we were always focused on how we can grow our business. Certainly you're always reacting to the market, but technology that can allow you to be flexible and look ahead is crucial."
One area of opportunity stressed at the show was the adoption of electronic upfront disclosures.
"E-signatures are getting adopted today," said Ms. Matthews. "There's real value in doing e-signatures on disclosures because it offers the borrower a better experience, they're ready to e-sign and it locks them into the loan, shopping them from shopping competitors."
"E-signatures around early disclosures is an easy process to implement, there aren't any legal barriers and it gets the lenders used to doing things electronic," added Roger Gudobba, senior principal of mortgage business development at automated compliance vendor Wolters Kluwer Financial Services. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/