Sustainable innovation in today’s mortgage market is one of the single most important requirements for growth and profitability. The challenge to innovate lies in the current state of the mortgage industry. Downsizing and lay-offs have stretched vendors and lenders very thin when it comes to having resources available to innovate. Can crowdsourcing bring innovation to the mortgage industry while addressing some of the industry’s most pressing needs?
There are numerous definitions and terms used to describe crowdsourcing. The basic idea is crowdsourcing taps the collective intelligence of a multitude of people (generally a large network) to solve business challenges that the company would normally perform itself or outsource to another service provider.
Challenges are broadcast using Web technologies in the form of an open call for solutions. Users, also known as, “the crowd”, work to develop solutions. The crowd also sorts through the solutions, finding the most appropriate ones. The best solutions, once selected, are now the property of the organization that broadcast the open call. Organizations reward the “crowdsourcer” (creator of winning solution) in a number of ways that can include cash rewards, prizes or recognition among the community.
The concept of soliciting input from others outside of one’s company is not a revolutionary concept, but with the advancements in technology, companies can reach significantly more people quicker, and more efficiently than ever before.
Perceived benefits of crowdsourcing include:
* Challenges can be explored and reviewed at a relatively low cost.
* Information can be obtained in real time.
* Rewards are only given for actual results.
* Organizations can utilize a broader range of talent and skill sets than might be present in its own organization.
* Improved productivity and creativity.
* Minimize research costs.
* Faster time to market.
* Mitigate risks typically associated with uncertain marketplace demand.
Examples of crowdsourcing from other industries include: Cambrian House, CrowdSpirit, PicksPal, digg and StumbleUpon to name a few. “At Cambrian House, people submit ideas for software products and then vote on which ideas are the best, commenting on changes or improvements they would like to see. Development of the most popular ideas is then sourced to members of the community, who earn “royalty points that determine how much each contributor makes.”[1]
“CrowdSpirit aims to utilize crowdsourcing to develop and bring to market tangible, sub-$200 electronic devises to market. Community members decide what the product is, from concept to design to technical specification, by submitting and voting on product and design ideas.”[2]
“PicksPal is a sporting event prediction site that allows users to vote on amateur and professional sporting events.”[3]
“digg is not only a poster child for web 2.0 success, it is also an excellent example of using the wisdom of crowds to organize and highlight information. digg’s concept is simple: users submit links to websites, articles, news stories, photos, or videos and other users vote on whether they are worth checking out. Depending on how many people, who, and how quickly links are “dugg” they may be promoted to the main page as a worthy link of the day.” [4]
Lenders and vendors are forced to do more with less but that does not mean that they can neglect delivering innovation to the market. Innovation is a key driver of growth and profitability. So can crowdsourcing provide lenders and vendors alike new innovation to respond to the rapidly changing landscape of the mortgage industry? Can it be used to develop successful loan modification products and services? What about foreclosures and defaults? Is there a better way to handle fraud? Is there a better way to engage troubled borrowers?
With a number of mortgage industry trade shows being canceled and budgets tightened for attendee travel, can crowdsourcing create a collaborative environment to address some of the industry’s most pressing issues today? Will crowdsourcing work in the mortgage industry? Are lenders and vendors willing to reach out to the masses for potential solutions? Is a shift in corporate culture required to effectively use crowdsourcing?
Share with us your thoughts on crowdsourcing and if you think it could have an impact on the mortgage industries recovery.
[1], [2], [3], [4] Josh Catone- Crowdsourcing: A Million Heads is better Than One
