WE’RE HEARING I was pleased to be asked to serve as a keynote speaker for this week's SourceMedia
There were a few reasons I enjoyed the venue, including the fact that I live in this crazy town so I could drive to the event and had a ready supply of South Florida jokes to kick off my talk. I knew that many of my industry friends and loyal readers would be there, and am proud to say that this was the closest thing this town has seen to a cultural event since we got the Swimming Hall of Fame. (Sad note: We're losing this Fort Lauderdale icon, leaving us with only the Fishing Hall of Fame.)
It's sad when you lose old stuff like that. Another example: the four Cs of lending. That still serves as a good basis for deciding whether to approve a loan, although it’s now been subsumed into a new acronym: “ATR” (ability to repay). However, the more compelling discussion at this week’s tech show was what I refer to as the “3 Key Cs” (say that three times fast!) of business success this coming year: capacity, conversion and compliance.
Right now we're in the middle of an interesting transition. Lenders are moving from an operational mode that was built around managing capacity, specifically how to build systems to crank more loans through the process as demand for mortgages remained high.
Now, the capacity question is not about doing more loans, but doing the lower volume of loans with less staff, as organizations are beginning the rightsizing of the organization to the new market norms. That creates its own technology challenges.
The second key C is conversion, and this was a much bigger part of the discussions at this year’s show. In fact, today lenders are measuring everything in an attempt to convert more of the leads they have and are focused more on pull through of the loan applications they are lucky enough to secure.
There was a lot of great discussion at this conference about lead generation, lead management and converting those leads into closed loans. There were reporters on site so I don't want to steal their thunder by telling you those stories, but suffice it to say that lenders in attendance were paying close attention to these experts.
They have good reason to, of course. I heard one expert admit from the podium that in January, 95% of his business came from refinance loans, whereas today more than 65% are purchase money loans.
When the phone isn't ringing with new business every day, it becomes very important for lenders to learn how to cultivate those leads and close those loans.
As lenders make the move from managing capacity to managing conversion, they must bear in mind that the deciding factor is the customer's experience. We are returning to a mode of business where word of mouth will be a critical factor in how many leads, and what quality of leads, a lender can attract.
Figuring out how to keep consumers happy and get them to refer business is a key success factor going forward.
The other important change, of course, is that lenders are no longer viewing compliance out of the corner of their eye, but rather are setting up systems that allow them to swiftly move leads through their process in a manner that guarantees compliance at every point along that line. They are also taking customer satisfaction very seriously and taking steps to measure it as often as possible.
In fact, questions about
I was also asked about our work in M&A which obviously shows the trend for some lenders to consider buying share or partnering with other institutions in the new climate.
And of course, I was asked questions of a more personal nature, such as “do you actually live here in South Florida” (yes, real people live here and we are not all retired!) and “where the heck do you come up with your jokes?” Well, I find humor in everyday life and so should you, even as the industry weathers some storms that would make only a South Florida weatherman get excited.
However, as an industry, I also believe that the ability to drive conversion of leads to funded loans and be compliant with new regulations is no laughing matter.
Garth Graham is a partner with Stratmor Group, and has over 25 years of mortgage experience, from Fortune 500 companies to startups, including management of two of the most successful mortgage e-commerce platforms. He was formerly with Chase Manhattan Mortgage and ABN Amro, where he was a senior executive during the sale of its mortgage group to Citigroup.
