This year has brought plenty of disruption to mortgage servicing, from regulatory and economic uncertainties, to a long-term shift toward remote work environments. Meanwhile, the past decade has seen an explosion of digital solutions in mortgage origination, and servicing will inevitably follow suit.
In this context, it’s natural to consider digital transformation; as all our processes are upended, this is perhaps an ideal time to rethink the business, and the technologies that support that business.
But this is a decision to make with care. About 70% of digital transformations fail. The cause of these failures can often be traced back to not keeping the business goals at the forefront of the transformation process, or overlooking how technology impacts and interacts with the entire operational ecosystem.
It’s important to remember that digital transformation isn’t just about implementing new technology. It’s about strategically using technology to help you achieve your business goals. If your organization is looking for digital transformation, these tips will keep you on track for success.
1. Develop a next-generation mortgage servicing data strategy
The rate at which we produce data has increased exponentially. Approximately 90% of the data in the world has been created in the past two years. Driven by the adoption of technologies like blockchain, artificial intelligence and machine learning, this explosion in data creation exposed a challenge: Where does all this data go? Most mortgage servicers followed best practices and addressed this issue by creating data warehouses.
The next step is to build a comprehensive data strategy. This requires a shift in focus, to consider the purpose of all that data. Think about data in the context of your “internal customer.” Who needs to use this data? How and when do they use it? How must the data be formatted to be useful? And perhaps most importantly, could changing the format of your data increase efficiency? You may determine, for example, that using BAI files for bank statement data will help your entire enterprise. Notably, your investor accounting team will be able to complete daily reconciliations and prevent end-of-month surprises.
2. Adopt a consumer mindset
Consumer technology now defines what we expect from enterprise technology. We expect software to be intuitive, user-friendly and extensible. We expect features like easy document management and automated classification. These are increasingly common on the mortgage origination side, where digital technology has played a key role in dramatically reducing the time to close a new transaction – and where the end user of the technology is clearly a customer, rather than an employee.
On the mortgage servicing side, however, it’s easy to forget that our employees are our “internal customers.” Their adoption of new technology (and the accompanying processes) determines the ultimate success of any digital transformation. When you think about introducing new technology, think first about your employees and how the technology will change their daily lives. Consider, for instance, how this new tool will change their current processes and procedures, and whether those changes really improve their productivity and engagement.
And the consumer-friendly approach need not end with the software itself. The next generation of enterprise software comes with far more customer support than it did in the past. Software providers once walked away after deployment. Now, they offer ongoing support to ensure that your technology continues to evolve alongside your business processes and industry.
3. Embrace SaaS and cloud servicing technology
The “build or buy” debate is probably already familiar to mortgage servicing leaders. Building your own proprietary technology allows full customization. But what about increasing data storage needs? Or regulatory changes? Given these challenges, buying technology is often the better option: the provider assumes the responsibility and risk for delivering the solution, along with updates necessitated by regulatory changes or new product features. The next decision is what to buy. Now is the time to embrace SaaS and cloud technologies. Among many other benefits, these are ideal for remote work environments, which have become the new reality for many of us.
If you’re looking to use cloud technology as the foundation for your digital transformation, it’s important to choose cloud-native tools, rather than cloud-enabled ones. Cloud-enabled technology is an application that was originally built as a traditional, static application and has been “moved” to the cloud. Cloud-native tools, on the other hand, are built specifically to operate in the cloud. They are nimble applications that are designed to offer easy integration, administration and scaling. This can be important in mortgage servicing, where sudden changes in transaction volume and number of users require software scalability.
4. Insist on visibility
A digital transformation is an opportunity to gain new visibility over those processes. And visibility has certainly gained importance in remote work environments. This isn’t just about monitoring employees; a recent survey from Prodoscore highlighted that employee trust is critical to productivity, and 90% of employees said they were open to giving employers more visibility into their daily productivity. As you evaluate new technology, consider the solutions that will give you more insight into the entire business process, including individual employees’ progress toward completion.
But that’s just the first level of visibility. The right tools can help you gain more visibility over the impact of your business processes through data and analytics. For example, your subservicer billing software might help you track the submission and status of each bill, giving you more access to the progress of the process. But the data could also be harnessed to help you evaluate the profitability of different mortgage servicing relationships or even to help model different pricing structures.
5. Build a functional technology ecosystem
Chances are, you and your operational team use a dozen different software tools each day. After all, no single tool can address every business need. This set of tools is your technology ecosystem. An important step in any digital transformation is to evaluate how functional that ecosystem is, and then to identify ways to make it even better. Step back to determine what tools you already have, along with any disconnects or information silos that cause friction in your business processes. You may even find that some tools are redundant or no longer fulfill your business needs.
As your technology ecosystem evolves, aim to adopt tools that integrate in real time. The type of integration (e.g., native, custom, iPaaS) doesn’t matter much, so long as the tools “talk” to each other. For example, integrating your mortgage servicing system with your reconciliation software can dramatically decrease the time required to complete custodial account and cashbook reconciliations.
To read the full February issue of HousingWire Magazine, click here.
