PERSON OF THE WEEK: Abhinav Asthana is a product manager for Wipro Gallagher Solutions, a provider of technology solutions to the mortgage industry. MortgageOrb recently interviewed Asthana to get his perspective on how the avalanche of new regulations is impacting lending overall and how lenders can ready themselves for the future.
Q: In light of all the new regulations, are lenders too burdened to think about the future of lending? What is the impact of compliance on lender innovation?
Asthana: There is a significant opportunity to bridge the gap between regulatory compliance and innovation in the mortgage lending community. As “fintech” and alternative lending companies continue to offer borrowers a high-tech, personalized approach to home buying, traditional lenders are becoming even more aware of any innovation lags within their businesses.
At the same time, the Consumer Financial Protection Bureau’s new TILA-RESPA Integrated Disclosure (TRID) rules still require extensive resources – and the upcoming Home Mortgage Disclosure Act regulation is expected to keep compliance front and center. Compliance is here to stay, but I think lenders are starting to view it differently.
Once upon a time, lenders might have looked at compliance as an isolated function completely separate from product development. However, the convergence of digital advancements with new regulation has generated something of a new paradigm: Compliance, while burdensome, is fueling the conversation around innovation.
On the one hand, lenders are eager to ride the digital wave, while on the other, lenders are frustrated with the inefficiencies and cost constraints occurring as a result of compliance initiatives. These dual pressures are breaking down some of the silos that exist between compliance and innovation, and there is reason to believe that the industry’s best solutions might emerge as a result of working within stringent guidelines.
Q: Outside of compliance-driven innovation, what are some steps lenders can take to advance in the new digital era?
Asthana: There are emerging tools and trends that lenders need to consider moving forward, and those range from data and analytics to advanced automation, mobility and Web-based portals. However, lenders need to be careful not to rush too quickly into adopting emerging technologies out of fear of falling behind. The application of new tools and trends should be paired with a well-defined strategy.
Lenders will benefit from reframing the questions they ask during the innovation process. The application of design thinking in mortgage will help lenders move away from the “innovation for the sake of innovation” approach, which is often rooted in fear and leads to waste, and shift to a “return on experience” approach, which is focused on solving a problem for the user/customer, whether that customer is an internal employee or the borrower. Asking the right questions of the right people – and then reframing that question to elicit a different response – will undoubtedly lead to those “eureka” moments. It is important to note that the “right” person is not necessarily a lender’s product experts or developers.
As an industry, we need some disruption. Borrowers are no longer at the mercy of traditional lenders and lending processes. They have more choices. The experience-driven lenders that dismiss the status quo, listen to the borrower and ask questions to better understand their customers will emerge as the next-generation lenders.
Q: From a technical and cost-management standpoint, how can lenders adopt a future-ready lending approach without breaking the bank?
Asthana: If lenders adopt new tools without a good strategy or experienced staff, they may lose more than they gain. Design thinking for creating “frictionless experiences” requires a combination of the right people, processes and technologies. Technology, in turn, is a function of cost, timelines and risk. What will give you the most bang for your buck? How much time will it take to get to your target vision? What risks does the solution pose to your current business?
Lenders will need to pursue future-building tools and technologies without losing focus on the objective, practicality of the project and resources dedicated to the project. When the time comes to look at digital adoption, we see some of the following questions come up over and over:
- Are your people, processes and technology aligned to support digital adoption?
- Is your core lending or core banking solution built on an architecture that can support digital integrations and other new service/technology integrations?
- Do you engage with service providers whose organization DNA matches your organization’s DNA?
- Will your systems and integrations operate as one solution?
There are a lot of reasons these questions are important. Managing multiple infrastructures for multiple types of technologies is cost-prohibitive and will lead to business fragmentation. Although digital and mobile technologies will ensure that you are adding face value with your customers, it may not be worthwhile unless you are also achieving business value.
We often remind our clients that an omnichannel platform will provide a foundation for future-ready lending, as it will support multiple channels, platforms and technologies and enable lenders to make profitable decisions that are grounded in a robust set of customer data.