MortgageOrb interviewed Hou to learn more about how real estate finance professionals should leverage technology to enhance productivity and drive actionable, value-enhancing strategies.
Q: The idea behind METIS' technology was partly born out of your experiences working on Wall Street in real estate finance. What mistakes did you see in how technology was deployed and managed during that time?
Hou: To be perfectly honest, during my tenure on Wall Street, technology just wasn't something that crossed my mind. I simply didn't make much use of it during my daily professional life. Over a decade, I had worked my way up the ladder and touched practically every aspect of the real estate finance and investment business – and consistent throughout my experience were fragmented, largely manual processes.
To give an example, in order to underwrite a large portfolio of assets, I spent 85% of my time gathering information from multiple sources before I could even begin the process of analyzing and making decisions. The time spent gathering data and market intelligence almost always outweighed the time spent on analytical work – which was, of course, the most critical part of the process. Often my colleagues and I were under a tremendous amount of pressure to finalize our pricing analysis within a limited amount of time, and this put us in the difficult position of having to improvise and rely on potentially incomplete or inaccurate data.
I'd seen how technology had transformed other industries and believed that it was time for real estate finance to join the revolution and realize the accompanying efficiency gains and business growth. After talking to hundreds of professionals within the industry and seeing that they shared my experience, I knew that our challenges could be solved with technology that promoted the aggregation and sharing of intelligence, better collaboration between colleagues and third parties, and transparency throughout the entire process.
Q: Technology has become more sophisticated, but real estate finance professionals continue to experience major pain points related to workflow. What pieces of the technology puzzle are organizations still missing?
Hou: The key issue here is the idea of centralization. Consider the lifecycle of a mortgage, from origination, to management, to exit. Within each stage, there are multiple steps, and multiple participants, both internal and external to the lending institution. Within the origination stage – as we move from step to step and participant to participant – data and documents must be transferred. With email as the default communication method, there is no centralized repository where data and documents can be stored and decisions can be tracked. Each transfer presents a potential opportunity for intelligence loss.
As the origination stage comes to a close and we move into asset management, we see an even greater potential for intelligence loss. The asset manager likely does not have a relationship with the borrower and is expected to monitor the mortgage with limited insight. And when it's time to exit – whether in the form of disposition, recapitalization or securitization – yet another set of players are brought in and have to capture and organize largely the same information. You can see how quickly the benefits of having one centralized system throughout the full lifecycle start to add up.
Q: We live in an age of automation. Many organizations feel that the less human involvement in processes, the better. In what areas can technology make human experience and intelligence more powerful when it comes to the real estate finance industry?
Hou: Success in the real estate finance industry is driven by relationships, experience and knowledge. Technology should by no means replace these uniquely human traits. Instead, what technology should do is free up one of the most valuable assets of all – time. From automating data entry, to presenting that data in an intuitive way, to aggregating intelligence, to facilitating collaboration, technology should eliminate manual, labor-intensive work and shift focus toward efforts that contribute to real business growth.
Q: The METIS platform specializes in managing data, documents and workflow and how people interact with them. What are your top pieces of advice for how organizations should approach each of those areas?
Hou: I would encourage them to take a step back, understand how their organization and processes work, and then define the ideal flow, both on an enterprise level and a project level. Then, explore the newest technologies available. Automatic data extraction can pull data from any type of document and then populate relevant fields, saving time and promoting accuracy; advanced document search allows you to access the file that you need, even if misfiled or mislabeled; real-time collaboration allows multiple individuals to work on the same document, with changes tracked and archived for future reference. These functionalities would have been groundbreaking, magic even, in the old days. Knowing what's possible is the first step.
Q: Many real estate finance professionals avoid implementation of new technology because they believe that the transition will be stressful. They worry that there will be a steep technology learning curve, and worse, that the technology just won't perform as it should. Often, new systems pose significant problems and cause pain instead of efficiency gain. How do you overcome these negative views of technology in real estate finance?
Hou: I can actually relate to some of the frustration. Perhaps these are some of the main reasons why the industry is slow to adapt to technology. Many solutions currently on the market force organizations into a pre-defined set of processes. During our research, junior and mid-level professionals said they wished someone would ask what they needed, as they are intimately involved in the transaction process. At METIS, instead of offering an off-the-shelf system, we listen and understand not only the organizations' but also the individuals' unique workflow, pain points and challenges so we can deliver a solution that respects, maintains and enhances ideal business processes. It's really all about technology that works the way you do.