PERSON OF THE WEEK: Teresa Blake is practice director at Wipro Gallagher Solutions, a provider of end-to-end lending technology and services. MortgageOrb recently interviewed Blake to learn more about the small operational changes lenders can make that may have a big impact on their bottom line.
Q: In the last several years, the mortgage industry experienced significant ups and downs that have prompted lenders to pursue business transformation initiatives across technology and processes. Is there a place for small operational change in today's mortgage environment?
Blake: Small operational change does not mean insignificant operational change. Due to the extensive number of regulatory changes everyone is addressing, massive business transformation efforts may be impractical for many lenders that struggle to identify which resources they will have to dedicate to such a large project.Â
While many lenders are looking at merger and acquisition opportunities or considering product and footprint expansion, there are some that will fare better by building upon their core expertise in mortgage lending. For those lenders, massive business transformation efforts or business model change might divert a lender from pursuing more productive and effective efforts that improve efficiencies or simplify processes. While the current mortgage environment is certainly making it a challenge to pursue even small operational change, it is not impossible.
I think it is also beneficial to look at other industries and consider new approaches to process change. For instance, a company like Apple will continue to make small incremental changes to its product set, which, over time, will generate considerable business impact. With some planning, mortgage lenders can also roll out small fundamental changes to their back-office processes that have an impact on performance and, ultimately, deliver better customer experience and satisfaction. With continuous improvement initiatives, a lender transforms over time and wakes up the leader.
Q: You mentioned time, resource and cost constraints in today's mortgage environment. What tips can you offer lenders that face these constraints and want to pursue practical and effective initiatives?
Blake: It is often the case that a lender overlooks the technology, tools and capabilities currently available within their operational framework. For example, a lender may not be aware of some of their technology's functionality and, as a result, are taking extra steps to complete a process that only requires one step. My suggestion is to conduct a technology and process audit. One of the mistakes a lender can make is jumping too quickly into buying flashy tools when their existing loan origination system and other core platforms offer that capability. A few simple configuration steps or a technology upgrade may be all that is required.
In addition to process and technology audits, lenders can benefit from the application of lean principles. I have found that there are some misconceptions about applying lean principles – one is that ‘lean’ is only used when pursuing massive business transformation. In fact, these principles are designed to simply prompt business leaders to ask the right questions and approach problems objectively to identify bottlenecks, instead of creating emotional attachments to their processes. This mindset of doing more with less promotes a focus on problem-solving and operational improvement.
Q: Are there lessons to be learned from other lenders? What are some of the characteristics of lenders that pursue small and/or practical operation change?
Blake: Our team has actually benchmarked successful lenders and identified some very clear differentiators. Eliminating process redundancies and mitigating errors at different stages of the loan process were some of the driving characteristics of successful lending operations. Successful lenders often had specialized teams that focused on resolving loan inactivity or loan challenges. They also used tools such as automated calling and emails to improve borrower response times; these tools often lessened the number of manual steps required to prompt borrower action.
Finally, successful lenders invested in understanding their customer's needs at various stages of the loan process. Once you understand the borrower, you can create a customer-driven workflow that is supported by your people, processes and technologies.Â
Q: Are there metrics a lender can use to gauge what areas they should focus on improving?
Blake: Absolutely. Metrics are a great way to monitor and improve performance. The general categories of metrics to consider are around quality, speed and process timelines, and costs. The lender may find that the number of manufacturing defects is impacting pull-through ratios. The lender may also find that the cost to originate is substantially higher than it should be and, therefore, pursue a business process outsourcing partnership to offset some of the economic burdens. Tracking and understanding the health of your operation gives the lender fact-based information by which to make smart process changes.Â
Q: Finally, you advocate for process change, but you work for a tech provider. Is there a trend you are seeing that is causing you to focus on the mortgage lending process as much as the technology?
Blake: I always tell clients and lenders that there is a symbiotic relationship between technology and process. Operations that rely on one more than the other are missing opportunities. Technology is most effective when there is a process strategy aligned with it, and it is the enabler of process change. Similarly, the processes are most effective when the latest technology streamlines the process. When technology supports the changes in the lending process, the results are seamless and efficient. The ideas of progress on both fronts do not conflict; they are intertwined. Focusing on progress in process, ideally, means implementing change in your technology. On the other hand, promoting changes in your technology should also improve your adherence to procedures.