In my view, the mortgage banking’s business model is broken and needs to change. I hear the same sentiment from industry executives every day. One manager recently shared that his son is graduating from college and he doesn’t want him to go into the mortgage business. Why? The executive believes that in five to 10 years, the industry won’t be around as we know it. It is true that the industry will not look like it has for cost reasons. It is inevitable with any business that change happens — just look at the dramatic transformations in the communication and music industries. Executives in these businesses have witnessed nothing less than a complete reinvention of how their products are sold and distributed to consumers.
In today’s business environment, the status quo doesn’t exist anymore. Success can be fleeting and over in an instant. In mortgage banking, it seems to me that a lot of the problems in the industry are due to its leaders and even originators having a hard time making changes to their sales model.
It certainly is understandable that letting go of old ways that were successful for years is difficult. No one is denying that. This is especially true when the company or originator has reaped high profits on how they conducted their business. But change must happen or a company will become irrelevant in the new reality of customer interface.
In The Chocolate Conversation: Lead Bittersweet Change, Transform Your Business, an excellent book by Rose Fass, she wisely observes that “the best kind of change comes when you envision, initiate and control it. That type of change creates opportunities, transforms sales organizations and ignites growth. Otherwise you’re facing the damaging prospect of change that happens to you, rather than because of you.”
Fass also states that organizational change is a three-step process:
- You need to define your change. What will the future look like and what changes will you need to undertake.
- You need to sell the change as a leader. People need to understand the why of change before agreeing to change.
- The leader always needs to lead by example. You can’t ask the employee to change and to do something the manager won’t do.
So, what does this have to do with McDonald’s Chicken McNuggets? The fast food giant recently announced it will be eliminating artificial preservatives from it’s Chicken McNuggets in an effort to address consumer concerns regarding food quality. This is a major change for a successful product that has been a big winner for them. But management is taking the lead to respond to customers’ demands for healthier food options.
In mortgage banking, prospects want more choices in how they interface with their lenders; knowledgeable salespeople; and valuable insight that helps them navigate the mortgage process quickly. Of course, they want a fair price too.
I think it is clear that companies must deliver what the customer wants if they are to succeed in the long run. In my view, everything needs to be on the table regarding rethinking the mortgage sales process.