Mortgage Banking and Black Elephants

In Tom Friedman’s latest book “Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations,” he calls climate change a “black elephant” phenomenon. A black elephant is a cross between a black swan (a rare, low-probability, unanticipated event with enormous ramifications) and the elephant in the room (a problem that is widely visible to everyone, but that no one wants to address even though “we absolutely know that one day it will have vast, black-swan-like consequences.”) In my opinion, the mortgage banking industry is facing a number of black elephant issues that must be addressed.

Last week at the MBA Secondary Marketing conference in New York, most of the lenders I spoke with said “that there weren’t a lot of new things going on.” No big announcements. Pretty much the same old same old. Of course, there were passing comments about the weak first quarter in production but not a lot of conversation about the tortuous loan origination experience for most consumers; outdated technologies that need to be retired; and labor intensive processes where poor quality salespeople are the primary customer interface. These are critical issues that will undoubtedly impact our industry’s future success. How long can companies expect to deliver a poor customer experience without dire consequences?

In a January 2017 report, “Retail Lending 3.0,\” Deloitte found that 60% of banking customers were at risk for switching companies due to quality of service issues. The report also noted that “high touch” service is no longer defined as sitting at a branch.

Lending is increasingly conducted outside of branches and call centers. Customers want around- the-clock convenience and expect instant access to information plus service tailored to their needs. For many lenders, frankly this is a tall order.

Deloitte also stated “that higher customer expectations are more than just a technology issue” Today’s customers expect and demand a whole range of services including simplified applications and a streamlined approval process. The bottom line is that customers will not tolerate salespeople who are not knowledgeable advisers in the financial marketplace.

In the report, Deloitte identified three emerging trends for lenders:

• Increasing frontline and back-office automation and mobility

• Increasing collaboration between borrowers and lenders

• Improving customer-centricity and understanding customer needs

I think the last point is the most important. Becoming customer-centric is more than marketing analytics and buying Salesforce. It involves lenders recognizing that they need to have a single unified view that reflects where the customer is in his or her respective life cycle. Individuals have different financial needs during different parts of their lives.  Smart lenders will respond by designing a lending framework that matches to these various points. Having customers move from one department to another and asking them to provide the same information over again is not only frustrating but does not foster a good customer experience.

How customer-centric is your organization? Are your programs and processes designed with the customers’ needs in mind?