While lenders are super busy now, many in our industry are wondering what mortgage lending will look like after the pandemic is over. Will we return to “business as usual” or will the environment be completely different? I believe it will be the latter.
For managers with 20 years or more left to work in mortgage sales, these are not trivial questions but issues that will fundamentally impact their working life, career opportunities and retirement strategies. Certainly, those who are close to retiring will have a very different set of concerns.
When you look at our country’s most recent pivotal event — the 9/11 terrorist attacks — everything changed in the aftermath from how we boarded airplanes to how we entered office buildings. Security was increased across the board and ID badges became commonplace. This was a classic example of a historical inflection point.
In Rita McGrath’s excellent book, “Seeing Around the Corners: How to Spot Inflection Points in Business before They Happen,” the author outlines how to anticipate and prepare for these events. According to McGrath, “an inflection point is a change in the business environment that dramatically shifts some element in your business activities, throwing certain taken-for-granted assumptions into question.” She notes that “what you experience as a big, dramatic inflection point has almost always been gestating for a while.”
McGrath contends that while inflection points seem to come out of the blue, they are blind spots that can be obscured by a company’s success. Examples include managers who feel immune to changing conditions; senior executives who have lost touch with their current customers’ reality; and failure to listen to front-line employees who know what customers are thinking and experiencing.
More often than not, by the time senior managers realize an inflection point has occurred, it is often too late to make necessary adjustments to help ensure long-term success. To complicate matters, McGrath says that many signals of change can be false warnings. If a company invests too early, they can be out front of a market that has not developed. If changes are made too late, a competitor can dominate the market before a company has a chance to implement new strategies. This means executive managers must master making changes during periods of “optimum warning.”
Optimum warnings are specific time periods between recognizing that customers are moving in a different direction from how a business has successfully operated in the past to a new category or way of doing things. As an example, McGrath discusses how Gillette, a company that once owned 70% market share in razor blades, is now facing a marketplace in which their customer base no longer wants to shave on a daily basis. Who would have thought that being clean shaven would fall out of favor?
Future Mortgage Lending Trends
Similarly, there are a number of current trends that indicate where mortgage lending could be headed in the future. Signs that customers are moving in another direction include:
- Branches: Consumers are currently restricted from going inside bank branches but will they ever go back to them? My guess is that the branch structure is outdated, costly and largely irrelevant to the increasing number of consumers who prefer to use their smartphones for bank transactions. Transforming a branch into a café or a bookstore is not recognizing the problem.
- Remote Working: Many lenders are having success with high productivity from employees working remotely. While executives will slowly move back to having office locations for workers, I believe working from home is here to stay.
- Video presentation skills will be a key requirement for all originators. The sales candidate interview will be a true audition similar to applying to be a QVC host.
- Use of video conferencing technology such as Zoom will continue to increase. Traveling to conferences and meetings will decline significantly. Receptions will be nixed causing trade organizations to rethink their marketing strategies.
- With the surge in remote working, will there be a decline in number of managers? In the U.S., there is one manager for every 4.7 employees. This organizational framework is not productive. Many experts believe remote working will be the nail in the coffin for some managerial-heavy firms.
What other future trends do you see in mortgage sales? Let me know your thoughts and I will share.