Mortgage lenders have differing opinions on how the industry should respond to changing market dynamics, particularly in light of new technology solutions, including the ever-evolving migration to digital mortgage lending and eClosings, and the big elephant in the room: how (and how fast) AI will change the mortgage and servicing industry. But there’s one thing everyone seems to agree upon: “We have to stop doing business how we’ve always done it.”
This fact was brought into sharp relief in a recent focus group Cloudvirga hosted in conjunction with BlackFin. The focus group brought together mortgage lenders from across the country, including from the wholesale, retail, broker and correspondent segments, to gauge their opinions and perspectives on the future of the industry.
Many of these same themes were also voiced in a recent Fannie Mae survey about the Technology Service Provider (TSP) marketplace which underscored just how important POS and LOS technologies are to the industry. The survey, which included 200 mortgage executives, found that LOS and POS solutions are considered by most lenders as business critical (or "must haves"), ranking highest in terms of total TSP investment, which includes headcount and/or resources dedicated toward implementation and usage.
Here’s what these two research initiatives found regarding the biggest pain points with technology, including POS solutions.
· There’s too much technology, too many providers, and the tech is only fixing little problems.
The general sentiment among the participants in the Cloudvirga/Blackfin focus group was that they have too much technology that doesn’t add significant value or ROI. In the Fannie Mae survey, POS was identified as the top area in which lenders believe there are too many technology service providers. What lenders didn’t like about POS tech was the similarity of services offerings, difficulties in researching all available options, and integration challenges.
In the focus group, when asked if the industry is innovating, or merely incrementally fixing little problems, 95% said “fixing little problems.” They said they are exhausted with their firms’ tendency in the past to move quickly to purchase nifty new technology that over-promises and creates expectations among LOs and operations, but then under-delivers. That leaves teams scrambling to put band aids and patch-jobs in place to work with new technology without it being properly implemented and/or adopted. When asked if their firms are guilty of buying the new, shiny object, there was 100% agreement.
· Integrations are hindering technology adoption.
According to the Fannie Mae survey, when selecting technology service providers, lenders’ top three requirements were costs, functionality and integration capabilities. From our focus group, when asked what top two issues they would change with their current platform, participants named integrations and POS/mobile functionality. When asked what factors would make their firm consider switching technology system(s), the top answer was integration.
· The lack of strategic tech planning is prevalent.
Our focus group participants believed the industry has a reactive approach to market conditions — primarily defined as being swift to hire and fire to match demand — but gave the industry a “D” in proactive strategic planning when it comes to technology. Well over half of participants (62%) did not believe the industry adapts to change well. “We are terrible at change management,” said one participant. And from others: “Our firm thinks of training on the day of implementation.” “We need to do better job buying tech. We need to ask what problem are we solving and how is it lowering my cost?” These comments underscore that technology optimization — trying to get more out of what they have — is a primary focus for most lenders today. Exacerbating the issue is a lack of strategic tech planning driven, in part, by leaders within TSPs that lack specific mortgage expertise. This leads to roadmaps that are not informed by what the industry actually needs and solutions that miss the mark.
· Lenders are looking for simplification with POS solutions.
We heard this sentiment in our focus group, but it’s a theme that is evident in other industry research as well: Lenders are signifying they’re ready to consider moving back to all-in-one solutions that help them modernize their process. In a previous Cloudvirga blog, we explored the industry’s interest in a new kind of POS — a POS plus if you will — that goes beyond simply facilitating the application. Instead they want a comprehensive, end-to-end solution that can work with prospective borrowers throughout the entire process, beginning when they first think about buying a home through final loan closing. It’s clear from the lenders we talked to that they are looking for more simplification with options that offer end-to-end benefits and solutions that actually deliver measurable improvements they care about — greater efficiencies, enhanced customer and employee experiences and, most importantly, cost savings.
For more information on how you can tackle POS pain points, reach out to our team today.
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