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Article

The Art & Science of Sustainable Mortgage Innovation

By Kevin Quinn, SVP, Servicing

The mortgage market is predictably unpredictable. If you are a mortgage industry veteran, you have ridden the mortgage rollercoaster and watched businesses exit never to return. The truth is that not every firm is cut out for (or designed to withstand) the fast, extreme market change that can occur in the mortgage industry.

If you are a mortgage business (lender, servicer, vendor, or outsourcer), the ability to remain innovative will increase your chances for business longevity and prosperity. But what does that even mean? I, too, am an industry veteran and have watched self-proclaimed “innovative” businesses die strategies fail in the face of drastic volume drops, and businesses cave to market pressures, despite their best efforts.

Being innovative doesn’t necessarily advance a business if the innovation doesn’t do what it is supposed to do; if the strategy for embracing new technologies and solutions falls short; or, if executive management isn’t fully committed to the technology or innovation. The challenges that come with being “innovative” can lead lenders and servicers into a state of inertia because it feels safe.

That’s why picking your mortgage outsourcing and technology partners is and should be a very thorough process. Distinguishing between an innovative mortgage business with the ability to transform, and one that simply advocates for innovation could be the difference between adapting to (or thriving in) challenging business and market conditions or suffering operational and business setbacks to a lender or servicer’s ability to compete (or survive).

As a leading mortgage services provider and technology innovator, Indecomm believes that there is an art and a science to building an innovative and sustainable mortgage services model.  I’ve had the good fortune of getting behind-the-scenes access to Indecomm’s business model and discovered that unlike other mortgage technology and service providers, Indecomm considers mortgage “innovation” a nuanced concept.

I have been able to extract and identify some noteworthy differentiators that may help lenders and servicers think through their partnership. Here are a handful to consider:

“Innovate Pragmatically, Or Die”

Innovation is of critical importance to survive the mortgage industry, but there are many products that are rushed in their build, lack practical application in day-to-day operations, or miss the point entirely. It’s essential to balance visionary thinking with practicality to ensure that your innovation is viable and sustainable.  Challenge the status quo? Yes, please! But do it in a way that is grounded in market realities, system and technology compatibility, and resources.  Indecomm solutions are built by mortgage practitioners, process experts, and technology experts to ensure that any solution developed will solve real-world problems that address market needs.

After all, most, if not all, of the leaders and front-line associates charged with successful implementations have day jobs. Innovation can’t come at the expense of overwhelming the teams that need to participate in the process.

“Proof Before Pride”

There are many, many mortgage services businesses that label themselves “innovative” and “tech-enabled” but there is no certainty in that definition. Most do not have proprietary technology.  Here is a slightly rudimentary analogy: a business adds a bell to a bike (and hey, that bell could save a life); another “reinvents” the bike (forgetting important features like wheels); and another resells tech products (slapping their logo on it). All claim “innovative” and all would be right if defining innovation is left to the innovator. The truth is, when it comes to mortgage innovations, the user determines whether your technology products are innovative, and it often comes down to whether tech solutions add value to their business and operation.

In every industry, tech, and service provider overstate how much their innovations or services “transform” business. In mortgage, this can also occur. Therefore, mortgage lenders and servicers should first define what they need from “transformational tech” and ask the right questions based on that criteria. What does the tech promise and is it truly what your organization needs? Is the technology built by mortgage experts? What does integration with your POS/LOS/ Servicing System look like? How much support is required from your team to keep it up and running? Who is managing the technology? What are the benefits and what are the risks? And so many more.

I have first-hand experience with some of the traditional service providers and here are a few things I’ve come to appreciate about Indecomm that help our clients gain confidence that our solutions will generate ROI:

1.     Indecomm’s Genius suite of SaaS/ automation solutions is built in-house by our mortgage experts. We do not resell other products. We are accountable for the performance. One of the best things about making your own solutions is that the quality of the result directly reflects the problems and needs that outsourcing partners bring up. By building around real-world use cases in the mortgage business, you solve problems that your clients face in the real world. This not only makes your services better, but it also helps Indecomm be a true partner and problem-solver instead of just a service provider

2.     Proof of concept on any solution Indecomm sells is required before any client roll-out. Since our technology and automation solutions are used within our own service offering (including fulfillment, underwriting, quality control, post-closing services, and servicing support) a product that doesn’t work would risk Indecomm’s entire business model.

3.     Indecomm backs most of its tech products with the “Indecomm Promise” which is its term for its reps and warrants.

4.     Indecomm does not consider its solutions “innovative” unless it generates a return for our clients that we can track: Reduced risk, cost saving, scalability, time savings, efficiency, etc.

5.     Indecomm takes a “glass box” approach to its solutions. For instance, lenders implementing Indecomm’s DecisionGenius underwriting and decisioning engine can see behind the scenes at the data and docs used to generate a decision. With AuditGenius, users get a complete audit trail that provides transparency and tracking in response to regulatory audits.

“Disruption without Being Disruptive”

While technology has enabled firms to trim costs, boost efficiencies, and focus on critical decisions, it has also introduced threats to lenders. At Indecomm, our greatest challenge is defending our integration and implementation approach in response to the mishaps made by other providers.  In other words, many clients that come to us have been burned by past vendor/ outsourcing/ tech partners.

Let’s be real: A new technology solution can be disruptive in a good way: enhanced efficiency, cost savings, and faster turnaround times. On the other side of that coin, embracing new tech solutions can introduce financial, compliance, and operational risk, from implementation through performance. Any downtime can significantly impact operations. Additionally, as technology evolves, staying compliant with regulations becomes a moving target, necessitating continuous monitoring and adjustments. As organizations navigate the technological landscape, striking a balance between leveraging advancements and mitigating risks is essential for sustainable growth. At Indecomm, being “innovative” doesn’t stop at the features and functions of its solutions, it includes a well-planned integration strategy based on what is best for the lender or servicer.

In such a volatile business environment, Indecomm knows that technology investments are high-risk for clients which is why it offers a range of creative adoption strategies based on the lender or servicer’s operational and business needs.  Find out more about Indecomm’s Genius suite of solutions and its tech-enabled services offering. Reach out to me at kevin.quinn@indecomm.net  If you are attending the upcoming MBA Annual Convention in Philadelphia, let’s schedule time to connect.