Mortgage Industry Trends and Observations From MBA Annual Convention 2021
Edison, NJ – Tuesday, October 26, 2021. Indecomm Global Services, a leading provider of digital solutions and services for the mortgage lending industry, was a Bronze sponsor of this year’s MBA Annual Convention, held October 17-20, 2021 in San Diego, CA. It was the first time the industry got back together to meet in person in large numbers after two full years due to the ongoing pandemic. Reflecting on last week’s event, Indecomm’s team sees it as a memorable experience in many ways:
- Mortgage industry leaders return to the industry’s premier event to network and connect at MBA Annual 2021.
- The economic landscape had changed significantly since the last MBA Annual Convention in 2019, held in Austin, TX. Dwindling home inventories coupled with a forecasted drop in refi volumes are presenting a double whammy for lenders in the year to come.
- Work from home is now the dominant mode of work for employees across all industries, including the mortgage industry.
- The “Great Resignation” has further exacerbated the demand for talent in the mortgage industry, further pushing lenders to find innovative ways to be productive and profitable.
Indecomm’s leadership team had a packed calendar filled with back-to-back meetings each day of the convention, starting with breakfast meetings, and ending with dinner meetings. The meetings with mortgage lenders of all sizes – from mega banks to large/medium and small independents – provided Indecomm with excellent perspectives about how the market has changed these past few years from an automation perspective, shared below.
Level of Knowledge About Automation Solutions Has Increased
Mortgage lenders have aggressively embraced automation over the past few years, often starting with native automation in loan origination (LOS) and servicing systems, supported by robotic process automation (RPA) for tasks that cannot be automated natively and enhanced by intelligent, data-driven automation. “The level of knowledge and understanding about the different underlying technologies driving these automation initiatives has improved vastly,” said Narayan Bharadwaj, SVP of Automation for Indecomm. “The mortgage lenders that we spoke with definitely seemed to be more discerning and curious about the types of automation frameworks, their efficacy, accuracy, throughput rates, ROI and sustainability.” This is fantastic and a welcome progress as the market will separate the solutions which are truly effective versus the ones where marketing budgets exceed core product development budgets.
Severe Buyer’s Remorse on RPA
Many mortgage lenders Indecomm spoke with had gone down the path of selecting and implementing an in-house RPA platform only to be stung by the lack of ROI or the frustration of having to deal with the unknowns in the RPA world, which even their technology partner was clueless about. Lenders, especially the ones who had experimented with RPA, have a very clear understanding of what to automate, how to automate, and what to expect as the outcome of automation. As RPA-led automation matures, this level of knowledge is much needed to make RPA initiatives successful.
In-House RPA Is Not Sustainable
Perhaps the most insightful observation Indecomm’s leaders came away with is that mortgage lenders who have implemented RPA with DIY platforms are struggling. “We spoke to a variety of lenders, especially banks, regardless of their size, who have tried to build DIY RPA, but are suffering from the fallout of maintenance, “said Bharadwaj. “For example, a very large bank implemented RPA going in with the corporate mandate but was stuck in the resource allocation and maintenance challenge with the centralized RPA Center of Excellence (CoE). When their bots broke, they remained broken for months together without a fix. This means that the operational capacity released by the bank due to automation had to be brought back. This is a nightmare of epic proportions!” On the other end of the spectrum, a small community bank who had gone down this path was finding it hard to hire and retain RPA talent and are very worried about the ability to run this in a sustainable manner. While in-house RPA may be effective in some scenarios, banks and lenders who jump into this without considering the long-term aspects of it tend to have a rough ride ahead of them.
Decision Management Is Clearly the Next Frontier of Automation
The number of mortgage lenders who want to automate their decision management is staggering. Lenders expect decision management systems to drive straight through automation in underwriting, but also deliver the transparency that helps lenders understand how a decision was derived. For instance, Indecomm’s DecisionGenius™ software delivers straight-through automation to automatically move a loan to the next milestone, while providing complete transparency to lenders, backed up by all data and calculations made to arrive at that decision.
Reimagining Loan Manufacturing
With the maturity of automation solutions across the continuum from RPA, Intelligent Automation to Supervised Automation, mortgage lenders are reimagining the loan manufacturing process. Lenders today have the capability to automate routine tasks using RPA, drive straight-through processing using data, and use human intelligence to perform higher order functions such as exception management and other tasks requiring cognitive intelligence. This new world where human cognitive intelligence and a machine-driven intelligence co-exist has already become a reality in many mortgage banks. “If one were to compare the process maps and swim-lane diagrams of the manufacturing process ten years ago versus today, the interplay of RPA, API-led automation, data-driven straight-through automation, and human interaction is striking,” said Bharadwaj. Clearly, more lenders are aware of the possibilities of this new world and are constantly reimagining this interplay.
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