Sagent’s own David Doyle was a guest recently on CONNECT by California MBA podcast, the weekly podcast by California MBA featuring one-on-one interviews with movers and shakers in the mortgage industry, hosted by Susan Milazzo, CEO of the California MBA.
Over the course of the conversation, David touched on the need to push the status quo with tech for a better borrower experience:
There are a lot of things about the industry that have changed over time. Technology has certainly been a huge factor; and the advent of Dodd Frank; and the growth of laws, rules, and regs; and the ability of regulators to enforce those rules. All those things have changed and grown, but the thing that really hasn’t changed much in the business is the borrower experience.
“I think for our industry, despite so many efforts, things really haven’t improved much with respect to the borrower experience, and it’s still a bit of an intimidating experience for borrowers. And I think that’s regrettable and something that the industry needs to continue working very hard on.”
They also went on to talk about the current state of the market. As David explained, would-be homeowners are tenacious, even in downturns:
Looking ahead, in 2024 rates are high, inventory is really low, credit’s pretty tight. This is why the MBA purchase index is running at 38% of its 10-year trailing average, and we’ve got related impacts on employment in the mortgage industry. I think mortgage industry employment is down over 20% over the last couple of years.
But the other side of the coin is the remarkable resiliency of the American homeowner. Borrowers figure out how to adjust to the industry conditions that they see. If rates are high, they think through the adjustable-rate mortgage solution, or they buy less house or they select a different neighborhood. The motivation that people have to acquire a home and then also some of the practicalities associated with making it happen.
As for what should be top-of-mind for lenders, servicers, and fintech partners alike in 2024, David had this to say:
I think it’s the premium on discipline and diligence. The industry is dealing with a fundamentally much smaller pie. So the way we acquire people, pay for people, invest in people — those investments need to be smarter. Because you can’t afford to miss as much as you could afford to miss in 2020 and 2021.
The rigor around the identification of top talent, the investment in top talent, the retention in top talent is super important to the success of institutions.
And part of making the most of your talent means empowering them with technology. But tech isn’t necessarily always the answer, and
David went on to explain how there’s a tendency to try solve non-technological problems with technology solutions:
And with robust markets like we experienced in 2020 and 2021, there can be a propensity to overspend on technology as well. And now, a lot of institutions are operating with lots of different technologies, lots of different points solutions that may be disparate, that might represent individual solutions to individual problems that might not even be technological in nature.
Companies need to reconcile all of that and reexamine their technology stacks to understand what’s really working. Why are my people using it? What’s really working? What’s creating value? But then also, importantly, understanding what’s not working, what suffers from low adoption, what’s not creating value in the process.
And we’re generally lousy editors, right? We tend to add lots of things, but we don’t really take things away frequently. This is how institutions end up with overly complex operating environments, a potpourri of point solutions that populate their ecosystem, and with very disparate levels of adoption, and value creation among all those solutions.
Lenders and servicers need to reconcile all those tools, strip away the things that are excess and not creating value so that their people can deliver for borrowers and for homeowners in a really elegant way. Not one that’s confusing and has got people moving from environment to environment through a single business process. I think that’s a very significant trend for 2024 and beyond.
The focus for 2024 then? Get lean and efficient. Have the courage to edit and strip away the things that aren’t creating value. Overcome your aversion to change.
An aversion to change can breed the tendency to stay with technologies beyond their appropriate shelf life, and sometimes what makes the sense for an institution is to acknowledge the dated nature of technology, rip the bandaid off, and make the changes.
To wrap up the discussion, David ends with some gratitude:
I just finished talking about making quality investments in top talent and how important that is, and I can’t think of a better example of us making a high-quality investment than the investment we made in putting Will Gehl — a Senior Sales Manager at Sagent — into the California MBA’s Future Leaders Program. I can tell you that he was super energized by his experience.
His participation with the small group, and the competition was to create a mortgage company from the ground up, and then have that team-based process culminate in the live presentations that they made to the California MBA Board of Directors recently. It was an incredible experience for Will, and it all added up to a great investment by Sagent and one that we would be more than happy to make again.
This is a can’t-miss podcast so be sure to add it to your queue and hear it in its entirety.
Listen to the full podcast here: