Sagent’s David Doyle on How Mortgage Firms Should Rethink Tech Strategy in 2024 

This article originally appeared in National Mortgage News.

Today’s mortgage market operating environment continues to prove very challenging, and most indications suggest these demanding market conditions will persist well into 2024 or longer. Unquestionably, this market demands leaner operations, requiring originators and servicers to continually identify ways to streamline their tech.

Many seller/servicers find themselves needing to rationalize their tech stacks and related costs coming out of the heady market of 2020 and 2021. All of this forces serious consideration and tough conversations about which tech solutions are actually creating value through the promises of automation, efficiency, employee productivity enhancements, and delivery of exquisite borrower experiences.

In 2024, the focus for servicers will be on streamlining tech, driving efficiency, and reducing overall spend. The big idea? Ever-elusive business simplification. 

The Tech-Spend Reckoning: What Makes the Cut?

In originations, lean shops have argued during this cycle that they need loan manufacturing (LOS/POS), pricing, marketing, and everything else is expendable.

In servicing, the must-have capabilities are more comprehensive and more nuanced: Core servicing, consumer, default, and loan movement (onboarding, transfers, etc.), ideally unified in one platform for operators and homeowners that aligns homeowner self-service capabilities with back-office capabilities.  And, of course, the ever-present requirement of a fully compliant platform.

Eliminate Tech Spend ‘Waste’

Spending more money to add solutions is not the answer. In fact, a 2023 Forrester report on cloud technology efficiency and maturity found that 9 out of 10 technology decisionmakers reported one or more types of avoidable cloud technology spending, with overprovisioned resources and idle (or underutilized) resources experienced by 50% of respondents.

Layering tech on top of tech presents a host of problems: Highly complex change management, challenges to future innovation, and inhibitions to repeatable execution of efficient, cohesive business processes are just a few. 

Many companies are great at adding new tech, but few are effective “editors” of their tech stacks.  Which makes future scalability and configurability less accessible, and adds complexity without value.  Sustainable innovation and continuous process improvement become nearly impossible if you’re working with layers of legacy technology that are not cloud-native and API-friendly. 

The most topical example of this is Artificial Intelligence (AI) and large language learning models (LLMs). AI and LLMs have the potential to supercharge servicing operations, but taking those ideas from theory into practice can’t happen without cloud extensibility and interoperability to power it.

Servicers must recognize dated, costly core systems and the “wrap around” approach to covering gaps for what it is — a costly methodology to sustain technology that has outlived its value and is now driving cost and risk, while suppressing the benefits of business simplification: More task automation, compressed cycle times, reduced costs, and risk reduction.

Optimize Existing Tech (and Processes) to Drive Adoption

One-off, surface-level tech solutions without a holistic approach that incorporates process and system improvements are feeble, short-term fixes that breed complexity as an org matures.

With leaner tech stacks, servicers can then focus on optimizing their processes to scale operational maturity and drive adoption of existing tech to streamline operations.

A lack of skills or training, siloed teams, etc. can also be a barrier to existing tech adoption. Mature organizations with well-optimized processes and cloud technology power better implementation and scalability, more seamless automation, and better talent retention.

Forrester found that organizations with high operational maturity captured the most value out of their cloud technology, including agility, visibility, automation, security, and staff retention.

Choose the Right Tech Partners

The value of your technology is as good as the quality of your partnerships, and the key is finding a tech partner who is building for the future, a partner whose approach to innovation is iterative, not additive.

This means a systems-thinking approach to holistic innovation, not spot-treating symptoms as they arise — a partner who will doggedly uncover the root issues and develop technology to heal them and fortify growth from within.

Bringing the best of startup speed and scale stability in this complex $14T market requires the breadth of servicing processes to work together cohesively in a single unified workflow across front and back office, from performing to default. This means an open ecosystem with real-time data flows and task automation to enhance and simplify processes for operators and consumers alike.

The Future of Servicing Is Unified

Throughout this immensely challenging cycle, Sagent is the only fintech making major investments in this future when servicers need it most.

Sagent’s vision for the future of servicing is clear: simple and unified workflows with smart automation and real-time processing for end-to-end capabilities across the entire loan lifecycle with a robust compliance and change management framework to exceed regulator, investor, and consumer standards.

This is what creates a world-class experience for consumers when they need it the most.  If you are interested in a deeper look at the potential for mortgage servicing’s future, and your future, look for Sagent’s big market announcements in the first quarter of 2024. 

This article originally appeared in National Mortgage News. 


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