When it comes to rule integration efforts such as the TILA-RESPA Integrated Disclosures (TRID), the effort can sometimes feel thankless especially when the outcome—compliance— gets rolled into the day-to-day processes. There is no cheering…no standing ovation when compliance is a success. Instead, upon final implementation, the individuals and leaders involved in compliance efforts take their first deep breath and mumble “we made it.”
Well, I am here to tell you that when compliance initiatives are accomplished with long-term business strategy in sight, the outcome goes beyond survival: It becomes a lender’s competitive advantage. Here are three ways to make the most of major compliance initiatives.
1.) Technology Strategy vs. Forced Change
At this point, every lending technology provider is ready for TRID but some providers are more accustomed to strategic decision-making than others. There is a difference between making system changes and driving technology advancements. If your provider’s goal is to simply help lenders achieve the minimal level of compliance and keep them out of the spotlight, then the lending technology provider may be a little short-sighted.
Everyone knows that compliance is critical but technology decisions should not be a byproduct of compliance requirements. Instead, compliance should be one among many outcomes of technology advancement. Lending technology decisions should be made based on a need to improve origination performance with the ultimate question being “how can we add value to the lender’s operation?” While compliance can serve as inspiration for technology decisions, it should not be the only reason a technology change is made. For example, at Wipro Gallagher Solutions, we focus on how we can drive down compliance costs using automation, minimize user error, or innovate tools that accelerate the origination manufacturing process. Now, when we talk about being TRID-ready to our clients we are also talking about adding business value.
2.) Getting Rid of Technology Limitations
Though few may recognize it now, the time and effort spent upgrading from a legacy system to a system that can handle compliance needs will ultimately generate costs savings and optimize processes. While compliance with TRID and other Dodd-Frank rules have created significant financial, time and resource constraints for lenders it has also enabled them to rid of technology limitations and outdated systems. For some, TRID prompted lenders to consolidate systems and move to an enterprise-wide platform which allows them to improve operational oversight and minimize business risk. Others have taken the opportunity to move to a cloud-based lending system to minimize IT costs. Some are seeking out larger organizational changes such as channel expansion or adding mobility to their strategy. When switching systems, lenders are able to ensure regulatory compliance and address other business and technology needs.
3.) Customer Experience is Critical
For those lenders and technology providers that understand the business value of the TILA-RESPA Integrated Disclosures will keep in mind that the overarching goal of recent regulation is to create a more transparent lending process. It is important to keep in mind that while transparency is enforced by regulators, the demand for transparency is driven by the consumer. Implementing Dodd-Frank regulation is an opportunity to rebuild borrower confidence and strengthen relationships.
For many lenders and their technology providers, compliance integration presents an opportunity to replace outdated processes and infrastructures with a more borrower-centric approach. Lenders that focus only on business improvements (such as efficiencies and productivity) are missing the opportunity to align with borrower needs. Borrowers today seek a simplified, streamlined, and transparent experience. Changes prompted by compliance should reflect that demand wholeheartedly. A holistic transformation that extends from back-office optimization (meets the lender’s compliance and business needs) to customer-facing service (excels the borrower’s needs) will bring about competitive advantage. Lenders that keep the spirit of TRID and Dodd-Frank at the forefront and remember its intent can take the rule one step further to improve the quality and simplicity of lending. This effort might include the adoption of modern technologies such as mobility and web-based lending or it may mean greater investments in borrower education.
These are just a few opportunities to make the most from recent compliance changes, however each lender should seek to identify how TRID and other compliance initiatives present unique opportunities to capture more business, improve efficiencies and minimize business risk. By focusing on overall strategy, lenders can better evaluate how regulation will impact their business in the long run.
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