A Bold Statement


Sue-WoodardHere is a bold statement: customer relationship management (CRM) technology is the most impactful development for the mortgage industry since the advent of broad-market loan origination software (LOS) about two decades ago. Those systems, despite being PC-based and just receiving their first graphical user interfaces, were transformative for their day. Printers replaced typewriters, and data that repeated throughout the loan file needed to be entered only once, for the most part. They seem quaint by today’s standards, but they were marvelous labor-saving devices at the time. In the new age of extreme regulatory oversight, however, when exactitude is required at every step of the origination process, no technology can bring as much impact as a great CRM.

That statement is certain to run contrary to the feelings of many who are involved with mortgage technology. But as someone who spent 20 highly productive years originating loans, as well as managing and training mortgage loan originators to succeed, I know without a doubt that an advanced CRM can make all the difference between success and mediocrity in our business. Here’s why.

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Innovation is more critical now than ever before for lenders, particularly in view of the industry’s multi-agency oversight and the precision that the new regulatory era requires of originators. In addition, lenders’ competitive pressures have shifted due to two principle factors. First, the decreasing influence of big box banks is giving rise to rapid expansion by predominantly non-bank lenders who are unfettered (at least so far) by the additional regulations to which depository institutions are subjected. Second, the homogeneity of products available due to the dominance of the GSEs in the investor community has made differentiation among lenders less dependent on products and more on marketing and sales efficiency. If every flavor is essentially vanilla, you had better possess superior surroundings, toppings and service if you want to engage customers.

Technology ties all these changes together. It represents the only truly acceptable response to the challenges of the new environment – and advanced CRM technology stands out among all others in this regard.

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Five-Tool Players: Baseball fans are familiar with the notion of the “Five-Tool Player,” the exceptional athlete who can run, field, throw, hit for average and hit for power at an elite level. They are as rare as unicorns and immensely valuable to a winning organization. Back when Branch Rickey, the legendary major league baseball executive, coined the term in the 1960s, he could name only two players who filled the bill, Willie Mays and Mickey Mantle.

In our business today, there are also probably only two five-tool players: the top-line LOS and advanced CRM technology. You need a superior LOS to get in the game and stay there; to win consistently, you need great CRM.

Historically, several of the core functions of CRM technology have been left to chance by lenders over the years, but in the new reality, that’s no longer a recipe for success. The days of leaving MLOs to their own devices in the creation of marketing collateral and non-standard presentations are over, thanks to the CFPB. Further, marketing campaigns and enterprise data must go hand in hand today, not only to achieve outreach excellence, but also to stay compliant with fair lending considerations, including Disparate Impact.

For the purposes of this discussion, I differentiate an “advanced” CRM from the garden variety tools to indicate that we are not talking about contact management software that produces basic email marketing messages, which the industry has used for decades. I am referring to the sophisticated variety of highly responsive technologies that are used by most other industries, yet have been strangely absent from the mortgage business until recent years. These are technologies that work with enterprise systems to maximize data usage, develop tailored marketing outreach campaigns, produce presentations that dazzle customers with personalized scenarios, and provide complete reporting to please data nerds and regulators alike. These technologies access content libraries representing hundreds of years of collective industry experience to produce articles, newsletters and informative materials that drive action, and create lasting bonds with borrowers and referral partners. They are an entirely new breed and rival the best CRM systems found in every other large industry.

So how does advanced CRM fit into the picture for lenders? Simply stated, that five-tool metaphor translates into functions every lender needs in order to excel today. The most advanced CRM technologies are cloud based, SOC 2 audited, secure platforms that:

>> Provide a competitive advantage with marketing sophistication to accelerate sales cycles and enhance recruiting efforts;

>> Keep MLOs and your brand protected and safely compliant with standardized messaging;

>> Regulate and keep track of outgoing borrower communications and offer detailed reporting for audit purposes;

>> Reduce costs associated with production through higher closing ratios;

>> Leverage enterprise data and exponentially increase the organization’s reach to potential customers, including to underserved markets that are affected by the Disparate Impact ruling and other fair lending mandates.

Excellence Trumps Freelancing: When discussing our CRM solutions, I am frequently asked first about how MLOs respond to having their freelance marketing efforts suddenly ended. The answer often surprises: they love it. Sure, it’s counterintuitive, because field loan people are quite often fiercely independent. But when they see the difference between the results of their amateur efforts versus the consistently polished, professional and always-impressive output of the advanced CRM system, their objections go away. The fact that the materials are produced so effortlessly wins them over because time is money for them. The fact that all are pre-designed for compliance is, in the minds of most MLOs, secondary. It has never been a good idea to let MLOs run amok with the company’s messaging in the field, but that course has been the path of least resistance for lenders over the years. Today, it’s an unthinkably dangerous practice due to compliance considerations, and thanks to great CRM, it can now be obsolete.

Another early question I am asked is, predictably, what about the cost issue? Until a few years ago, big technology improvements generally required writing a big check. These days, pay as you go and success pricing arrangements are the rule rather than the exception. You can expect some integration time and expense, of course, but those are recovered very quickly as the benefits of advanced CRM are realized. When those systems are already integrated with the leading vendors, much of the implementation time and expense evaporates, too.

Evaluating Prospects: Just as big league scouts vet prospects to find five-tool players, it’s important to do your homework before you commit to a CRM technology. And don’t just include the tech people in the organization, either. CRM is a business-side decision, as it can have enormous current and future impact on a company in terms of data productivity, retention marketing success, referral partner relationships, pull-through rates, and recruiting goal achievement. Schedule demos for senior production executives and be sure to include the operations and compliance leaders. Gauge their input and reactions and make certain nuts and bolts observations are carefully recorded, as top CRM systems are highly customizable. You don’t have to settle for “one size fits all” when it comes to features and capabilities.

Security is on everyone’s mind, as well it should be. The best CRM vendors have undergone rigorous audits to demonstrate their operational and data security measures and can share that information readily. The Service Organization Controls (SOC) 2 report, for example, focuses on a business’s controls over security, availability, processing integrity, confidentiality and privacy of a system. These are prepared by independent third party auditors and should be considered absolutely necessary for a CRM candidate when company data is on the line.

The upside of putting advanced CRM to work for an organization is greater than ever, thanks in no small part to Dodd-Frank and the CFPB. While many might disagree, it is a blessing in regulatory disguise; lenders would have benefited mightily from having these capabilities over the years. Now that everything lenders say to the outside world is under the microscope, they have the opportunity to do something truly transformative for their companies that is well beyond today’s regulatory demands. As the competitive landscape changes to spotlight fewer teams chasing greater shares of the market, they would do well to have some truly great five-tool players at their disposal.

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