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Sustained Winds Of Change To Continue

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We’re all conditioned to think about change coming in waves with ample time in between to recover before the next wave hits. This is true in both our personal and our professional lives; we see it within a year and within a lifetime. But what happens when the waves of change become so frequent that it’s hard to tell where one ends and the next begins?

Since 2009, the US mortgage industry has experienced back-to-back changes. Not only have we seen typical purchase/refinance cycles, but we’ve also had countless compliance changes: RESPA, ATR/QM, KBYO, and so on. It’s not just the mortgage industry, either. Across seemingly all aspects of modern life, largely thanks to technology, the pace of change is quickening. For example, the VHS was introduced in the US in 1977, followed by the DVD 20 years later in 1997. However, Blu-ray entered the scene just 6 years later in 2003, and now we have the 4K revolution quickly setting in – something YouTube adopted in 2010. Now, with the election of a new kind of presidential administration, there is no reason (on top of all others) to think that the pace of change in the US mortgage industry will ease. There will be considerable uncertainty around regulation and interest rates. Add in innovations like those for borrower experience now further fueled by Fannie Mae’s Day 1 Certainty program and industry movement towards eClosing and the overall view can be daunting. Our new normal is nearly constant change. The question becomes: How is this constant change impacting your staff, and what can you do to support their needs in order to best serve your customers?

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It’s in our nature as humans to react to, and then absorb, a wave of change. We also expect that the dust will settle before the next wave of disruption hits. However, when change continues unabated, it can be stressful. As managers, it can be equally stressful to help your staff adapt to these times. One way to simplify the impacts change has on us is to think of change similar to the well-known stages of grief: denial, fear, acceptance, commitment:

>>Denial. With change often comes an unwillingness to accept what lies ahead. Fortunately, there are steps you can take to help your staff overcome this make-or-break stage. First, get buy-in from staff early on. By communicating what the change means to each team member long-term, you are more likely to advance through the four stages without as much resistance or push-back.

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>>Fear. Denial and fear often go hand-in-hand. Again, communicating regularly about what this change means for each employee and how you seek to make the transition as smooth as possible for everyone can make all the difference. Most important for this stage is establishing an action plan for addressing the changes. This step can significantly help your staff see the big picture and the “light at the end of the tunnel”.

>>Acceptance. By now, you should have buy-in from your team that the change is happening but is manageable thanks to the plan you’ve put in place. At this stage, you should encourage that acceptance and continue keeping the lines of communication open. Without ongoing communication, staff could very well revert back to the previous stages, thinking the plan established is not, in fact, being acted upon.

>>Commitment. Because the waves of change are sure to be constant going forward, the four steps can become cumbersome and hard to constantly manage. In order to gain true commitment from your staff, ensure you have a nimble “change-enabled” origination process in place. By creating systems and processes that can easily adapt to meet change, you can significantly reduce the impact of future changes on your staff and your customers.

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By better understanding how we, as humans, process change, while also taking our own advice by going through the 4 steps to accept that we now live in constant change, we can begin to best position our organizations for long-term success. The next step in riding the winds of change is to establish the processes and systems that will lead your staff towards long-term commitment.

While as an industry, we can’t avoid or ignore external change like required security or compliance updates, lenders and vendors alike can build vetting and prioritization processes to make sure that only the best changes/improvements are put in place to truly support where your business needs to go. If you have too much “self-introduced” or discretionary change, then you might add unacceptable levels of risk. On the flip side, if you have too little self-introduced change, then you’re sure to be exclusively reactionary and passed by competitors.

So what are common criteria for vetting and prioritizing change in the mortgage industry? Compliance risk, financial risk, impact to borrowers, impact to staff efficiency, level of effort and/or expense all are great starting points. For a given proposed change, many of those categories might be mixed (positive in some areas, negative in others). Some will be easier to quantify than others, but this should not mean that subjective measures can’t be used. For those that might fear bureaucracy, you can introduce a lightweight and flexible process. The point is that you collect additional facts only when appropriate to the size/impact of the decision. Frequently, you will decide based only on readily available information but still will take the time to capture it in a structured way. Having a transparent and fact-based process helps get the right discussions going between the right people and will make difficult decisions easier.

So a process around vetting and prioritizing change is essential. In addition to that, what aspects of an origination platform will help manage change? True flexibility is required, but what specifically in a technology platform provides flexibility? An open architecture that is extensible means having a developer’s toolkit and an API surface. An exposed rules engine is also important so that you can easily configure workflow, drive efficiency like automatically ordering services, kicking off exception processes, etc. Last but not least, delivering all this in a SaaS product model is critical to stay current on the latest releases. This is no longer optional thanks to regulatory changes and ongoing security enhancements to keep your borrowers’ data secure. Custom or quasi-product models allow for the customer to lag on an out-of-date version. When this happens, you’re not only missing the latest security and compliance updates, but you’re also limiting your ability to effect change because of the friction of moving your enacted change through multiple version upgrades.

As John F. Kennedy once said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.” By working with your staff, updating your processes, and advancing your technology, your daily concern will be less about adapting to change and more about anticipating the change. Let your focus turn towards the future, which is sure to look brighter than ever before.

About The Author

Paul Wetzel
Paul Wetzel has led Product Development and Product Management activities through most of his 20-year enterprise software career – over the last 10 serving the Financial Services industry. In his current role, Paul manages both customer and industry requirements to drive product enhancements while also ensuring Mortgage Cadence leads the way in innovative loan origination technology. Paul began his career with Accenture in software development where he rose to the level of Director, Business Development for an Accenture subsidiary. Before joining Mortgage Cadence in 2009, Paul spent several years with FICO in product marketing and corporate strategy roles.

A Bright Future Lies Ahead

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The term loan origination system or LOS is bandied around a lot in mortgage lending. The LOS is the core system of record that lenders rely on. However, LOS companies have not been known to innovate and are often blamed for holding lenders back from innovating themselves. That’s what has made Mortgage Cadence so successful. The company has always managed to stay ahead of the curve.

For example, the company recently made news when it transitioned all of its clients – more than 600 mortgage lenders across the U.S. – to the Accenture Mortgage Cadence Cloud to better manage loan processing cycle times, increase system reliability and leverage product upgrades. Brad Thompson, the current Mortgage Cadence Technology Lead at Accenture Credit Services; and Paul Wetzel, the Product Management Lead for Mortgage Cadence, talked with our editor about their careers, what’s next for Mortgage Cadence, and what lenders need to do in order to remain competitive these days. Here’s what they said:

Q: I understand you worked for Accenture in the early stages of your career. How has your experience been different this time around? Are there similarities?

PAUL WETZEL: Yes, I worked for Accenture, then Andersen Consulting, my first 9 years out of college. I spent my full tenure working on airline software. First – as everyone did – in a coding role, then finishing up in a business development role. At the time, that project was a bit of an anomaly for Accenture whereas software is a key area of focus for the firm now. One thing that remains the same is the very high caliber of people I work with. Then and now, Accenture is able to attract and retain the best available talent, and I very much enjoy the opportunity to work with them in serving our customers.

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Q: How do you see the industry evolving over time?

PAUL WETZEL: First, the borrower experience will be revolutionized by 2020. This will include the time involved and process to apply, how updates are received and how the borrower interacts with the lender. Heavy emphasis on digital and ease-of-use. Forward-thinking lenders and technology partners will lead the way.

Second, top 20 lenders will continue switching from custom or quasi-custom in-house loan origination solutions to partnering with reliable, SaaS-based loan origination solution providers. The best technology partners continue to improve their offerings, while lenders are beginning to realize that risks are too great to remain on a one-off platform. Their loan origination process is better managed with an origination platform partner that can remain current, compliant, and secure, allowing them to focus on their business.

Third, by 2020 mortgages will be broadly bought and sold more easily in a purely digital way, reducing needless cost and risk for both buyers and sellers. The need is there, and the technology is there. Look for further traction from the industry in the coming years.

BRAD THOMPSON: First, I believe that with all of the recent regulations and imminence of more in the near future, lenders are going to look for new ways to reduce their cost to originate in order to remain competitive. To do this, lenders will turn to their partners to deliver innovative and disruptive solutions. This will also allow them to capture the Millennial generation who will become the predominant target market in very short order

Second, with more regulations in-store, and new generations requiring transparency and a simple origination experience, lenders will find themselves needing to offload the risks and the costs associated with mortgage lending. I’ve recently joined Accenture Credit Services to assist in their BPO (Business Process Outsourcing) practice. We plan to closely align this business with Mortgage Cadence in order to provide lenders with a simpler origination process, all while providing the very best mortgage technology and compliance support the industry has to offer.

Finally, I believe that the mortgage industry is poised to look more like a manufacturing business than a finance business. Quality will be derived through the automation of many currently manual processes. Ultimately, the fact remains: the less a loan is touched by people, the higher the loan quality and consistency will be.

Q: You are a long-time Mortgage Cadence employee Brad, getting your start nearly a decade ago with the company. What has this journey been like for you?

BRAD THOMPSON: It’s been an exceptional journey watching Mortgage Cadence grow from a small technology firm to becoming one of the leading technology platforms in the industry. We’ve seen the industry go through some very prosperous and traumatic times that no one was immune from. Despite it all, Mortgage Cadence has always been true to its core values and mission, and I believe that is what allowed us to emerge on the other side as the premier mortgage technology provider and trusted partner of many of the top lenders in the space.

Q: What should lenders be thinking about now in order to prepare for the future lending landscape?

BRAD THOMPSON: Lenders should be looking at how their loans are originated today. Simplifying these processes will help future borrowers obtain a mortgage in the fastest and easiest way possible. The Millennial generation will expect this from their lender and will have very little patience for those that don’t simplify the process and give them complete transparency into how their loan is being originated.

Q: What is the single greatest threat for lenders in coming years?

PAUL WETZEL: More TRID-like waves of compliance could increase the cost and risk of doing business to new levels. There is always opportunity in this, however, on both the lender and vendor side. The best prepared will survive – and thrive.

BRAD THOMPSON: I agree with Paul. The cost to both technology providers and lenders was immense in order to roll out TRID. Very few technology companies or lenders will have the wherewithal to withstand more major regulatory changes in the near future. Flexibility in processes and technology is certainly the first step. Being prepared and forward-looking is the second.

Q: With that being said, what is the single greatest opportunity for lenders in the coming years?

PAUL WETZEL: To use technology as a true competitive differentiator, allowing lenders to scale and become more efficient, exceeding their own customers’ expectations in the process.

Q: What does the future hold for Mortgage Cadence?

PAUL WETZEL: We have seen tremendous success over the last few years with Accenture, which has granted us an incredible amount of autonomy. This, in large part, has continued to allow us to focus solely on providing the very best mortgage technology the industry has to offer while still being able to bring all the capabilities of Accenture to bear whenever appropriate in serving our customers. As a result, Mortgage Cadence is entering a new era. This is an exciting time for the company and presents a world of new possibilities. By 2020, the lending landscape will look entirely different. Today, we’re making the strides necessary to stay ahead of the industry.

BRAD THOMPSON: Paul said it best. While I am moving on to new opportunities within Accenture, I will continue to stay aligned with Mortgage Cadence to ensure we are delivering the most complete mortgage technology and services possible. As my successor, Katharine Loveland will take over as Client Services Lead. Her expertise will be invaluable to the company’s future success. Over the past three years, Katharine has led a dynamic team of Strategic Engagement Managers, defining the department and working closely with Professional Services to develop new and repeatable processes to streamline customer implementations and engagements. As a company, Mortgage Cadence is absolutely poised and ready to lead the way into this new era of mortgage lending.

INSIDER PROFILE

Paul Wetzel is the Product Management Lead for Mortgage Cadence. Paul has led Product Development and Product Management activities through most of his 2- year software career, the last 10 serving the Financial Services industry. In his current role, Paul manages both customer and industry requirements to drive product enhancements while also ensuring Accenture Mortgage Cadence leads the way in innovative loan origination technology. Through collaboration and true partnership, Paul and the entire Accenture Mortgage Cadence team is committed to providing the last lending technology customers will ever need.

INDUSTRY PREDICTIONS

Paul Wetzel thinks:

  1. The borrower experience will be revolutionized by 2020.
  2. The top 20 lenders will continue switching from custom or quasi-custom in-house LOS to partnering with reliable, SaaS-based LOS providers.
  3. By 2020 mortgages will be broadly bought and sold more easily in a purely digital way.

INSIDER PROFILE

Brad Thompson, current Mortgage Cadence Technology Lead at Accenture Credit Services, is responsible for assisting Accenture Credit Services in providing their clients with powerful, technology-based BPO offerings leveraging the Mortgage Cadence suite of products. Over his ten years with Mortgage Cadence, Brad was a key contributor to the company’s success by assisting in go-to-market strategies, bringing key market data back into the organization to continually shape our product suite, and maturing our implementation methodology while growing the professional services team into the highly successful unit it is today

INDUSTRY PREDICTIONS

Brad Thompson thinks:

  1. With all of the recent regulations and imminence of more in the near future, lenders are going to look for new ways to reduce their cost to originate.
  2. With more regulations in-store, and new generations requiring transparency and a simple origination experience, lenders will find themselves needing to offload the risks and the costs associated with mortgage lending.
  3. I believe that the mortgage industry is poised to look more like a manufacturing business than a finance business.
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