The State Of Innovation


Over 100 mortgage executives came together to attend PROGRESS in Lending Association’s Sixth Annual Innovations Awards Event. We named the top innovations of the past twelve months. After that event, we wondered what would happen if we brought together executives from the winning companies to talk about mortgage technology innovation. Where do they see the state of innovation? And what innovation is it going to take to get our industry really going strong? To get these and other questions answered, we got the winning group together. In the end, here’s what they said:

Q: Some say innovation has to be sweeping change. Others say innovation can be incremental change. How would you define innovation?

JEFF BRADFORD: Innovation can be incremental or sweeping. The key is that it is an improvement. It can be a small change to a process that improves efficiency or costs, or it can be disruptive and eliminate an entire category of services or processes.

DOMINIC IANNITTI: In order to gain significant traction and adoption in the mortgage industry, things generally happen in increments, mostly because so many parties have to weigh in and agree on how and when to effectuate change. A good example of that is the slow but sure industry adoption of eSignatures, eNotes and eClosings.

However, universal change and innovation can occur when a major compliance regulation is put into effect. The CFPB’s drive to implement the TRID rule created a fundamental shift of seismic proportions in both business processes as well as relationships. This affected so many entities across the mortgage supply chain. The CFPB essentially became a change agent that facilitated never-before collaboration between lenders and title companies. This not only helped the borrower but it also helped develop far greater transparency, much more efficient workflows, and better communication.

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So depending on the impetus, innovation can be swift or incremental. But I really define innovation as a process — the process of arriving at new ideas, concepts and approaches to doing things differently — and then bringing all the necessary parties together to execute on and attain adoption.

PAUL CLIFFORD: I don’t think it is either. Innovation isn’t tossing out the old paradigm completely, nor is it tweaking the old paradigm for incremental change. Innovation is taking what we “know,” our collective industry experience, and solving for old problems in new ways. We can’t forget our history, nor can we simply amend it.

MARC RICCIO: There is no definite explanation on how to create innovation, which is what also makes it so difficult to define. Considering something as being innovative means that it is one of a kind regardless of how it was achieved. What matters most in today’s industry, especially in the software world, is that creating innovation is mandatory in order to stay relevant and competitive. Without the ability to think outside of the box, there is little hope for survival.

BRAD THOMPSON: Innovation must be constant. It’s a given, really, for all technology companies, though especially ours. We’ve built our business around rapidly evolving mortgage platforms to meet the ever-changing needs of lenders and their borrowers. Regulations over the past several years, including TRID, are current examples, though many innovations were less reactionary and more visionary for us, such as the rollout of a true borrower portal in 2001 – it’s the combination of both reactionary and visionary innovations that allows lenders and technology providers to stay ahead of the market.

NICKIE BADALAMENTI-KALAS: Innovation does not have to be mutually exclusive to being either sweeping change or incremental change. It depends on the circumstances and specific market conditions in play. Innovation requires a company’s commitment to delivering dynamic solutions, technology, new processes, that proactively address current and future market conditions in a way that adds value to all interested parties.

SHARON MATTHEWS: Innovation comes in all formats, including small changes and large revolutionary advances. Being innovative simply means doing something differently than what has traditionally been done. It means not accepting the status quo as a given, but rather looking for new ways to do things. For every disruptor like the smartphone, there are many more that have been the result of multiple innovations over time that have improved the state of the art. Mortgage technology is a prime example.

Q: How would you define the state of innovation in the mortgage industry? Is it thriving or in a state of decay?

BRAD THOMPSON: Innovation is thriving in the mortgage industry! Stronger than ever, in fact. Some of it is, of course, reactionary – TRID for example – yet the most interesting are forward-looking – like the work we’re doing around business intelligence and our next-generation borrower portal. Lenders require partners that are innovative, therefore, the best companies will be taking similar steps to stay ahead of industry trends.

MARC RICCIO: If you asked me this question 12 months ago, I would have replied it’s in a state of decay because of TRID. Although still weighing some vendors and lenders down, the worst part is over…and we have some exciting and innovation capabilities being released in the next 6-18 months. That being said, there are many new opportunities to embrace innovation. The Millennial generation will need housing, which will push lenders to embrace “their type of technology,” including tablets and mobile devices. We haven’t even scratched the surface with e-signature and paperless process capabilities. The future is all about speed, efficiency and economies of scale, and it will be driven by providing a seamless and optimizing loan process that provides personal service. The lenders who find a way to achieve this through innovation will be the winners.

DOMINIC IANNITTI: To use a well-known proverb, “Necessity is the mother of invention.” I cannot recall the last time I have seen so much innovation in the mortgage industry. Dodd-Frank imposed unprecedented regulatory oversight, introducing new processes and procedures, workflows, increasing compliance costs, along with greater risk while reducing bottom line profit and thinning margins. In order to survive, lenders must turn to eliminating old paper-based processes and automating more of the compliance verification and document process to ensure proof of compliance to protect themselves against future regulatory audits.

The increasingly regulatory intensive landscape the industry has faced ended up forcing a major business change from producing a paper trail, to document compliance in a loan file, to implementing a continuous automated, electronic data verification and compliance audit process. This resulted in ensuring that both the data and the documents which contain them are as current, complete and compliant as possible. Even Fannie and Freddie have moved from a post-closing review process to new pre-closing verification systems in order to verify data before final documents are drawn.

The short answer is that regulatory mandates to implement new compliance rules resulted in vendors developing better technology solutions to accommodate them. While it has been painstaking, I believe that the mortgage industry is about to turn a critical corner. We’re going to reach new heights of efficiency and the truly paperless eMortgage will gain critical mass sooner rather than later.

JEFF BRADFORD: I think innovation is thriving in the mortgage industry. The amount of venture capital that is pouring into the FinTech sector is huge. There are a lot of ideas being funded. We’ll see some of these turn into new services and products and enter the market in the next few years. Some may even disrupt the mortgage market. It will be interesting to watch.

NICKIE BADALAMENTI-KALAS: Personally, I know at Five Brothers we view the state of innovation as thriving. The influx of new rules and regulations has forced companies to develop innovation to respond to constantly changing market conditions. The key is developing a culture within the organization that is continually looking for ways to do things better, faster, and more cost effectively.

PAUL CLIFFORD: While it is thriving from a “spot solution” standpoint, I do feel we are still too reactive rather than proactive, preventing us from innovating at a broader, industry level.

SHARON MATTHEWS: Innovation in the mortgage industry is thriving without question. Every phase of the mortgage process is evolving, from the user experience at the point-of-sale, to eClosings, to post-close processes. We see better, faster and more cost efficient approaches coming to market in all these areas. Even data standards – not something typically associated with innovation – are helping to make possible the vision of a data-validated mortgage, in which quality and compliance are more easily assured from beginning to end.

Q: Lastly, if there was one innovation that you would say the mortgage industry desperately needs to happen over the next twelve months, what would it be?

SHARON MATTHEWS: It would be what we have termed the “Data-Validated Mortgage,” which refers to a loan whose individual data elements are in an accepted, standardized format and is made available in a way that is useful by stakeholders in every aspect of the business. The ability to assess loan documentation from pre-close to close and then extending through to post-close, especially in relation to TRID disclosures, is a game-changing capability affecting compliance, loan quality and investor salability. Leveraging the work performed by MISMO, eLynx and others, the Data-Validated Mortgage is an innovation whose time has come and is ready for adoption by the industry.

DOMINIC IANNITTI: Director Cordray of the CFPB has gone on record as stating that his number one goal moving forward is to implement a total eClosing and electronic Compliance Management System (CMS) that effectively addresses both compliance and consumer satisfaction. Our participation in the CFPB’s eClosing Pilot provided us with keen insight into helping streamline the overall consumer experience from the initial LE and eDisclosure to delivering the final CD and pre-closing package three days prior to consumption.

In order to ensure a truly consistent and compliant process, however, lenders need to document all consumer interactions. Using paper-based or even imaging-based systems aren’t going to cut it. You must start and end with electronically creating a completely paperless process to document consumer consent and understanding, acknowledgement, intent to proceed, receipt of delivery, etc. throughout the entire mortgage manufacturing process.

In future compliance audits, the CFPB is going to be checking the source and validity of the data so lenders are going to have to keep an electronic audit trail to document that as well. The only way to effectively accomplish that is to implement a true eMortgage process (eSign, eDisclosure, eClosing, eNotary, MERS eRegistry) and retain electronic proof and evidence of compliance (data, documents and electronic audit trail) that resides in an eVault along with reps and warrants to ensure total compliance with regs.

MARC RICCIO: I see the need for providing “picture” documentation that allows a borrower to zoom and click a picture of a borrower document with their cell phone or tablet. They need to be able to securely transmit the document to the lender to automatically be uploaded to the LOS and securely attached to the borrower record. The key is providing a secure delivery that requires no human intervention.

JEFF BRADFORD: Appraisals need to get better. Much better. It’s a big bottleneck for lenders trying to close loans when 50% of the appraisals submitted are returned for corrections. Innovation in the appraisal process, in the analysis and in the reporting are desperately needed. We live in a world, which revolves around technology and appraisers are still filling out forms manually. This has to change.

NICKIE BADALAMENTI-KALAS: With the influx of new rules and regulations, property preservation is not just about securing a lock or boarding up a window; it is about preserving the appearance of neighborhoods and maintaining homes as good as the house next door. The speed and accuracy at which servicers can get information from their property preservation company is a critical factor in making this happen. Mobile technology specifically applied to property preservation significantly speeds up this process while also improving data integrity and therefore will have a major impact on the industry over the next twelve months.

BRAD THOMPSON: The digital mortgage is absolutely crucial. Even a hybrid approach where the front-end process becomes digitized is a step in the right direction. With regulations and an ever-changing industry ahead of us, the ability to be agile is critical to long-term success, and being digital is essential to being agile.

PAUL CLIFFORD: Well, I don’t think it is a secret that we need to drive to data standardization and interoperability. The longer we remain a fragmented industry of stakeholders and systems, the longer our problems persist and multiply.

The Fourth C In Successful Lending


The industry today places more emphasis on the traditional three Cs of lending than we have seen in quite a long time. In the current environment of homogeneous loan products, however, the most successful mortgage operators value more than just character, capacity and cashflow; they value and nurture a great culture. A company’s culture defines how it delivers its products and services and has a profound effect on customer satisfaction. How does a company create a successful culture? Is one culture better than the other? Is there a “best” culture?

When we think of companies with great cultures we often think of ping pong tables, gaming rooms, free cafeterias and other notions marketed to the public by successful Silicon Valley tech firms. But a strong company culture goes deeper than games and a free lunch. At its root, a good culture stems from leadership deliberately creating an environment and experience based on what they want a company to stand for and mean in the lives of the people. To that end, there is no “best” culture, since different people value different things. It ultimately comes down to deciding what you believe in and becoming that as a company, through and through.

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How does a company go about creating a positive culture? It starts off by defining itself and its core values. Core values, mission statements and comments about culture must be more than mere references in the company’s employee handbook. They must be the very heart and soul of a company’s being. A company must define what is important, what is vital to its success and then live those values in everything it does. For example, if a company values integrity, it must ensure that from the top down it makes the right decisions even when it is difficult and when no one is looking. If it values fun, the company needs to have fun employee events. If it values community service, it should hold routine community outreach with its employees. But most of all, its values must transcend every aspect of the company’s operations on a daily basis.

Think of a successful company culture like an inviting patchwork quilt. Even if patchwork quilts are not really your thing, you have likely seen a quilt that struck you as surprisingly nice. It never seems manufactured, and it always feels authentic with its own distinctive style. Every core value truly carried out, every employee’s contribution, every satisfied and repeat customer and their referrals, the company’s competitive triumphs and challenges are all represented – each with its own patch – on the quilt. Each patch makes up part of the story of who a company is and the overall result has its own look and feel. That’s a company’s culture. And that is how employees and customers judge a company.

Take a moment to evaluate and strengthen your company’s unique and authentic culture quilt. You should find a unified, prideful and loyal workforce that delivers a higher quality of service to its customers with greater employee and customer retention and referral rates. These are the fundamental pieces of a culture quilt that translates into a great place to work.

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Attracting New Business


In today’s hyper competitive mortgage market, with intensifying regulatory pressures and burdens, lenders are struggling to consistently attract new borrowers and capitalize on existing borrower loyalty.

With so much time, effort, and resources being spent on meeting this intense regulatory burden, lenders are finding it difficult to consistently allocate the time and effort needed to regularly fill their pipelines.

That’s where marketing automation- “Set It and Forget It” technology comes into play.

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So what is marketing automation?

Marketing automation refers to software platforms and technologies designed for marketing departments and organizations to more effectively market on multiple channels online (such as email, social media, websites, etc.) and automate repetitive tasks.

“At its best, marketing automation is software and tactics that allow companies to buy and sell like Amazon – that is, to nurture prospects with highly personalized, useful content that helps convert prospects to customers and turn customers into delighted customers. This type of marketing automation typically generates significant new revenue for companies, and provides an excellent return on the investment required.” Hubspot.

Why is marketing automation important to lenders?

In order to survive and thrive in this mortgage environment of constantly changing rules and regulations, heightened competition for borrowers and extreme pressure to produce results, you must realize the need to identify high quality business opportunities. It is critical to identify leads quickly and efficiently and then drive them to the point-of-sale with compliant communications for converting them into borrowers. It’s equally important to retain these borrowers and to maximize their on-going value through repeat business and referrals.

Engaging these prospective borrowers in real time across a multitude of channels such as the Internet, email, social media, print, video, and mobile devices highlights the importance of working with a proven mortgage specific marketing automation solution that can bring out the best in your marketing while easing your compliance burden.

This requires a proven enterprise-wide marketing automation solution that supports you and your specific initiatives to address these market conditions. Each person in your organization that is involved with driving growth is empowered to focus on what they do best. For example, Loan Officers are free to close more loans, instead of trying to create marketing materials. C-level executives are presented with sophisticated, yet easy-to-use tools for more effective oversight and management, while marketing managers can demonstrate their marketing genius and compliantly maintain brand consistency across the organization. The benefits of mortgage specific marketing automation include:

>> Establishing consistent long term profitability

>> Yielding unseen business opportunities

>> Leapfrogging the competition

>> Reducing marketing compliance risk

>> Attracting new talent and retaining top producers

>> Automating company branded marketing

How is Marketing Automation Being Used in the Mortgage Industry?

To help understand marketing automation and the power of consistently marketing to potential borrowers through automation, let’s explore some of the types of automated marketing campaigns that today’s most successful lenders are using.

Renting vs. Buying comparison campaigns (this campaigns both print and email) which outline all the benefits of homeownership (definitely popular now as lenders are looking for new business opportunities).

Refinance campaigns, which are providing up-to-date loan features and information for annual and semi-annual loan reviews.

In-Process Customized Homebuyer Guide. These are detailed books sent to pre-qualified prospects with the specific Mortgage Company and Loan Officer branding personalized to prospective borrower.  This guide outlines the entire home buying process to help educate the prospective borrower.  This is a print piece in action.  This piece is created in close collaboration with the Lender as every Company has unique processes and experiences for borrowers.

Automated Pre-Qual and In-Process email campaigns.  The content and milestones are customized to meet the needs of the specific lender.  Most common Pre-Qual series include a welcome email to borrower and realtor, a 3-4-email campaign discussing the home loan process at specific Mortgage Company.  Another popular example of this is a series, which are 11 emails over a 60-day period, which is cancelled upon loan application submission.  For In-Process emails, most series include general milestones such as loan submitted to opening, loan submitted to underwriting, conditional approval, clear to close notice and funds disbursed.  Lenders have differing opinions on which in-process emails should be copied to Borrowers’ Realtor.

New Millennial prospecting series.  This is a series of a combined 8 print and 8 emails pieces designed specifically to the millennial generation.  Language and visual appeal is designed to resonate with potential millennial borrowers.

These are just a quick sampling of the types of automated campaigns lenders are using to attract new borrowers. The power is in the consistent and personalized communication that is being sent out without increasing the time and resources from the marketing department.

Your Marketing Team’s Best Friend

Mortgage specific marketing automation provides you with a solution to demonstrate your marketing genius while compliantly maintaining brand consistency across the entire organization. The platform enhances the Marketing Genius in you to drive business through increased efficiency with a custom company-marketing library. Consistent, relevant communication can easily be sent to all contacts companywide through each milestone in the loan process including the lead and post-close stages.

>> Unleash your marketing genius

>> Automate your marketing activities

>> Experience a surge in your response rates

>> Provide consistent and relevant marketing content

>> Produce high quality content more quickly

>> Easily strengthen your marketing compliance

>> Drive brand consistency throughout organization

Experience a surge in response rates by communicating through all possible channels (email, mail and phone). Client retention increases by communicating more effectively than your competitions’ standard email marketing. Strengthen compliance with easy tracking and approval processes for those loan originators who want to easily create custom marketing.

Marketing Automation delivers an END-TO-END marketing solution, which uniquely models the entire marketing process for converting opportunity into revenue

>> Lead capture and qualification

>> Database management and mining

>> Audience segmentation and targeting

>> Content creation, storage and management

>> Multi-media delivery (including print mail)

>> Fast and secure execution and fulfillment

>> Real-time response tracking and reporting

In addition the right solution provides the marketing team with a powerful library of content. Here you’ll find hundreds of ready-to-go marketing materials that have been professionally prepared. Choose from postcards, letters, greeting cards, newsletters, emails, and much more. The materials are categorized by format, purpose and audience for easy access to exactly what you need. Content is constantly refreshed to target current business opportunities. In addition there are holiday greetings, home maintenance tips, recipe cards … something for every occasion.

You’re welcome to take these materials and adapt them to meet your specific needs and brand standards. That’s why you’ll find a “copy” button against each item in the library. Clicking the button allows you to make a copy of the piece in your company’s private library, where you can edit it as necessary. You can even limit access to a specific branch or branches: for example, allowing only reverse mortgage specialists to view reverse mortgage content.

Mortgage specific marketing automation should also provide creative tools to give you creative freedom where you need it.

Create Activities

The “create activity” button in your company library enables you to design marketing materials from scratch. Clicking the button takes you into a simple wizard that guides you through the steps that turn your marketing ideas into actionable content – in three minutes or less.

Set Up An Activity Series

With Activity Series Builder (ASB) it’s never been easier to create end-to-end “set it and forget it” marketing for all contact types: prospects, applicants (in-process), borrowers (closed customers) and business partners. The ASB’s setup wizard guides you through the following simple steps:

>> Make the series available to all or any subset of loan officers

>> Define target audience criteria for the series (e.g. per bucket)

>> Select the marketing materials you want from the content library

>> Specify the trigger event or date for generating each activity

>> Choose pay up-front or pay-as-you-go for each activity

>> Set the series to run for as many years as you want

>> Implement an optional pause following activity fulfillment

>> Enable system-generated e-mail notification to loan officers

Just having a CRM solution (electronic rolodex) or emailing some general marketing messages and posting on social media every once in a while is not marketing automation. More importantly, it will not consistently and compliantly drive new business to the point of sale. So if you are serious about growing your lending business, it is critical to understand what mortgage specific marketing automation can do for you.

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Prevent Loss Mit Delays


As the impact of the housing crisis continues, lenders are still frequently pursuing short sales, deeds-in-lieu and other workout plans, often at the initial request of the borrowers themselves. Especially in states such as New Jersey and Florida, where foreclosure timelines are typically extended and thus, more costly for lenders, these loss mitigation strategies present a better option for all parties involved. However, while foreclosure alternatives are known for having shorter timeframes, they are no stranger to delays of their own.

When it comes to today’s non-foreclosure solutions, a lender’s overall objective is to identify and successfully execute a plan that leads to the fastest possible resolution. While undoubtedly quicker than foreclosures the vast majority of the time, loss mitigation processes are often prolonged when the strategy changes. This most commonly occurs when a short sale transaction must transition to a deed-in-lieu. This increasingly common scenario can disrupt progression and inevitably requires added resources, leading to a more difficult, lengthier process for the homeowner.

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This March, Hope Now reported that, while loan modifications in January 2016 were down 10 percent from the previous month, deeds-in-lieu jumped 17 percent in the same timeframe. It is likely that many of these deed-in-lieu transactions originated as short sales. With this upward trend, lenders are beginning to realize the importance of making loss mitigation adjustments more quick and seamless, and are looking first to technology to help.

Traditionally, lenders have managed their short sale and deed-in-lieu processes separately – separate departments, different personnel. From an organizational perspective, this might work. However, should a circumstance require a change in the loss mitigation strategy, lenders are often forced to start the process over entirely. For instance, if during a short sale a borrower is unable to sell his or her home within a given timeframe, a lender must typically close out the short sale and shift the transaction to either a foreclosure or deed-in-lieu. When using disparate systems, the information housed in the short sale platform would be completely lost when the transaction converts, ultimately causing delays. Instead, lenders can benefit from a dual-path approach, which entails running courses for a short sale and deed-in-lieu simultaneously. Then, if approval on a deed-in-lieu is granted first, there is a smoother transition to REO. Or, if a short sale begins, yet must transition to a deed-in-lieu, there is no need for the lender to start the process from the beginning.

By handling multiple loss mitigation options concurrently and within a common system, any notes or documents on file, messaging communication, property valuations and title work, all remain saved and can simply transfer should the strategy change. There is no need for information to be lost or for activities to be duplicated. Based on the frequency with which loss mitigation scenarios adjust, it is more important than ever for lenders to apply the methodology and technology to avoid further postponements, interruptions and confusion. Leaning on a single system as opposed to multiple platforms inherently provides lenders greater transparency throughout their loss mitigation departments while ensuring homeowners receive consistent and ongoing communication.

As many Americans continue to struggle to fulfill a mortgage, lenders remain responsible for both helping borrowers find an optimal resolution while preventing another downturn. The industry’s enduring need for loss mitigation solutions will continue to drive foreclosure alternatives. Given this, lenders should be updating their processes to ensure the short sales and deeds-in-lieu they pursue are handled in a way that results in the best possible outcome for the homeowners they serve.

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Serving The Small And Mid-Sized Lender


Small to mid-sized mortgage bankers fund 50 to 1,000 loans per month. These lenders have the same technology needs as larger lenders, yet typically struggle with fewer resources to streamline operations and ensure compliance. In the past, this was a significant competitive disadvantage, but some technology companies have more than leveled the playing field for this important market segment by delivering powerful solutions that rival the largest lenders’ capabilities.

It is important that the vendor has mortgage bankers on staff that clearly understands the impact of not meeting a sales contract deadline, missing a lock delivery or working through a repurchase request.

Why is this deep industry working knowledge from the LOS provider so important to a lender’s management team? It’s simple- if you are dealing with these types of business issues, then you are not focused on growing your business. In addition, the cost to cure these issues is taken straight from profits. Lenders are often hobbled by work-arounds, manual processes and low expectations from their systems. With today’s technology there is a better solution for mortgage lenders.

Small to mid-sized lenders need an integrated solution from their LOS that is affordable and easily maintained with minimal staff. These attributes can only be designed by close collaboration with lenders by technologists who have experience in the small to mid-sized environment. The best providers understand the features necessary for both the lender’s users and the system’s administrators, enabling both ease of use and efficient operations.

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Tools, Customization and Sharing the Load

Users need tools to streamline their everyday activities. Administrators need to be able to implement and maintain the tools with far smaller staffs than large lenders. Loan origination system providers that truly understand the middle market appreciate the value of sharing the administration responsibilities. Additionally, modifications to customize the application should be provided via table configurations rather than software development. Systems for the middle tier are architected to have the vendor manage the version, compliance and table configuration best practices. At the same time, they allow the lender’s administrator to turn on various features by role, or establish unique customized workflow to ensure the application meets their specific needs. Simply put, the best LOS designs present the right information to the right user at the right time.

The right origination technology dramatically reduces the problems caused by process issues distracting lenders from focusing on growing their business and the bottom line. Here are five points that a small to mid-sized lender should require from their technology partner when their operations struggle with daily challenges:

>> Broad scope of tools with table based configuration

>> Tightly integrated third-party vendors

>> Rules based workflow

>> Robust data access

>> A collaborative and transparent relationship

Each of these requirements should be considered just as important as cost to ensure your operations run smoothly and maximize your return on investment. Lenders should also remember that these items need to be implemented in a timely manner to successfully contribute to the bottom line. The following is a breakdown of each requirement in more detail.

First, the scope of tools should include everything from initial inquiry to selling the loan. If a lender is required to integrate various tools they will need more time to implement and maintain them. Additionally, it’s likely that a lender will not have an accurate single database of record to ensure that data entry from initial origination and throughout processing matches the information used for closing or investor delivery. This can result in pricing issues and delivering files to investors that are not purchased – or post-closing liability from an end investor when a defect is found years later after a payment default. These are common issues for lenders who do not have an effective system of record.

Lenders also must assess the types of tools each role needs. Borrower-facing tools such as online portals allow an originator and the lender’s staff to efficiently collaborate and document communication with borrowers throughout the loan process. Built-in imaging will ensure the data and file documentation are simultaneously managed and match file requirements. Integrations must be incorporated in a manner that allows each role to easily complete the steps that are dependent on third parties.

The Industry Relies on Third Parties

This leads us to the second requirement – tightly integrated third party vendors. As part of the loan manufacturing process, lenders have been exchanging data with credit agencies, underwriting systems and flood for about 20 years. Pricing, compliance, fraud and tax verifications vendors are commonly used, and the latest wave of integrations now supports asset, income, employment and property information. Successful lenders will have an effective plan for all of these services.

High functioning integrations will, at a minimum, support two-way “lights-out” data exchanges. Lights-out is a method that ensures the data needed to request services has been completed before the order request is made. The user’s login credentials are stored in the LOS and the LOS has a method for sending the request and retrieving the results (data or forms) automatically. The user will never have to leave the LOS platform to complete their work, a major time and cost saver.

More advanced vendor integrations run based on rules established in the LOS and allow the lender’s employees to focus on managing the exceptions rather than the tasks. This is critical: it means the staff will focus on resolving an issue such as a compliance alert or a flood zone determination requirement rather than the task of running an interface. High functioning LOS’s should offer and support work queues that leverage the results of automated vendor integrations.

Rules and Roles

The third requirement of small to mid-sized lenders is that the systems be based on business rules or logic to ensure the right information is presented to the right user at the right time. Making a loan is very similar to an assembly line and each employee in the organization contributes to the final product. For each person to do their job correctly other roles need to have completed their responsibilities predictability and accurately – sometimes sequentially (completed before them) and sometimes in parallel (completed simultaneously).

A rules-based system incorporates logic to ensure workflow is predictably completed and accommodates all roles within the organization. Rules-based engines should be used to identify what data is needed, what documentation is needed and when they are needed. Logic can also be used to determine if data is within a valid range or if it meets specific loan program guidelines.

The fourth requirement that lenders should consider is what tools and/or methods are available to access their data. This means simple and effective data exports, as well as the ability to establish customized data exchanges with proprietary tools. At a basic level, a lender should have the ability to export their data in Ascii, comma delimited or XLS formats. Additionally, standardized industry formatted exports such as MISMO and FNMA 3.2 should be supported for a single loan or for a list of loans in a batch process.

Lenders need advanced support

Today’s lenders are now looking for more advanced data integration support. These options include ADO (ActiveX Data Objects), Web services and database replication – all of which are available with the industry’s best LOS providers. Advanced data integrations allow lenders to read data, write and perform functions such as creating a loan or moving images in real time. These tools are the foundation for real time reporting and to transport data from customized CRMs or out to hedging, servicing or data warehouses. As such, a single database of record is necessary to ensure lenders are efficient and accurate in all data reporting and collaboration activities.

The fifth requirement a lender should seek is a collaborative relationship. Lenders know their business much better than any software executive or business analyst, and they need the ability to discuss, strategize and prioritize on the issues that impact their everyday objectives. Focus groups have a role, as the ability to ensure your needs are addressed and understanding your vendor’s strategy to get there is valuable. The most productive relationship with a vendor will be a transparent relationship. Know what your LOS provider knows, where they come from and where they are going. And importantly, assess whether you’ll have a say in their future plans to support your operations.

Are You Missing Out?

Without these tools, how much business are you missing out on? Perhaps more than you think. The modern LOS technology is the single most important decision a mortgage origination company can make, and the tools it provides can directly impact efficiency, profitability and marketing reach. Understanding the business realities and the needs of its users are, in the final analysis, more important than the bits and bytes that go into a system’s makeup. The most sophisticated code ever written is of no value if it is not relevant. A vendor that is true, knowledgeable, and listens to your specific needs to help you achieve and exceed your company’s goals delivers the best loan origination solutions.

Just as preferred lenders of any size earn that status by listening to their customers, premiere technology providers become the first choice by understanding the needs of their lenders. As in life, learning never stops – and we have found there is much to learn from the small and mid-tier professionals of the mortgage business.

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Why Some Fintech Companies Fail


There was a lot of talk at a recent technology conference about the power of fintech startups these days. However, a lot of these startups fail. So, what makes for a successful fintech startup these days? William Mills Agency, a financial public relations and content marketing services company, released a white paper detailing the top factors leading to failure for fintech startups and how to avoid them. Here’s what they found:

The white paper, written by WMA executive vice president Kelly Williams, is a compilation of the most frequent “fintech startup killers” that Williams and his WMA management associates have observed during almost four decades in the financial industry. A few of the deadly mistakes cited in the white paper include: underfunding the fintech startup; underestimating length of fintech sales cycles; not understanding the fintech customer markets; no relations with the bank core providers and poor fintech sales and marketing strategies.

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“It would seem that these mistakes are failures to follow common business sense, but they happen so often that we felt compelled to address them,” said Williams, executive vice president, William Mills Agency. “This white paper is a useful resource for fintech startups because it also gives simple advice on how to steer clear of these mistakes altogether and to become successful, profitable companies.”

“There are lots of great innovations happening in fintech, but it’s a tough and unforgiving environment for startups,” said WMA CEO, William Mills III. “Given the concerns regarding financial regulations, cybersecurity, and the entrenched legacy technologies and processes of this industry, there is little room for error – especially for startups. We hope fintech executives will use this document as a guide to keep them on the road to successful company launches and beyond.”

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Beware Certain Technology


Within the stories that are told to individuals and companies that are newly involved in Manufacturing Quality is the tale of the executive of a clothing manufacturing company. It seems he had been losing money on his clothing because his “cutters,” those individuals who cut the cloth that was used to manufacture the clothing, were very inconsistent. A rather large percentage of the clothes he produced failed to consistently conform to the manufacturing specifications. Despite his efforts at training these individuals the problem continued to exist.

He then hired a Quality Management Consultant who reviewed the problem and told the CEO that what he needed to do was install technology that cut the material. This way it would be consistent and he would eliminate the problem. The CEO followed his advice and at first was very pleased. Sales were up, rejects reduced and demand tripled. Subsequently he increased the amount of material he fed into the new “technological” tools. Soon however the problems returned. Very upset he called the consultant back into his office and angrily berated the value of his advice. The consultant then asked the CEO if he had seen the problems when reviewing his quality measurement results. He admitted that he really hadn’t looked at them because he had the technology in place and technology doesn’t make mistakes.

The consultant then went to the manufacturing floor and examined the cutting tools. What he found was that because of the demand level the individual’s positioning the material for the technical tool to cut the material had been adding more and more cloth to each cut. As a result, the tool actually spread out as it came to the bottom layers of the material. Hence the source of the problem. When told about this problem the CEO was distraught. “I thought this would solve my problem but since the technology was developed without the necessary calibrations, I have only made it worse,” he bemoaned.

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This story is told not to discourage the use of technology, but to warn management that technology is not the ultimate solution of all process problems. That these tools need to be monitored to ensure they are working as they were designed and that sometimes the intervention of humans is required to make sure this happens.

The same advice applies to mortgage lenders. In reviewing the process of approving loans underwriting was designed to evaluate loans in order to determine the probability that the borrower would repay the associated debt. Over time income levels, credit history and liquid assets became related to a high probability of performance along with the amount of cash invested in the property by the borrower. These findings became the lynchpin of the rules that make up credit policy. However, it also became apparent that not every borrower fell neatly into the “approve” or “deny” category. The reality was that many borrowers whose credit profile did not necessarily fall into the “acceptable” category were in fact as good as or better than those being approved. Reverse occurrences, where borrower’s with apparently acceptable credit criteria were not necessarily those that underwriters would approve also occurred. Thus began the recognition that underwriting was not necessarily as transparent as thought and that the “art” of underwriting was just as important as the science. This approach was predominant until the idea that the “science” aspect of the underwriting process could be “programmed” to analyze a borrower in a scientific fashion. The primary technology tool utilized in this program was known as artificial intelligence (AI). While there are several different methods of developing AI the one used in the automated underwriting system was rules-based which relies on a series of underwriting rules and data to determine the acceptability of a loan application.

The advancement of artificial intelligence has not abated since it was originally introduced in the 1990s by then dominant Prudential Home Mortgage. This program was quickly followed by Countrywide and then Fannie Mae and Freddie Mac. These programs, developed in order to allow “plain vanilla” loans to be approved without having underwriters actually review the files, quickly advanced into more complex underwriting programs. Any loans that could not be approved by the system were sent to underwriters for review and, if acceptable, approved.

These refer loans were basically deemed to be the loans where the “art” of underwriting was needed to evaluate those issues or variances from guidelines that were best done by an individual who was experienced in the risk relationships associated with loan approval.

Unfortunately, the industry recognized too late that the technology, while clearly a valuable underwriting tool had flaws. The realization of the need to ensure the data entered was consistent with the application, as well as validating that the data itself was accurate, came too late to prevent the abuse of the program in the run-up to the Great Recession.

Numerous other aspects of the loan origination and servicing processes followed the path of automated underwriting. New regulatory compliance tools, credit scoring technology, automated valuation models and servicing modification models were only some of the tools that emerged as part of the new technological approach to mortgage lending. These tools were quickly adapted into the overall process. In many cases, this scientific approach overrode the “art” that was a critical part of what we did, and how mortgage lenders were able to expand homeownership while keeping delinquencies low. While these tools are without question extremely valuable to the industry, where in the process did the evaluation that is the “art” of mortgage lending come into play? The answer to that is clearly in the Quality Control function.

Quality Control reviews conducted by knowledgeable mortgage underwriters, closers and servicing personnel were designed to be the measurement tool that evaluates whether the science that has become underwriting when evaluating applications, credit, appraisals and calculations correctly, was working correctly. In addition, this analytic process determines if the “art” of underwriting was used when necessary in order to ensure that loans meeting the organization’s risk profile were met. Without this measurement method, lenders could produce loans that were far outside the risk parameters due to such issues as errors when programming the rules, the use of inaccurate data or a general failure to follow guidelines. This loan and process analysis was the only measurement that could identify and report on fluctuations in the origination and servicing processes. Lenders’ failure to pay attention or their failure to act on the QC findings concerning the misuse of the AI technology became obvious in 2007.

Since that time new QC requirements have been imposed by Fannie Mae, Freddie Mac, FHA and VA. The new rules have added an analytic layer on top of the error identification by requiring that lenders risk rank the loans with errors based on the taxonomy they have developed. As a result, vendors who specialize in quality control software have seen this as an opportunity to enhance their programs and add another layer of technology, using AI, to the process. Some vendors have taken it upon themselves to dictate the specific process issues to be reviewed by quality control and establish risk ratings for each variation for those rules. All of this is done automatically and in order to change the risk rankings, the analyst must take action by physically going in and changing the rating.

This approach is one in which the level of the technological support is actually a deterrent to the efficiency of the process as well as hampering Quality Control’s ability to effectively provide accurate risk evaluations to management. Here’s why.

As discussed earlier, sometimes underwriting is based on the “art” of evaluation and not the “science”. When this is the case, the artificial intelligence is unable to adapt and supposed errors found in the loan may actually be acceptable or considered less risky that what has been programmed into the AI results. On the contrary, specific risk attributes that a lender believes are risker may be missed because “the system does it for me.”    Furthermore, as a result of these mistaken risk evaluations, the overall rating on the loan, which must be used to calculate the total error rate, could be inaccurate and relay a false impression to investors and/or regulators.

Another issue with this AI based QC programs is the inability to allow for unique products such as those for private investors or loans where the lender has secured overlays for the standard agency products. In addition, there are product types, such as jumbo loans that may have their own specific risk-related processes that have not been included in the AI rules. To further confuse things these vendors do not allow individual clients to add their own specific questions or risk ratings to the program based on their stated desire to maintain the “purity” of the resulting product. These issues make it impossible for lenders to get a clear picture of their individual process issues and product failures.

While I believe very strongly that the quality control process needs some level of standardization and consistency within its analytic function, I have grave concerns about any individual company dictating the risk related to individual errors when there is no evidence of how this rating will impact the overall evaluation of the loan. Furthermore, none of these tools have shown in any fashion how the ratings are related to performance and/or repurchase risk. I find it highly unlikely that any individual has the knowledge to decide the risk associated with an error is high or low without understanding this relationship.

These vendors are correct when they say this additional technology can make the process faster. This statement however, is dependent on the company using the program “as is” and the QC staff does not evaluate any specific issue in light of the overall loan file or the company does not have any unusual or unique programs or products. Ultimately however, the additional technology utilized in these QC programs is adding on uncalibrated technology. Furthermore, the technology does not allow for ability for individualization of the necessary calibration by those individuals responsible for the output and the risk associated with it. As a result, the analysis and reporting that is provided to management is still flawed and will once again prove as irrelevant as the current loan level findings which management finds unsatisfactory.

While I applaud these companies for developing products that support QC, having companies spend money on technological tools that do not provide results that resolve the problem as intended do nothing more than delay the necessary realization that QC standardization and calibration are critical to making Quality Control function as the industry desperately needs.

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Data Analytics


What a surprise! Here I am writing about data again. Data collection has become much more effective with the automation and digitization of the retail mortgage industry’s business processes. The downside is we are overwhelmed by the sheer volume of data, both structured and unstructured.

The development of MISMO’s Logical Data Dictionary over the last ten years has played a large role in reducing both the time and effort in connecting the numerous entities involved in financial transactions. As more organizations adopt this data standard, it will significantly increase the electronic exchange of data.

So what does this mean for the mortgage industry? Let’s start with an Information Management article by William McKnight that emphasized the fact that data must have true quality across the enterprise. McKnight’s theory regarding data quality is centered on the following observations:

The volume of available information is exploding. This includes inside data, through channels, and third-party sources.

Our current business environment plays in real time. Opportunities are lost when decisions and action are delayed.

 It has never been more true that information is a key business asset, regardless of your industry. An organization’s ability to manage its information is a powerful competitive differentiator.

McKnight further asserts that enterprise data lacks standardization, which handicaps our ability to project how business will be conducted in the next decade, and that intra-organization cooperation on data quality is key to an organization’s success. The interesting point is that this article is now over five years old.

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Recently, I read an article “Top Three Mortgage Quality Control Trends You Need to Know for 2015” by ACES Risk Management (ARMCO). With their permission, I have extracted some key points from that article. “2015 is shaping up as another year of significant changes in the mortgage industry. Increased regulatory scrutiny continues to raise the stakes for mortgage lenders’ operations. As a result, quality control will be front and center among lenders’ enterprise risk management strategies and truly mission-critical to their success.”

1: The Changing Nature of Risk for Mortgage Professionals. “There has been significant reduction in underwriting and credit quality risk in recent years. Although troubling for lending volume, QM and QRM have made it difficult for unqualified consumers to obtain mortgage loans, without resorting to outright fraud. So where is the risk now?”

2: Mortgage Lender Accountability and Responsibility. “Regulators have made it clear through various guidelines that outsourcing, contracting, subcontracting, or even eliminating certain functions does not reduce a lender’s or servicer’s accountability for those functions.”

3: 2015: The Year of Big Data. “In thinking about big data in the mortgage industry, there are two types to consider – loan data and process data. When lending risk resided in underwriting, loan data became critically important. We’ve now reached a point where underwriting standards are so high that the risk of making a flawed decision based on bad consumer information is relatively minimal for the typical lender. For example, loan quality control defect rates continue to be as high as 10% and more at certain lenders. Typically, these are not loans that are in danger of default because of the borrower’s inability to pay. Their defects rest in the manufacturing process, and the largest single category of those defects, according to our client data, is missing documentation.” (For more information, visit

Today, the buzz is all about Big Data, defined as extremely large data sets that may be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions. So, let’s explore this concept a little further and look at some definitions and clarifications.

Analytics vs. Analysis: You can’t talk about Big Data without talking about analysis and analytics. Analysis requires a breakdown of data into its constituent elements, along with an identification of metadata that provides context and supports meaningful information taxonomy. Analytics can refer to the methodology for conducting the analysis, but it also defines the output of the analysis: analytics are the meaningful information derived from data analysis. While analysis is a study of the past, analytics supplies a model that can be used to predict future results.

Analytics vs. Business Intelligence: Business intelligence, BI, is a technology-driven process for analyzing data and presenting actionable information to help organizations make better business decisions. Depending on the organization and the industry, BI may draw upon a wide range of tools and methodologies to support collect data from internal and external sources, prepare it for queries and analysis, and ultimately output reports of analytical results to decision makers. Tom Davenport wrote, “I think of analytics as a subset of BI based on statistics, prediction and optimization. The great bulk of BI is much more focused on reporting capabilities. Analytics has become a sexier term to use.

Why is this relevant? In Tom Davenport’s book, Analytics at Work, he reports that “two-thirds of large US companies researched believe they need to improve their enterprise analytics capabilities” and “nearly three quarters said they are working to increase their company’s business analytic usage.” Some recent articles include these statistics: 89% of US businesses are investing in data and data analytics, 85% of CEO’s say that digital technologies related to data and data analysis are creating high value for their organizations. According to Attivio, 90% of an organization’s data is hidden in silos that aren’t known or can be reached.

This initiative broken down by industry in the Big Data Analytics Survey by Peer Research showed 43% in banking, 14% in technology and 9% in consumers. The key results were:

>> Better decision making (49%)

>> Better enablement of key strategic initiatives (16%)

>> Better relationships with customers (10%)

>> Better sense of risk (9%)

>> Better financial performance (9%)

>> Others (6%)

I believe it is finally time for the lending community to take full control of their data, and that will be difficult if lenders don’t have an in-depth understanding of what that means and all that it entails.

Having control of your data across your entire enterprise will provide the following:

1.) A better understanding of your customer’s needs.

2.) Make your processes more efficient.

3.) Reduce risk by proactively recognizing and addressing vulnerable areas.

4.) Finally, reducing costs, which is always an objective.

If your organization doesn’t embrace this; You can rest assured, your competitors will. By the time you realize that, it may be too late.

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Originations Are Falling


RealtyTrac released its Q1 2016 U.S. Residential Property Loan Origination Report, which shows 1.4 million (1,415,511) loans were originated on U.S. residential properties (1 to 4 units) in the first quarter of 2016, down 12 percent from the previous quarter and down 8 percent from a year ago to the lowest level since the first quarter of 2014.

The loan origination report is derived from publicly recorded mortgages and deeds of trust collected by RealtyTrac in more than 950 counties accounting for more than 80 percent of the U.S. population.

The year-over-year decrease in total originations was driven by a 20 percent year-over-year decrease in refinance originations even while purchase originations increased 3 percent from a year ago and Home Equity Line of Credit (HELOC) originations increased 10 percent from a year ago.

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“After a surprisingly strong 2015, the mortgage refi market started running out of steam in the first quarter of 2016 despite lower mortgage interest rates,” said Daren Blomquist, senior vice president at RealtyTrac. “Meanwhile the purchase loan market continued the pattern of slow-and-steady growth that it has been following the past two years, and HELOC originations increased on a year-over-year basis for the 16th consecutive quarter, showing that borrowers are regaining both home value and the confidence needed to increasingly leverage their home equity.”

Dallas, Louisville, Seattle, Sacramento, Columbus with biggest HELOC increase

Among 50 metropolitan statistical areas with at least 5,000 total loan originations in the first quarter, those with the biggest year-over-year percentage increase in HELOC originations were Dallas, Texas (up 35 percent); Louisville, Kentucky (up 28 percent); Seattle, Washington (up 25 percent); Sacramento, California (up 25 percent); and Columbus, Ohio (up 23 percent).

Other metro areas with a 20 percent or more increase in HELOC originations from a year ago were San Antonio, Texas (up 23 percent); Orlando, Florida (up 23 percent); Portland, Oregon (up 22 percent); Cincinnati, Ohio (up 21 percent); and Tampa, Florida (up 20 percent).

“Loosening credit, low interest rates and the first time millennial buyers moving into the South Florida real estate market all add up to an 8 percent increase in purchase loan originations for the first quarter this year over last year’s first quarter,” said Mike Pappas, CEO and president at The Keyes Company, covering South Florida. “Our rising prices and increasing equity are giving confidence to homeowners as we have seen HELOCs increase 12 percent year-over-year.”

Baltimore, Tucson, Louisville, Minneapolis, Nashville with biggest purchase loan increase

Metro areas with the biggest year-over-year percentage increase in purchase originations were Baltimore, Maryland (up 26 percent); Tucson, Arizona (up 18 percent); Louisville, Kentucky (up 17 percent); Minneapolis-St. Paul (up 14 percent); and Nashville, Tennessee (up 14 percent).

Other metro areas with a more than 10 percent increase in purchase loan originations from a year ago were Washington, D.C. (up 13 percent); Cleveland, Ohio (up 13 percent); Atlanta, Georgia (up 12 percent); Indianapolis, Indiana (up 12 percent); Kansas City (up 11 percent); St. Louis (up 11 percent); and Chicago (up 11 percent).

Cincinnati, Philadelphia, Milwaukee, Raleigh, Salt Lake City with biggest refi decrease

Metro areas with the biggest year-over-year percentage decrease in refinance originations were Cincinnati, Ohio (down 35 percent); Philadelphia, Pennsylvania (down 32 percent); Milwaukee, Wisconsin (down 32 percent); Raleigh, North Carolina (down 31 percent); and Salt Lake City, Utah (down 29 percent).

Other metro areas with a 25 percent or bigger decrease in refinance originations from a year ago were Oxnard-Thousand Oaks-Ventura, California (down 28 percent); St. Louis (down 28 percent); Sacramento, California (down 28 percent); Tucson, Arizona (down 27 percent); Louisville, Kentucky (down 26 percent); Chicago, Illinois (down 26 percent); Richmond, Virginia (down 26 percent); San Diego, California (down 25 percent); and Honolulu (down 25 percent).

Loan origination dollar volume up 5 percent as HELOC dollar volume jumps 45 percent

Although the number of originations decreased from a year ago, the estimated total dollar volume of originations increased thanks to higher average loan amounts. There was an estimated $444 billion ($444,560,103,469) in total loan origination dollar volume in Q1 2016, up 5 percent from the previous quarter and up 5 percent from a year ago — the fifth consecutive quarter with a year-over-year increase in loan origination dollar volume.

The total dollar amount of purchase loans originated in the first quarter was an estimated $146 billion ($145,693,394,297), down 11 percent from the previous quarter but up 8 percent from a year ago. The total dollar amount of refinance loans originated in the first quarter was an estimated $204 billion ($203,593,423,522), up 8 percent from the previous quarter but down 9 percent from a year ago. The total dollar amount of HELOCs originated in the first quarter was an estimated $95 billion ($95,273,285,650), up 34 percent from the previous quarter and up 45 percent from a year ago.

FHA loan share increases annually for fifth consecutive quarter

Among all purchase and refinance loans, 17.5 percent were FHA loans, 8.3 percent were VA loans, 0.8 percent were construction loans, and the remaining 73.4 percent were other loan types, including conventional.

FHA loans as a share of all loan originations increased 7 percent from a year ago while the VA loan share were up 5 percent and construction loans were up 19 percent. The FHA loan share has increased for five consecutive quarters, and in 10 of the 11 last quarters.

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5 Things Every Modern Entrepreneur Needs


Let’s get straight to the point. Here are five things that every modern entrepreneur need:

1.) Transparency. Operating with transparency used to be a luxury versus a necessity but, now, it’s quite mandatory. Millennials in particular, who wield a tremendous amount of influence and purchasing power, make buying decisions based largely on the provenance, manufacturing processes and overall business practices of a particular company. Because millennials are now the largest population in the U.S., to say that transparency will drive how businesses are perceived is an understatement at best. However, the good news is that establishing and maintaining transparency doesn’t have to be difficult. Simply communicating regularly with honesty and unequivocally holding yourself, your staff and your company accountable will go a long way toward fostering good will with not only consumers and prospects, but also with vendors, strategic partners and your industry at large.

2.) Loyalty. It used to be that only airlines had “loyalty” programs. Now, everybody from giant corporations like Pepsi Co. to mom and pop corner coffee shops have some sort of loyalty program. And, rightfully so. Every industry faces new competition on a daily basis and customers are understandably price sensitive, often buying from whoever has the best sale or perks. However, what loyalty programs really come down to is creating that coveted repeat customer. For instance, airlines offering free first class upgrades or hotels upgrading size of the room for elite travelers often creates an allegiance that trumps price point.  This principle can be applied in every business.  If you’re a service company and a client is at the end of their agreement, offer a specific service at a discount or another deliverable with a high perceived value. Those who do business online can easily build an awards program that fosters a faithful following.

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3.) Crowdfunding. The ugly truth is if you need a loan, chances are extremely high you won’t be able to get one. In fact, the recent small business study also revealed that the majority—a full 61%—of those who tried to get a favorable loan were unable to do so. Venture capital and private equity funding is equally difficult to come by, if not more. While some types of capital are actually easier to procure, the interest rates are usually more aggressive, often prohibitively so. Instead, focus on crowdfunding and non-traditional lenders such as Bond Street, Kabbage and Deal Struck. According to Massolution’s 2015CF–Crowdfunding Industry Report, global crowdfunding was anticipated to be over $34 billion. A revenue source of that size is simply too big to ignore and not tap into.

4.) Pay-for-Play Social Media. Facebook was among the first to implement the “pay-for-play” model by removing organic reach and focusing on paid advertisement. Since being acquired by Facebook, Instagram is destined to follow. Pinterest and Twitter are also both currently growing into their pay-for-play systems and will likely make it difficult for pure organic reach as well. Unfortunately, this means entrepreneurs will need to increase their social media budget. However, Facebook’s paid ads have been shown to reach a significantly greater percentage of users than organic posts, making paid ads well worth the investment. However, social media shouldn’t only be leveraged as a form of advertising. Rather, social media is an ideal way to handle customer service in such a way that not only improves marketplace loyalty but also your company’s transparency endeavor.

5.) Instant Gratification. Simply put, if you don’t offer some form of instant gratification your prospective customer will likely go somewhere that does. This truth is particularly problematic for businesses that require information from customers, such as insurance or financial services. Having prospects fill out contact request forms to be contacted later on for products or services is becoming less and less effective in the “Age of Impatience.” To be competitive, you need to deliver to the customer instantaneously in some way, whether that be with the provision of information they are seeking or other deliverable that will satiate them in the moment and keep them interested for a longer term.  Even just offering quicker and more efficient processes in dealing or transacting with your company is certainly a form of instant gratification. At every available touchpoint, strive to impress the customer—an incredibly effective way of evoking that gratified feeling.

No matter what industry you’re in or the type of business you run, you can still make a profit no matter what the current economic outlook happens to be. That begins with giving customers what they want, how they want it and in a way that’s more sensitive to marketplace vs. company needs. The above tools will put your business well on its way to doing exactly that, possibly making 2016 your most successful year yet.

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