Innovative Disruption In Mortgage Servicing

cake blogIn a previous life I worked for a giant computer company. One of the activities I had to do was level set expectations with new clients who had invested large sums in new computer and software systems. This setting of expectations took the form of reminding new clients that new systems always necessitate a learning curve, the implementation itself would be disruptive to their established processes, and that real efficiencies would not be realized immediately.

Instead, it would take some time for the system to be installed and tested, and for their business users to become proficient with the new process. Once these hurdles had been overcome my clients always saw benefits and efficiencies that made them more productive and more profitable.

Disruption is sometimes dictated by circumstance, forced on us by outside influence or in some other unavoidable way. It is almost always seen as a negative. But in today’s mortgage market it will take innovative disruption to make meaningful changes; innovative disruption in the form of the judicious application of technology. It is always easier for us to fall back on the operating expense side of the ledger and try to solve business problems simply by hiring more people. The rationale is that operating expenses are a given cost of doing business and so easy to justify.


disruptive technology shifts of the next five years large resized 600

***Source: Dachis Group

Technology investments on the other hand are capital expenses. These take justification, an ROI that is quantifiable, and work to get approved. Why else would mortgage companies continue to accept the process limitations and expensive overage fees associated with current mortgage processing systems? The point is, today’s mortgage servicing systems were not designed to handle the 21st century borrower’s demand for highly variable communications – nor will they ever be. Disruption has simply been postponed.

Just as when I worked for that giant computer company, I now remind you that yes, implementing a new solution can be disruptive and yes, there will be a learning curve. But when executed with a trusted partner and evaluated from a truly incurred cost model – investment in the right technology services will:

  • Avoid the never ending costs of adding FTEs
  • Guarantee a project that actually goes live in an agreed upon timeframe
  • Extend core system capability
  • Enable significant process improvement

This is the positive side of disruption – this is Innovative Disruption.