Is technology the problem, not the solution, in the mortgage industry?

The mortgage industry has long been promised a technological revolution to streamline workflows, reduce operational costs and improve efficiency. But despite significant investments in new technologies, the cost of lending has risen dramatically. Companies still struggle with cyclical hiring and firing, and the expected return on investment (ROI) of technology implementations has yet to be discovered. This raises a critical question: Is technology failing the mortgage industry, or are we approaching it wrong?

The promise versus reality

High expectations

Technology providers have marketed their solutions as a panacea to long-standing industry inefficiencies. They promise improved workflows, lower costs and streamlined processes to revolutionize mortgage production.

Rising costs

Contrary to these expectations, mortgage origination costs have escalated and reached record levels in recent years. Rather than reducing costs, technology investments have sometimes added layers of complexity and cost.

Persistent cycles

The industry continues its pattern of expanding and contracting workforces in response to market fluctuations. Despite technological advances, companies still resort to cyclical hiring and firing, indicating the need to address core issues.

Why technology doesn’t deliver the expected ROI

1. Misaligned solutions

• Workflow Band-Aids: Many tech products address surface-level symptoms rather than underlying systemic issues. Solutions often streamline individual tasks, but must integrate holistically with existing processes.

• Complex implementations: The time and resources required to implement new technologies can offset any potential benefits. Complex systems may require extensive training and adjustment periods.

2. Human element overlooked

• Resistance to change: Employees may resist adopting new tools, especially if they feel those tools threaten job security. This resistance can lead to poor adoption rates and underutilization of technology.
• Technology versus human expertise: Automated systems cannot reproduce the nuanced decision-making and relationship-building skills of seasoned professionals. The human touch remains crucial when providing mortgages.

3. Too much emphasis on technology as a panacea

• Neglecting process improvement: Relying solely on technology without redesigning the underlying processes limits effectiveness. Technology should enhance, not replace, sound business practices.

• Underestimation of training needs: Inadequate training can lead to underutilization of new systems. With the right insight, employees can take full advantage of the technology.

The cyclical rent and brand mentality

• Market sensitivity
  • Mortgage companies often respond to changes in the market with rapid staffing adjustments. This reactive approach leads to instability and a need for sustainable expertise within organizations.

• Focus on the short term
  • Addressing immediate financial pressures through personnel changes undermines long-term stability. It prevents the development of a skilled workforce that can adapt to new technologies and market conditions.

• The role of technology
  • Instead of stabilizing the workforce, technology investments sometimes increase instability due to upfront costs without quick results. Companies may cut staff to offset these costs, reducing the potential benefits of new systems.

Is technology the problem?

• Not the technology itself
  • The problem may be something other than the technology itself, but how it is selected, implemented and integrated. Poor alignment between technology solutions and business needs leads to disappointing results.

• Strategic coordination needed
  • Technology should support, not replace, well-defined business strategies. A clear vision and strategic goals are essential for successful technology adoption.

• Human-centered design
  • Solutions should be designed with the end user in mind, and should enhance rather than replace human work. Employee input and involvement are crucial during the development and implementation phase.

Progress: Rethinking Technology Implementation

Holistic needs analysis

• Identify core problems
  1. Conduct thorough analysis to understand the underlying issues before seeking technical solutions. This ensures that technology meets the real needs of the organization.

• Employee involvement
  1. Involve employees at all levels to understand practical challenges and opportunities. Employee involvement can improve adoption rates and maximize the benefits of new systems.

Process redesign

• Optimize before automation
  1. Improve existing processes to ensure technology increases efficiency rather than automates inefficiencies. This step prevents flawed processes from becoming entrenched.

• Change management
  1. Develop robust strategies to manage the human side of technological change. Support, training and clear communication can ease the transition and increase acceptance.

Strategic technology partnerships

• Joint development
  1. Work with technology providers to tailor solutions that fit the unique needs of the business. Collaboration ensures that the technology matches business objectives and operational reality.

• Long-term commitment
  1. Think of technology adoption as a long-term investment that requires ongoing support and evolution. Continuous improvements and updates keep systems relevant and effective.

Conclusion

The mortgage industry’s technology adoption challenges highlight a fundamental disconnect between expectations and reality. It will take more than just technology to solve deep-seated operational problems or replace the invaluable work of human workers. Instead, companies should adopt a balanced approach that integrates technology as a tool within a broader strategy focused on process improvement and human capital development. By doing this, the industry can begin to realize the promised efficiencies and cost savings that have thus far remained out of reach.

Call to action

• Collaboration within the sector
  • Stakeholders must come together to share best practices and develop standards for technology implementation. Collaboration can lead to more effective solutions that benefit the entire sector.
• Continuous learning
  • Invest in training and development to ensure teams can use new technologies effectively. A well-informed workforce is essential for maximizing ROI on technology investments.
• Reevaluate ROI metrics
  • When assessing technology investments, shift the focus from short-term returns to long-term value creation. A long-term perspective stimulates sustainable growth and improvement.

Ryan Colkitt is vice president of product management at AppraisalVision

This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.

To contact the editor responsible for this piece: [email protected]