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The Technology/Productivity Conundrum—Has Technology Slowed Down Mortgage Lending Productivity? - Ellen Rose

Ellen Rose
New Coordinates
Summer 2018

Ask a group of seasoned mortgage underwriters whether they can underwrite loans faster today than “in the old days.” Many will likely tell you no. Ask a mortgage servicing claims manager how many claims personnel can currently file per person per day. The answer will probably be as low as one or two, while “in the old days” 10 was a standard goal.

It is puzzling that despite all the technological advancements made in the mortgage industry, certain processes are slower than before. Yes, there are more regulations that apply and, therefore, more boxes that must be checked since the financial crisis, but that’s just part of the picture. This article focuses on how new technology may be impairing productivity and what to do about it.

The Next, Best Thing
When considering a technology upgrade, it is important to first question the perception that new systems are needed. What do current technologies lack? Are existing systems being used optimally or are misaligned processes weighing them down? Be careful not to choose the next, best thing without conducting a comprehensive evaluation.

Asking what, when, and why can go a long way toward preventing repetitive and costly technology turnover. Yet many companies skip two important steps—analyzing in-depth why their current technology is not working and identifying processes that could be redesigned or reengineered to optimize it. Instead, their reflex is to start over with a new vendor and a new platform. (Yet even this option requires similar analysis to determine a new system’s business requirements.)

If new technology is purchased, a common challenge—and, perhaps, mistake—is extensively customizing it to match existing processes. Implementers often simply carry over processes that are, perhaps, inefficient and/or broken. Customization leads to the need for lender resources to test and maintain the customization as the technology platform improves its standard features over time with new releases. Ultimately, the vendor may no longer be able to support the implementation.

Companies would be better served by reengineering the processes to take advantage of new workflows and efficiencies inherent in the new technology. Done right, the next, best thing may provide opportunities for true business process transformation.

Lesson 1: Analyze whether the old technology is broken or whether processes are broken. When implementing new technology, embrace the standard architecture and modify processes to make the most of the change. Consider complete process transformations that optimize the technology. Help the organization excel at change.

Hybrid IT
Most mortgage lenders today use at least three different systems or applications to complete an evaluation of a loan application. There are sales tools, including mobile applications, enabling loan officers to review various scenarios with the borrower. There is a loan origination system (LOS) that functions as the system of record for loan data. The LOS may or may not have workflow and document management features. There is a secondary marketing engine that assists lenders in selling originated loans. These systems may or may not be integrated.

In addition, many lenders not only have multiple systems, they also have service providers dedicated to assisting with compliance, document management, fair lending, and document preparation. Some may even have different sets of systems for different loan products (e.g., home equity lines of credit or multifamily commercial real estate). Lenders choosing to service loans typically will add another system to the mix or use a subservicing provider.

The resulting hybrid IT environments contribute to the technology/productivity conundrum. The fact that very few legacy systems are being retired as new ones are introduced is slowing things down and having an impact on productivity gains within organizations, a technology CEO said in a recently published interview with I-CIO.1 Indeed, it only takes one look into market-leading mortgage servicing software to see that legacy systems are still very much in the mix. Graphical user interfaces have been built on top of a mixed technology stack that includes Common Business-Oriented Language (COBOL), designed in 1959 for mainframe computers.

Lack of integration, a web of legacy systems, and an overall lack of planning about how and where different technologies impact productivity may be contributing to a reduction in productivity.

Lesson 2: Understand that new technology is not magic, and that one change can cause unforeseen impact. Plan with an eye to achieving an overall business strategy, and implement new technology in alignment with other technology to support business objectives.

The PAID Reality
In a book titled One Second Ahead, “corporate mindfulness” specialist Rasmus Hougaard and his co-authors have put forth the theory of a PAID reality, which stands for Pressured, Always on, Information-overloaded, and Distracted. The researchers found that the modern office is filled with more information and distractions than ever before. This, they claim, results in brain overload, which negatively impacts performance, productivity, efficiency, and effectiveness.

In addition to common office interruptions such as worker interaction and telephone calls, today’s technologies add emails, instant messaging, video conferencing, mobile communications, and information security measures to the mix of distractions. In a 2015 study from the University of California, Irvine, researchers shadowed workers on the job, observed their productivity, and found that it took an average of 23 minutes and 15 seconds to get back to a task, once interrupted.2

Nearly every worker at one time or another has uttered the statement, “I was multitasking,” to explain why they were slow to respond to a question. The fact that they usually needed the question repeated indicates that they were not really multitasking, they were single-tasking on something other than the conversation.

Research by the American Psychological Association shows that what workers think is multitasking is “ineffective and inefficient,” according to an article in Entrepreneur magazine.3 Multitasking takes as much as 40 percent more time than focusing on one task at a time—more for complex tasks. The article goes on to state that a Stanford University study “showed that those who consider themselves to be great multitaskers made more mistakes, remembered fewer details, and actually took longer to complete tasks than those who did not consider themselves to be frequent multitaskers.” (Try taking The Myth of Multitasking author Dave Crenshaw’s exercise4 to see how these concepts play out.)

Is it possible that with better technology, there are more interruptions and distractions that cause a work productivity slowdown? A Fast Company article5 has reported that interruptions cost the U.S. economy $588 billion a year.

Lesson 3: Design processes, policies, and procedures that enable focused work and technology optimization. Consider “Deep Work”6 to cultivate focus skills. Design goals and metrics that reward quantity and quality. Encourage breaks for answering emails, returning calls, and otherwise remediating what would have previously been interruptions. Challenge the current state with stretch goals.

Make a Plan to Increase Productivity
The following recommendations may help to improve processes with both current and future technology.

  • Analyze before buying.
  • Make sure you have a clear business strategy.
  • Analyze processes in their current state; create detailed process maps; capture controls; measure.
  • Consider using a business process modeling tool that can help simplify and improve processes.
  • Do a deep dive into the integration of people, process, technology, and information.
  • Assess technology configuration and integration; identify customization and legacy systems.
  • Reengineer processes to better align with technology and business strategies.
  • Consider optimizing current technology instead of replacing technology.
  • Consider simplifying and standardizing.
  • Ensure that technologies integrate well.
  • Consider time studies to identify productivity improvement opportunities.
  • Look for waste in processes (hint: handoffs often result in rework).
  • Eliminate distractions and interruptions; establish focused work effort in 90-minute increments.

A Final Word
Digitalization was a leading topic at the Mortgage Bankers Association’s 2018 National Secondary Market Conference. Lenders must embrace emerging technology in order to offer the best customer experience and to remain competitive. In doing so, lenders should take the opportunity to transform processes. It is the perfect time to think outside the box. Do it faster and better. Continuously analyze, measure, and improve.

Lesson 4: Don’t let inefficient processes defeat potential gains.

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1 “Why It’s Time to Reimagine Business Processes and Boost Productivity,” I-CIO;
2 “Worker, Interrupted: The Cost of Task Switching,” Fast Company;
3 “Why Multitasking Is a Myth That’s Breaking Your Brain and Wasting Your Time,” Entrepreneur;
4 Time how long it takes to write on one line “1,2,3,4,5,6,7,8,9” and on the second line “a,b,c,d,e,f,g,h,i.” Now time how long it takes when alternating digits from one line to the next (e.g., 1,a,2,b, etc.).
5 “The Hidden Costs of Interruptions at Work,” Fast Company;
6 Deep Work: Rules for Focused Success in a Distracted World, Cal Newport, January 2016

Treliant, LLC, Compliance, Risk Management, and Strategic Advisors to the Financial Services Industry and Consumer-Oriented Businesses, brings to you New Coordinates, a quarterly newsletter offering insights and information regarding pertinent issues affecting the financial services industry. This article appeared in its entirety in the Spring 2018 issue. To subscribe to our quarterly newsletter, please Contact Us.

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