Mortgage Banking & Technology: Lenders’ Perspective
The Financial Services Team at CC Pace is very proud to announce the posting of a new white paper, which is based on the results of a recent industry survey. The senior consultants in our Mortgage Practice periodically reach out to a broad cross-section of the industry to gather direct input on the mood in the marketplace, current trends, pain points, technology innovations and more. The results from a survey we conducted in late summer can be found in “Mortgage Banking & Technology: Lenders’ Perspective”.
In this white paper, you will find lender input on a broad array of topics, including the competing priorities in the current market, the role of technology in competitive advantage, lender satisfaction with current technology and current progress toward a digital mortgage. One of the things we at CC Pace like to think distinguishes our survey results from others in the industry is our approach toward capturing a detailed, open dialog with our participating lenders. While the white paper certainly includes numerous charts quantifying the various positions the participants have on an array of topics, it also includes a wealth of insight in the form of direct quotes from lenders (albeit provided with anonymity, as per our agreement with the participants) on many issues. We hope you will agree that our open dialog approach makes our industry reports compelling reading, full of insight and perspective.
We hope you will enjoy our latest white paper and the view put forth by our participating lenders. Please share your thoughts with us, both on the paper itself and on topics you would like to see us cover in a future survey. And please let us know if you would like to be included in our next market survey, currently targeted for the first quarter of 2018.
With Star Trek: Discovery’s television debut rapidly approaching, I can’t help but reflect on the many valuable lessons on project management I took away from the original series, Star Trek, and its successor, Star Trek: the Next Generation. Those two TV series counted on the strengths of their ships’ captains, James T. Kirk and Jean-Luc Picard, respectively, not only to help entertain viewers, but to provide fascinating insights into the characteristics of leadership. In so doing, the shows created timeless archetypes of starkly contrasting project management styles.
Kirk and Picard both had the title “Captain,” yet could not have been more different. In project terms, both series featured a Starship Captain operating as Project Manager, Project Sponsor and Project Governance all rolled into one. Yet despite common responsibilities, they were very different in how they carried them out, each with different strengths and weaknesses; one would often succeed in roles where the other would fail, and vice versa. Each episode was like a project, but on the show, thanks to their writers, each ship’s captain seemed to always get a “project” that they were well-suited for. But that only happens in real life if someone makes it happen, and most real-life projects don’t have writers working on the scripts.
Kirk and Picard were polar opposites in management style in many ways, and most people involved with project execution have common traits with each. Suppose you are like one of them – are you a Kirk or a Picard? – what should you do to maximize your strengths and minimize your weaknesses? Suppose one is on your project – how do you ensure they are put to their best use? How should you be using them and what role should they play? What would they be good at and not so good at?
To get down to basics, the biggest difference between the two is Kirk is “hands on” versus Picard is “hands off.”
Kirk is clever and energetic. Because he is “hands on,” he is always part of the “away team” – the group of people who “beam down” to the whatever this week’s show is. The senior management here is typically the project team. When additional work was found, he did it himself, or with the existing team.
Picard is visionary and a delegator. He is more of a leader than a manager. He set objectives, made decisions and, obviously “hands off,” told Number One to “make it so.” Number One led the project team; Picard rarely went himself.
The best use of a Kirk is as a project manager with delegated authority on a short-term project with a fixed deadline, like a due diligence effort requiring the current situation to be assessed and a longer-term plan of action defined to address deficiencies. Kirk’s style and authority allows the team to move quickly; if additional tasks appear, Kirk will summon enough energy to get himself and the team through it. When decisions need to be made, he makes them. He will shine. But on a long-term project, if there is additional scope discovered (and there always is), Kirk will become a martyr, skipping vacations and asking his team to do the same. He will fail at some of his primary tasks – staffing the project properly, as example – and will inadvertently overestimate the current state of the project to his stakeholders, and underestimate the risks. Here again, it only works on TV.
The best use of Picard is as a project sponsor – he has the vision and needs you to implement it. The trick will be keeping him involved. On a short-term project he wouldn’t be your first choice for a PM – unless it was a subject that he cared deeply about – because he might delegate without being very involved.
If Number One got into trouble, but didn’t know it (e.g., the boiling frog parable: as the water heats up, the frog never notices until it is too late), Picard wouldn’t be providing enough oversight to know it either. Or, if his insight was needed, then there might be a delay while waiting for him to decide. On a long-term project, the project will need strong oversight to monitor progress and ensure engagement. That way Picard can keep the team focused on the right things. Picard could also be a PM on a long-term project like a process transformation. If there was a new requirement, it would never occur to him to try and do it himself – he would go to the sponsor to explain the tradeoffs of doing or skipping the new requirement, and get the right additional staff to do it. His management style is great for delegation and building a team, as well as developing the people on that team.
I know that both Kirk and Picard have their fans, and their project management skills both work on TV and in movies – but because there they always the type of project to work on that suits them, as the writer made it be so. In real life you need to be more flexible in how you use them, and apply the right one, or at least the right traits, to meet your business objective. Understanding this, and acting accordingly, may be as close to having a script writer for our projects as most of us will ever get.
A startling statistic that often gets overlooked is that 70% of projects world-wide fail. Each year, more than one trillion dollars are lost to failed projects. Most importantly, statistics show that these failures are frequently not the result of a lack of technical, hardware or software capabilities. Instead, these failures are typically due to a lack of adequate attention being paid to program management.
After seventeen years working in program management―implementing enterprise business strategies and technology solutions―I continue to be surprised by business leaders who misunderstand the differences between project management and program management, or simply think them to be two terms that refer to the same thing. Fact is, program management and project management are distinct but complementary disciplines, each equally important to ensuring the success of any large-scale initiative.
Let’s take just a minute to level-set the roles of both. Project management is responsible for managing the delivery of a ‘singular’ project, one that has defined start and end dates and is accompanied by a schedule with a pre-defined set of tasks that must be completed to ensure successful delivery. Project management is focused on ‘output’. Program management, on the other hand, takes a more holistic approach to leading and coordinating a ‘group’ of related projects to ensure successful business alignment and organizational end-to-end execution. A program doesn’t always have start and end dates, a pre-defined schedule or tasks to define delivery. Program management is primarily responsible for driving specific ‘outcomes’, such as ensuring the targeted ROI of an initiative is achieved. Put another way, program management is basically the ‘insurance policy’ of a project, the discipline needed to make sure all the right things are done to ensure the likelihood of success.
One analogy I often use to help differentiate the roles of a program manager and project manager is that of a restaurant. The executive chef (project manager) works within a defined budget, makes certain the kitchen is adequality staffed and creates the menu. The executive chef will provide defined tasks, processes, tools and strategies that ensure efficient and consistent delivery of meals. The meals are a tangible delivery (output). Overseeing the chef, the restaurant owner (program manager) will provide the executive chef with a budget to work from and will closely monitor the output of the kitchen. The owner will make sure each delivery and support role is adequately staffed, trained and paid (e.g., wait staff, hostess desk, dishwasher, bussers and bartender). The owner will also make certain all the details like music and lighting are in place and establish an appropriate ambiance. The owner will make sure the right tools are in place for flawless execution (such as utensils, glasses, napkins, water pitchers, pens and computers), while making sure expected standards and key performance indicators are being met to achieve overall profitability targets and a great end-to-end customer experience (outcomes). The restaurant owner’s primary responsibility is to focus on merging the tangibles with the intangibles to support successful business strategy execution.
When it comes to mortgage banking, an industry that’s known more than its fair share of failed implementations, it is critical that we start giving program management a greater priority, and ensuring that those commissioned to perform the role are equipped with the requisite skills and tools. Whether it’s adding a new imaging platform, bolting on new CRM or POS technology, or something as expansive as replacing an LOS, every enterprise initiative requires a project manager to be leading the implementation effort and a program manager focused on change management and roll-out. Consider the addition of an end-to-end imaging system. A program manager’s tool box should include strategies and frameworks to effectively manage the roadmap for each critical impact point. This would include things like training, updating policies and procedures, executing an internal change management strategy, synchronizing marketing communications, and updating key performance indicators. In some instances, the project may require staff analysis, skills assessments, compensation analysis and adjustments, or even right-sizing of the organization. All of these are key components of the program manager’s toolbox, and not generally covered within the role of a project manager.
Bringing this dialog back full-circle, program management helps reduce project failure rates by maintaining a holistic approach to guiding an organization’s successful adoption of the impending change, leaving the nuts and bolts of build-out in the hands of project management. By addressing the myriad of intangibles required to orchestrate successful adoption and acceptance of change by an organization’s personnel, program management also helps ensure that business strategies and projects remain in full alignment and ROI objectives are achievable. Preparing management and staff for the impending changes defuses fears that can send adoption off the rails and eases the transitions and realignment of resources and roles that often accompany larger initiatives.
In closing, it’s not surprising to find the lines between project and program management will easily get blurred. Our experience is that it is often difficult to identify a really good project manager that is proven capable of undertaking a large-scale effort, but even more so to find someone truly adept at managing all the moving parts of the program. This difficulty is even more apparent in organizations where undertaking significant projects is a relatively rare occurrence and these skills are simply not found among existing staff. While it may seem adequate to budget for a singular project manager and hope that the program elements will be attended, managed and executed, unfortunately, “hope” is not a viable strategy when it comes to business-critical initiatives. The assignment of a skilled program manager, whether sourced internally or externally, will ultimately prove to serve as an effective insurance policy to your project investment. In an industry where failure cannot be afforded, it’s time to stop gambling on project execution and begin implementing program management
As a continuation of our blog series on system selection, it’s time to discuss helpful tips to facilitate a successful product demonstration. The organization and management of the entire process requires upfront preparation. If you drive the process, your demo evaluations will be far more effective.
Demonstrations are one of the most critical components of the software selection process. Seeing a system in action can be a great learning experience. But not all demos are created equal. Let’s talk about how you can level the playing field. To make the most of everyone’s time, CC Pace recommends the following best practices for product evaluations.
Tip One – Keep your process manageable by evaluating no more than five systems. If you evaluate too many vendors, it becomes difficult to drill down deep enough into each offering. You will inevitably suffer from memory loss and start asking questions like, “which system was it that had that cool fee functionality that would be really helpful?”
Tip Two – For each software vendor, set a well thought out date and time for the on-site demo. Depending on your team’s travel schedule, try to space out the demos a few days apart so that you have time to prepare and properly analyze between sessions.
Tip Three – Logistics play a big role in understanding how a system looks and functions, so do your part to help your vendors present well. Whenever possible, arrange for a high-quality projector or large HD screen for the attendees in the room. Hard-wired internet connections are always better. There’s nothing worse than being told, “the screen issues are because of a resolution problem” or “it’s running slow because the air card only has one bar.” Providing these two items can easily remove doubts about external factors causing appearance and performance issues.
Tip Four – Involve the right people from your organization. It’s important to have executive sponsorship as well as hands-on managers involved to assess the software modules. This is also the best opportunity to get “buy-in” from all parts of your organization.
Tip Five – Be sure to head into these demonstrations knowing your key requirements. Visualize it as a day in the life of a loan and follow a natural progression from initial lead into funding. Jumping around causes confusion and can be difficult on the vendor.
Build a list of requirements based on the bulk of your business. Asking to see how the software handles the most complicated scenarios can send the demo down needless paths. No one wants to watch a sales person jump through a bunch of unnecessary hoops for a low-volume loan product.
If you highlight which functional capabilities are most important to your organization, the vendors can spend more time demonstrating those capabilities in their software. Communicate how you think their software can help. But be careful not to justify why something is done a certain way today, but rather focus on how it should be done in the future.
Tip Six – The easiest way to take control of the demo process is to draft demo scripts for your vendors. Start by identifying the ‘must-have’ processes that the software should automate. Don’t worry about seeing everything during this demo. Set the expectation that if the demo goes well, the vendor will likely be called back again for a deeper dive. Provide a brief description of each process and send it to the vendor participants so they can show how their software automates each process. The best vendor partners will have innovative ways to automate your processes, so give them a chance to show their approach.
As you watch the demos, keep track of how many screens are navigated to accomplish a specific task. The fewer clicks and screens, the better. Third-party integrations can significantly help with the data collection and approval process. Always have an open mind regarding different ways to accomplish tasks and don’t expect your new software to look or act just like your legacy system.
Simple scorecards should be completed immediately following each demonstration. This will make it easier to remember what you liked and disliked and prove invaluable when comparing all the systems side-by-side when your demos are complete.
One final suggestion: always request copies of the presentations. Not only will this help you remember what each system offers, it’s useful when the time comes to create presentations for senior management.
photo credit: http://www.freepik.com/free-vector/business-presentation_792712.htm Designed by Freepik
CC Pace is proud to welcome Chris Gill as the newest member of our Financial Services team, a group that has been recognized as among the premier consulting practices in the mortgage banking industry. Chris’s knowledge, skills, expertise and overall commitment to helping lenders solve their challenges makes him a great addition to the team. During Chris’s nearly thirty-years in mortgage banking he has spent significant time as a lender, working at both Washington Mutual and JP Morgan Chase, before transitioning to the software side of the industry, where he spent nearly ten years at a leading mortgage software firm. This collective experience serves to make Chris a valuable asset to our clients, someone they can trust to help chart a course for success with their most complex challenges. Chris recently sat down for a Q&A session to discuss his background, his vision for the industry and his purpose in joining CC Pace.
How did you get into the mortgage banking business?
CG: My first exposure to the mortgage banking industry was with the Sheltered Lending group at Chemical Bank in Jericho, NY. While still in college as a temporary employee, I worked in the Closing department faxing out packages from the mailroom to attorneys and settlement agents. I was hired not because of my knowledge or experience but rather my ability to turn a double play. Not only am I proud to still be part of this tight knit industry, you can also find me on the baseball diamond trying to hurt myself.
What sort of things have you done during your time in the industry?
CG: I’ve been fortunate enough to be exposed to lots of different areas within the mortgage banking industry. Started in the backend end of the business as part of a Portfolio Administration group, worked my way into Secondary Marketing, ran a rogue IT shop, and eventually became a licensed Mortgage Banker, Broker and Secondary Lender. One of my most valuable experiences was the time I spent working on a trading desk building a conduit. Interesting to note, these various positions spanned across both the business and IT sides of the house. My new role with CC Pace will allow me to accomplish so much more and better service our clients.
What would you say are some of the greatest challenges the industry is facing today?
CG: Whether it’s customer demand, changes in the market or new regulations, the ability to adapt is the greatest challenge facing financial institutions. Understanding, reacting, and potentially leading is the true definition of an innovator. This can be accomplished with solid forward thinking strategy which most likely includes process and technology refreshes. The famous quote by General George Patton, “Lead, follow or get out of the way!” is still relevant today. Mobile devices, portals, automated workflows, imaging, e-notes are no longer the wave of the future. They are essential building blocks to keep pace with our real-time, on-demand society.
So you’ve transitioned from lender to technologist, and now consulting. Why the recent decision to join CC Pace?
CG: Right people, right time, right situation…. While I’ve been in the industry a few decades, I’ve only worked at a handful of institutions. Every organization strives for excellence. I firmly believe the most effective way to be successful is to work with the best professionals. In my opinion, CC Pace offers something not found at other consulting firms. Deep real-life experience with complete focus on the client’s best interest. At the end of the day, we’re all in this business to originate loans. For me, this opportunity represents a unique chance to work with more than one lender. Servicing clients while driving industry innovation excites me.
What will be your primary focus be at CC Pace?
CG: My role at CC Pace will be a little departure from the traditional business development function. CC Pace has done so much in the industry that no one knows about. I’m here to start meaningful conversations and share our valuable experience. “Been there, done that” is a great mantra when it can be said about defining strategy, improving efficiency, reducing risk and ensuring success.
What makes for a successful lender/consulting partnership?
CG: This could really be a one-word answer: ‘trust’. Trusting our experience, our knowledge and our skills to help solve your most complex of challenges or projects. Our end goal is to help you operate more efficiently, effectively and successfully. A great partner can be the difference in making a struggling, meandering project with marginal success into a timely, smooth-running project with significant success.
When should lenders be calling you?
CG: Call me anytime, even if you’re not sure what you need. CC Pace is the premier financial services consulting firm. Our seasoned staff of consultants have an average of over 25 years of experience managing highly complex multi-faceted projects. Together, we can accomplish great things.
As Wall Street analysts predict smartphone sales will continue to level off due to varying levels of market saturation, does that actually mean smartphone utilization is set to follow? Is the smartphone honeymoon over? Is the saying ‘there is an app for that’ dead? Perhaps the sales of new smartphones are in fact tapering off, but I am a firm believer that ‘utilization’ is just getting started.
Since the turn of the Century, each new generation of trains, planes and automobiles continues to be enhanced in order to increase consumer satisfaction and society’s overall productivity. With each new generation they become faster, easier, and cheaper to run and maintain, and lighter, smaller and in many cases even more luxurious. Why should the smartphone be any different? It has revolutionized how we store, manage and transport information. In the short term, the smartphone has allowed people to immediately ditch the bulky briefcase loaded down with a calendar, address book, calculator, plane tickets, a newspaper and manila folders to that of just a handheld device which simply fits into a shirt pocket.
The invention of the smartphone is on par to that of the automobile. Society’s overall successful adoption of the smartphone has been in an effort to help increase one’s ‘quality of life’. With that said, it’s quickly becoming high noon in the world of business where the lack of an effective smartphone strategy for both customers and employees will likely seal the fate of said business. Most at risk may in fact be the financial services industry, given the volume of legacy systems built and now required to support some of the most comprehensive of services and investment products. The up and coming millennial generation has made it blatantly clear they will adopt those who have successfully adapted. Moving forward it’s incumbent on a business that their success, let alone their survival will be dependent on their smartphone e-strategy. So in reading the following article, it confirmed my belief that the smartphone generation is just getting started. Read more about it in Strategy+Business, “Radical Intimacy and the Smartphone”.
CC Pace remains committed to helping guide organizations in the development, deployment and adoption of their e-strategies.