How to Survive and Thrive in the Age of AI and Mortgage Platform Disruption

I’m going to share four important issues around AI and mortgage disruption and then explain ways for you to survive and thrive in this brave new world.

1. The one thing that AI can't do: own your consumer.
2. Invest in training: equip your sales team to win.
3. Diversification and specialization: focus your future here.
4. Use what the big boys use: the new tech stack.

Mortgage destruction is inevitable and it's most predictable in any industry whose existing model is too costly, too inefficient and too unresponsive to consumer’s needs. If that doesn't describe the mortgage industry, I don't know what does.

The process is essentially been the same since they got into the industry in 2003. The cost of production is rising for a multitude of reasons. At the same time margins are being squeezed and more regulatory hurdles are being added.

An industry such as mortgage, where data and automation have a huge advantage, you can see why the tech-savvy giants are taking aim at the mortgage industry. And even though automation and data provide such a huge advantage, does anyone believe that Amazon can't figure out a better way to do mortgage? Rocket Mortgage, Zillow and Redfin are all making some waves. It's more likely that the biggest disruption will come from outside the industry. And the truth of the matter is that will be more difficult for those of us inside the industry to figure out the better way. People that would create the biggest disruption turn slowly. So it's harder for an incumbent to adapt their platform in order to create a more efficient one from scratch.

We in the mortgage industry really have a hard time seeing it with a fresh perspective and a new set of eyes.

Own your consumer

If you're a Loan Officer, Sales Manager or Marketing Manager, you should change the way you view a lead. As an organization, you should be looking at these opportunities that own the consumer. Gone are the days of “this is a loan or not” as a kind of short-sighted thinking that will usually be surpassed by any of the disrupting platforms, web-form, phone call, etc.

These are the seed that should be planted, nurtured and owned.

Not just the one they go on to become loans. Loan Officers must not stop looking at what the lead can do for them, what they start looking at is what can I do for the consumer? A company spends millions upon millions of dollars a year to speak to tens of thousands of consumers to do a couple of thousand loans. What happened to the rest? They are missing the opportunity to get their market share because either we don't have the systems or the mindset of doing, the company you see on these gold mines don't even realize it. Your current database and previous consumer’s database of turn-down and missing opportunities are the gold mine.

Invest in training

So, how do you change a company that gathers market share while continuing to do business? I know that's hard to do. Stop being a one and done company, make consumer engagement training for your public-facing staff, I mean loan officers, sales managers, fast processors, etc. and anybody that deals with the consumer.

Institute policies and systems that will aid the loan officer, your management team and any aspect that will make you serve the consumer. However, while creating efficiencies make it fordable to them. I think it really starts in training and reinforcement. While officers need to see the long-term benefit of owning their turned-out not just what they get today, they also need consistent training.

Remember your biggest advantage over the machine is value. By creating value don’t put yourself in a position that you have to compete with machine. You're going to lose. The machine can work 24/7, doesn't get sick, crunch numbers faster, and in the long-run, it is cheaper for the company.

Diversification and Specialization

So diversification and specialization is not a way to insulate yourself from the impending destruction in the mortgage industry and help solidify your future value. Machines can be taught to be very efficient at normal things, and there are areas such as non-QM where the nuances might make automation more difficult. If you are a purchase/loan officer, then you should own that consumer and be there for them to serve them when the time comes for them to refinance their property. If you are a consumer direct refinance or loan officer then you should be looking to spread your wings and find out opportunities to help people purchase. You can't be a one-trick pony, it’s going to be too limiting in the future.

The New Tech Stack

There are technologies that exist today which you should be deploying to solidify your client ownership training. Basically, we need to give ourselves the tools to be able to compete and own that consumer. There are software that can take structured data out of your unstructured data, they can help you monitor those calls. There is enough time for managers to listen to calls and make real-time corrections and find missed opportunities. But these machines can do it for pennies, they can alert you to missed opportunities, help with assessing and creating skills-based training, they can help with compliance and can also measure customer engagement.

That could digitize the loan process, source your data and allows borrowers to complete the loan process relatively in an automated frictionless manner.