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2020 and 2021 have been very challenging for everyone. Plenty of people lost their jobs, some industries have been decimated, lots of businesses had to shut down and everyone has had to adapt to survive. We had to fundamentally change the way we work; setting up full home office workstations and being productive whilst homeschooling children. We don’t praise it enough but it’s a herculean task to be juggling all of life’s obligations in a way we have never done before in our lifetime. It took a lot of courage and commitment on behalf of everyone who had to tackle those changes. That was a personal transformation.
This past year has also pushed mortgage lenders to the edge in a way they haven’t experienced in a generation.
With the market shut for three months and constantly changing risk factors and trends, lenders had to make more criteria changes, faster than ever before in order to keep up. They called “all hands on deck” to firefight this situation, survive and get through this difficult time, and some of them had to close shop to be able to process cases and satisfy unpredictable demand. Most of them saw their applications’ time to offer double and sometimes even surpass 100 days. We can’t let this get out of control again and happen in the future.
That hard period has forced lenders to face the transformation challenges they have been putting off for years, and for legitimate and rational reasons: transformation is really hard, especially in a highly regulated competitive environment where the stakes are very high and poor execution can have lasting damaging effects. However, the cost of failing to embrace proper transformation is even higher, and the past year has brought this to the surface. Or as Warren Buffett says: 'Only when the tide goes out do you discover who's been swimming naked'.
In order to prevent these painful periods again, the solution is simple: continuous incremental transformation. Simple doesn’t mean easy, but transformation should not be a big bang event that each lender goes through every 2-4 years. One-off events, where many components and moving parts are updated simultaneously, puts business continuity at risk. Transformation should be a continuous process that is iterated over and over in frequent, small steps.
Change should be deployed regularly and incrementally for live constructive feedback. This gives lenders the ability and flexibility to implement small tactical changes without any disruption of business. When a lender embraces this approach to change, they massively reduce the need to go through a big transformation again involving loads of resources and personnel without a promise of success.
We can make small mistakes and correct them as we move forward, but we can’t afford to make a big one. Big bang changes means lenders have to be conservative. Continuous incremental transformation is the answer to that and lenders will have the resources to experiment more in the future. More importantly, transformation and change will happen when it's not urgent and lenders can manoeuvre comfortably, or as Erasmus famously said: 'prevention is better than cure'.
Today lenders are tied to the limitations of the technology they use and cloud-native tools will offer them the flexibility to be masters of their own fate and pace of change. Take Gmail as an example: it has been around for nearly 20 years and businesses use it the same way today as when it was created in 2004. Yet, the technology is a hundred times more powerful and businesses have an immense freedom to add plugins and connections to countless other technology companies, empowering that ecosystem even further. Gmail eliminated the need for businesses to go through email transformation altogether because Gmail goes through the constant transformation itself behind the scenes.
At Mast, we have the same philosophy and are building the next generation of cloud-native mortgage technology that is completely self-serviced to empower lenders and give them that flexibility and speed to stay ahead of the curve and the freedom to experiment. Lenders will be able to focus on what they do best: lending. And when the tide goes out again, they will have their modesty intact.
