January 16, 2023
By Keith Kemph, President & CEO at BlackFin Group
During 2021 there were a select few, well respected, prognosticators in the mortgage industry who were sending clear warning shots of what was ahead in 2022. While many lenders still found themselves caught between denial and others who demonstrated willful neglect – other leaders in lending recognized what was ahead, planned, and flexed accordingly. Either way, 2022 wasn’t easy to stomach as mortgage unemployment soared, again.
After taking a moment to pause this holiday season, it’s now January 2023. Time to buckle up and for industry leaders to step up. No longer can (or should) mortgage leadership survive and thrive based on reckless ‘production only’ mentalities. A take the money in the hot market – then run when the market flips again. A philosophy that never ends well for the mortgage teams, humans, families, who are impacted. In 2023 it’ll be more important than ever for industry leadership to take a bold step forward and develop more viable, sustainable, teams. Highlighted below are the four key strategies to building more sustainable organization.
1) Define an agile strategy and company infrastructure. While ebb and flow are natural parts our industry, the industry can do a better job of reducing the dramatic swings. How? Wayne Gretzky didn’t become the Great One by going to where the puck, was. Instead, he focused on where the puck was going. Making all the necessary calculations, planning, and– he could see where the puck was going. Then strategizing accordingly. He became the National Hockey Leagues all-time scoring leader and assist producer. He has more assists in his career than any other player scored total points during their career. Thus, the ‘Great One.’ Too often we find that leaders in lending are needing to stop looking down at today’s production and headlines, then only reacting. Instead, there is a need for leaders in lending to start looking on the horizon in relation to strategy, products, profitability. Reading, analyzing, and strategizing based on all the economic commentary, trends, and analysis of consumer behavior wants and needs. As David Stevens, most recently pointed out, people need to be careful not to overreact to today’s market. Opportunity persists. Outline the three potential shifts in the market ahead and then define your three avenues to success with each – strategy, sales/marketing, operations, technology, people.
2) Develop and nurture a culture that is craving continuous improvement. While it’s one thing to develop an agile business strategy, being able to successfully implement new strategies and change, scale, and ensure successful adoption – is another. Ask any group of people if they want change, all the hands will go up. When you ask how many of them want change to ‘be’ changed, you won’t find a single hand going up. By nature of an extremely complicated industry and our complex lives, humans are not conditioned for systematic change (continuous improvement). In 2023 building a more efficient and effective businesses will remain top priority (reduce cost to produce). To develop a culture of continuous improvement, lending institutions must focus on building, and for some rebuilding, an organizational infrastructure that rewards its people for identifying and recommending continuous improvements in all aspects of the lending business – strategy (products, pricing, markets, channels), technology, operations, sales/marketing, and people. Leadership needs to challenge people to come not come to them with problems, but instead need to present challenges and recommended solutions for those difficulties and opportunities. Coach team members to design solutions. Leaders will find they get more system wide support and buy in to those specific changes.
3) Make decisions. Put an end to paralysis by analysis. We recently had a lender Client who was sitting on their technology decision for a year – putting off the inevitable to replace it. Once forced to move forward by external pressures, the project to select and implement a new system cost 34% more than the original cost. In another instance, a lender wanted us to step in and develop, then implement, a couple new critical lending products so they could aggressively diversify revenues, grow market share, and stave off living on the edge. By the time the project started, they were out of business. Both projects were held hostage to paralysis by analysis, and both cost the lenders dearly. My dad always said, “a decision is always better than, no decision.” Understandably, the lending industry fights a relentless battle of margin (productivity) vs cost (required overhead). We empathize, understanding that making any business decision can become a mountain of distraction and slow productivity and is why many leaders stall a decision. However, it’s time to start asking the other side of the question – what’s it going to cost us if we don’t do it? It’s not just making decisions but also making ‘better’ business decisions as too often executives rush into the shiny new object or allow themselves to be ‘sold’ technology. In 2023, leaders in lending are going to have to become more three-dimensional leaders in relation to strategy, business planning, and decisioning.
4) Skilled in the art of implementation and adoption. In other words, your team must become proficient in the art of skillfully changing the tires on the bus, while it’s going 100 mph. Once business decisions are made, leaders can’t just walk away and ask for status reports. Leadership needs to implement a defined, and disciplined, approach to development, implementation, and adoption of any business strategy. This is the only way the goal and desired outcome is ultimately going to be achieved. Carefully balancing project management, project planning, program management, project team resources, and measuring success.
In closing, while the key to success for lenders in 2023 is that they are nimble and quick to embrace market changes; the only way to effectively accomplish this will be leadership teams investing significant amount of time into building a more sustainable organization. Investing in strategic planning, cultural preparation, making better educated decisions, and implementing disciplined frameworks that guarantee adoption as the market shifts.
BlackFin Group is a management consulting firm that works with national, regional, and state – community banks, credit unions and independent mortgage bankers. Our subject matter expert teams in banking and mortgage advise on strategy, capital markets, and implement new projects, technologies, and business initiatives. For more information, contact the company at (303) 524-1907, info@BlackFin-Group.com, or visit its website https://www.blackfin-group.com.
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