How to Know if Your Fintech Solution is Worth the Price

Published February 25, 2022

As the mortgage industry continues to face the challenge of increasing origination costs, and not to mention margin compression and rising interest rates, it’s becoming imperative for lenders to evaluate their current cost to produce, from both a technology and personnel standpoint. Now is the time when CEOs and executives should be examining their technology production costs in comparison to their labor expenses with the aim of discovering ways to originate more with fewer employees and increased efficiencies. Technology cannot solve for all, and lenders still need human expertise. So has the growing fintech stack really increased efficiencies and reduced origination costs? Or are lenders adding to their fintech stack without any real return on investment? As lenders evaluate their origination costs and consider bringing on new technologies, a simple checklist of a few questions can help you determine if the fintech is worth the price.

Knowing if Your Fintech Solutions Are Bringing Value to Your Organization

·         Does it align with your business strategy? – In my 43 years of experience in this industry, I’ve observed that established organizations always have dependable, tested, and proven procedures in place and do not often embrace new technologies quickly. However, this technology driven world we live in today demands innovation. Therefore, if your business strategy includes scalability and sustainability, it is critical to evaluate your current fintech solution to ensure it aligns with your strategic initiatives.

·         Does it utilize data for sales strategy optimization? – If your company doesn’t have adequate computational resources, it won’t be able to monitor all the critical customer-facing activities like organizing, managing, and strategically using large datasets to enhance sales procedures.

·         Does it have a user-friendly interface? – You’ve likely heard the expression that “time is money”. I agree. If you have a fintech solution that is difficult to navigate or does not have features that reduce or eliminate the time to fulfill all the required steps to complete a loan, then the fintech results in a higher cost to produce.

·         Does it offer built in compliance monitoring? – It’s challenging to originate in a heavily regulated industry like the mortgage industry.  The technology should track compliance to the various rules such as initial disclosure, issuance of CD, tolerance cures, etc. It is imperative that your fintech solution help manage regulatory standards now to avoid undesired outcomes later.

 

If you are currently using a fintech solution or considering changing your fintech solution, I want to give you a quick checklist that will help you determine how to know if the price is worth it. Check for these four elements:

 

1.       Fully Digitalized Origination Process – When your solution offers a fully digitized loan origination process, it allows mortgage bankers to immediately issue agency approval while talking to the borrower which saves time and allows an increase in productivity on the number of loans that can be processed per day.

2.       Guided Workflow – Because of the nature of the Mortgage Industry, there are several steps that take a loan from verification to approval faster. Based on my experience, these steps can take over 30 days because of the validation necessary to complete the process accurately. When your fintech solution has a guided workflow, it allows automatic approval where possible and has built in tutorials to help both seasoned and new mortgage bankers streamline their procedures for faster completion.

3.       Incorporating Sales Strategies in CRM – Sales activities drive revenue and therefore the habits of loan officers are critical to meet and exceed your revenue targets. When your fintech solution incorporates sales strategies in your CRM, all customer data is organized to inform the highest value sales activities for the day based on previous actions and the stage of the customer journey.

4.       One Data Warehouse – When your fintech solution has one database for originations, processing, funding, marketing and sales activities, you company will have a streamlined process that reduces errors and makes historical reporting and future projections easier to prepare.

The global fintech adoption rate rose to 64% in 2020. This reveals how critical these sorts of technologies have become to the Mortgage Industry. I expect that rate to be closer to 100% over the next couple years as we pivot to more online solutions. Whether your organization is a part of the 64% who already have a solution or the 36% who will adopt a solution, it is important to verify you get the most value for your money.

Those who measure their solution using this checklist will align their business strategy with their sales strategy and create a seamless workflow that promotes employee engagement, agency and regulatory compliance, faster loan processing, and satisfied customers.