In the mortgage industry, a hardy group of technology scouts have ventured ahead to seek the best routes for the industry and are learning valuable lessons along the way.
Most importantly, they are learning that technology is only a platform for creating a strategic advantage. Unless it is first aligned with a company's comprehensive business strategies, technology is nothing more than another way to perform the same processes, and perhaps not as efficiently.
Consider the use of laptop computers by loan originators. In the earliest stages, laptops were considered little more than state-of-the-art typewriters, light enough to carry and able to store origination information. Loan originators simply completed forms for later processing.
Even when modems - and later the Internet - made it possible to communicate with the main office, many laptops were not integrated with back-office systems. The data had to be input multiple times so the laptop proved no real advantage over a lead pencil. In this case, the technology chased the business strategy, when it should have been used to facilitate strategic objectives.
One of the most important ways for the mortgage industry to pioneer technology is to support client relationship management strategies. Financial services firms have traditionally been excellent at cultivating customer relationships, but consider those relationships in the context of enabling technologies, such as the Internet. It is one of the lowest-cost ways for companies to reach countless customers, but is it effective at reducing operational costs?
In a 1999 Ernst & Young survey, one major mutual fund company acknowledged that three call-center calls are needed to support each on-line transaction. And though the Web lets companies access and manage large volumes of information, it can be a costly investment unless it links people, processes, and consistent information. Some 41% of respondents in the survey said clients cannot obtain consistent information through their electronic delivery channels.
What's missing in these examples is a business strategy. Technology has become a prerequisite for survival, and companies will do well to apply three strategies that technology scouts have devised.
- Focus on the business strategy, not the technology. Technology can be expensive. To be sure it is a wise investment, align it with your strategic goals. For example, one way to enhance client relationships is to provide convenient delivery channels. However, establishing countless delivery channels can be too expensive even for the largest companies. Don't use the technology because it is there or simply to replace more traditional channels. Consider instead what delivery channels will satisfy clients' needs and evaluate whether they will reduce operational costs, improve capital return, increase productivity, or mitigate the business cycle risk.
- Partner with technology experts. Focus on finding a niche in the market, not on becoming a technology developer. Find technologists who can develop and/or customize their software to align with the company's business strategies. Treat them as partners responsible not only for creating technology that works, but also meeting the outlined business goals. This partnership can help minimize capital investment and allow a variable cost structure as different stages of the technology solution are phased in.
- Look ahead. A good pioneer will always try to anticipate. So will a good business strategist. To survive in an industry that constantly strives for a "faster, better, cheaper" solution, you need to forecast how customers' needs will change, how your business will grow, and how your technology platform will support those changes. Build for scalability; make sure the system can grow and be integrated with new processes.
Technology will continue to be a prerequisite for survival, but its use will also continue to evolve. Technology pioneers who weather the uncertainty and learn from their experiences will win the survival game hands down. Mr. Murin is president and CEO of Lender's Service Inc., a Pittsburgh-based information service provider to the real estate lending industry.
