Tuesday, January 9, 2024
I’ve been thinking about technology and our industry’s interesting relationship with it.
There’s long been a natural tension between providers of software and the producers of products in our space including loans, title commitments, appraisals, and closings. It’s a culture clash, really. Technologists love to live by the phrase “move fast and break things,” while producers of financial products prefer to “go slow and build things.”
Technologists believe in implementing quickly, then incrementally adjusting on the fly. Producers are more in the camp of making sure the boat is entirely seaworthy, in any foreseeable scenario, and only then setting to sea.
Tech people love to ask the question, “why on earth would you not want change?” while producers often focus more on the question “why should I change, if what I’m doing now is working?”
I don’t mind telling you, the hesitation on the part of many who work in industry to rush into the latest and greatest tech offerings is legendary in the world of our tech providers. It’s only a minority of businesses in our space who rush to embrace the newest software hot off the press, and it’s understandable as to why.
Direct underwriting software in the lending space was a giant leap forward, as was automated workflows to remind producers of critical tasks required, in an optimum timeline, so deals don’t languish due to oversight. Throughput numbers could and did increase. New efficiencies were found.
Formulaic title commitments and settlement statements constructed with the assistance of efficient software were also quickly adopted. In those scenarios, it was easy for a human to spot and correct any flaws or inconsistencies to the work product created. Human oversight, with an ability to supersede, was key to a rapid adoption rate in these areas.
Yet now the challenge lies with technology offerings to realize and provide the next set of production gains via largely invisible actions, with less human oversight. For many that prospect is a bit more daunting.
The integrations from system to system that can pull elements of a transaction together at lightning speed can also be difficult to monitor in real time. Calculating your break-even point for transactions whose cost factors are opaque can feel a bit like Mission Impossible.
It’s also true that each time tech solves a problem for production shops, it often results in a new set of problems to solve. Take for example the inevitable and exciting move toward a Software as a Service (SaaS) model. The idea is to spend less money on internal hardware and/or a hosting provider for software licenses your company owns. Terrific! Reduced expenses and being less vulnerable to local events of weather, fire and other mayhem are a big step forward. Yet, as we saw during the recent and devastating cyber-attack events, those SaaS models can be even more susceptible in times of crisis than an individually hosted model.
The fun part is in realizing that both sides are a little bit right.
People who work in consumer finance tend to not be highly experimental type of folks. Our employers, customers, regulators, courts, bottom lines, and greater financial markets reward us for wearing the transactional equivalent of a belt and suspenders. And sometimes we don’t evolve quickly, even after it’s safe to do so.
Tech folks need to understand, really truly understand, which problems the industry needs you to solve. Tech should focus on solving a few of those at a time, exceedingly well. Only then will producers follow with trust down the path you lead.
The common cause, on both sides, boils down to problem solving. For buyers, it’s a question of which problems tech solves, and whether it solves in such a way that the new problems created are less costly or problematic than the cured problems. For tech providers, it comes down to solving the problems business needs solved, rather than the ones you think they should want to solve.
It’s well summed up in a quote by tech provider Kirill Klokov who said “It’s simple: You just need to listen to your customers and for B2B, you need to be the biggest customer advocate. Probably 40% of my time during the week I spend with customers. And I try to listen and understand what’s missing…the Northstar that I keep telling my team: nobody wants your product, everybody wants a solution to their problem. And the more you use your product to solve their problem, the more you’re going to be successful as a business. Our Number 1 value is customer obsession. You can get everything else wrong, but if you build what customers want, you’ll be good as a business.”
If you’re a buyer, make sure you’re clearly articulating what problems you have that need solved.
If you’re a seller, make sure you’re solving those problems before solving anything else.
It’s a magic formula, and it’s nearly universally applicable. No matter what you’re buying … or selling.
Until next time,
Mary Schuster
Chief Knowledge Officer
October Research, LLC