The struggle is real. We have been airing several months of our Monday show Now Next Later as part of the Chrisman Commentary lineup. Sasha Stair and I have interviewed executives, innovators, product people, and regulators. The number one thing we hear from tech companies is the entire success or failure of their solution is based on adoption. Adoption is the whole ballgame in our industry. The number one thing we hear from lenders is that adoption is an outcome based on the change management strategy.
Change management is the diet and exercise of this industry. We know the best practices. We know what it takes to be successful. We know we’re not especially good at it. We (sorta) know that we have to do it. The companies that execute a disciplined change management regime are “in shape” and those that do not are left wondering - what happened?
Change management is not about rates
It is almost as though we substitute the rate of change in interest rates for the actual change in the industry. Sure, the rates have changed. We misinterpret that to mean “change is all around us.” Sure the sales environment changed. Recruiting changed. Cost to acquire a lead changed. Not much about the mortgage process has actually changed.
Yes, market volatility means sales people have moved around, especially among IMBs. If you define change as layoffs, then of course, we have to acknowledge the size of mortgage lenders has changed. Otherwise, the core business does not seem to have changed very much at all.
Market share remains almost the same as it did 3 years ago. Perhaps small ebbs and flows between wholesale and pure retail have changed a little. UWM is the top overall lender now but without much of a distinction otherwise. Rocket Mortgage is either second or third and the experience for both clients, real estate agents and brokers remains consistent. Both lenders are solid and consistent. A compliment, to be sure, but I would not call that change.
Consumer application process, turn times and days to close remains largely the same.
Loan delivery remains the same.
Loan servicing remains the same.
As much as things (i.e. rates) change, things (i.e. everything else) remains the same.
When I asked one industry expert about this, the response was telling. More loan officers are using TikTok to educate first-time home buyers. Admirable, but not change, at least not in the way I mean. Change management is the corporate way to say - let’s evolve. Every prudent business has to evolve responsibly and so, we came up with a term for it. We must change. Let’s change with organization and discipline.
Change management is a job.
The problem is that change management takes over. In many companies, there is more focus on process than result. Change management becomes a full time job … and not in the good way. Suddenly lenders are mired in product roadmaps and sprints and user testing. These are all good things. Unfortunately, these often, somehow, become the priority over the new capability.
There’s never been a more stark example of this than the last 2 years. For a year, there was indicators that NAR may lose the mega-lawsuit that threaten their usual business practice and custom. The mortgage industry struggled to pay attention amid skyrocketing interest rates. Indeed, NAR lost and was forced to change. The mortgage industry struggled to choose a position as their primary referral source for purchase loans was under “attack” and, at the same time, mortgage was looking to become more relevant to a home buying public. The opportunity to move out ahead within the consumer education, lead gen, preapproval or shopping experience stalled. Mortgage did not move.
Here we are. The process remains largely the same. The technologies and capabilities are tweaked but the same. The homebuying and refinance public has not experienced any change to financing a home despite social, political and economic changes all around them.
Some might say that’s good. We’re steady. We can be relied upon.
The problem is the game is moving faster than ever. It’s not just technology that’s evolving perception and expectation is too. A chatbot is not enough. Consumers (and apparently politicians) expect more.
Change management is survival
According to anecdotal market research that I just made up to drive home this point, consumers have been conditioned to find solutions in big tech. Trained by supply chain advances, immediate notifications and customized deals. We have survived the last few years telling ourselves that the home purchase and home loan is such a big investment and such a big deal that consumers will still come to the experts. The experts being real estate agents and the mortgage pros they refer. This belief has served us well.
The problem is change management perception versus the reality of change.
We have used the belief that a home loan is complex enough and that we’re changing “enough” as a reason to avoid true innovation. Our change management process feels big. It feels meaningful - think of all the people and resources working on your product roadmap. And yet, a few years, after major interest rate upheaval and the largest change to the real estate industry in 50 years, the mortgage industry remains (largely) the same.
Change management is goals
The point here is not to say all hope is lost or throw up our hands in defeat. The goal is to spark action. What I’ve learned from all those episodes of Now Next Later is that change management starts with a belief. Companies must decide 1). Who they are and 2). Who they want to be. The fundamentals of effective change management and, frankly effective leadership, are answered in those two questions.
Today, the good news is that the market share has not changed (all that much). The opportunity that existed 3 years ago, 2 years ago and last year, still exists. The ability to (re)think how we change and devote the necessary resources to becoming who we want to become remains. The changing market - price, cost, inflation, real estate commissions - remains as well. Instead of using that a reason NOT to change, use it as the motivation to win the change management cycle this time.
Not change management as the professional orchestration of tasks but as actual, fundamental change to your organization. For example, are your tools and solutions aligned with your differentiation in the market? How can you both measure and highlight the growth that new “changes” provide? In other words, are you doing enough to provide clear direction (even after selection of a new vendor) all the way through marketing to the world your success?
Brett McCracken of Stratmor Group wrote recently, “A centralized strategy for a target operating model is key.” The foundation of effective change management is built on you and your strategy. Yes, the struggle is real but it is the most effective way to ensure your company’s success for the future.