To cut expenses, the majority of economic sectors have successfully embraced technology. For instance, the Federal Reserve Bank of St. Louis estimates that business process improvement and automation will be substantially responsible for the 34.7% rise in overall labor productivity in the US from 2003 through 2022. As interest rates remain significantly higher than last year, lenders continue to face narrowing profit margins; however, technology adoption in the lending industry is still not as encouraging as expected.
Lenders must first distinguish between technological Innovation and technological adoption from one another as a business and an Industry. Failure to innovate will make things difficult for an industry that keeps raising the cost of labor. Lenders frequently give up their profitability while they wait for the next refinance boom. Lenders must be actively innovating in the meantime to control costs so that the earn rate always outpaces the burn rate. According to former Ellie Mae CEO Jonathan Corr, our Industry fixes its problems through human spackle. We hire individuals to perform the same jobs today as they did in 2012 rather than implementing innovative business processes and adopting technology to automate anything automatable.
“The typical lender used only a small portion of Encompass’s capabilities to automate everything automatable completely,” claimed Jonathan. The cause is that lenders have not been innovative in developing new, upgraded business procedures supported by technology. Change is difficult for lenders, and human compromise is simpler than genuine Innovation.
Senior executives are where the path to automation through Innovation begins in lending businesses. By acting as the catalyst, the C-suite must understand how important adoption is. To read more on the adoption of technology in the lending industry, click here
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