MReport September 2019

TheMReport — News and strategies for the evolving mortgage marketplace.

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Page 32 of 67

TH E M R EP O RT | 31 FEATURE L et me ask you some questions. Is Amazon a technology company or a marketplace retailer? Is Uber a technology company or a taxi cab service? Is AirBnB a technology com- pany or a hotel business? Is Netflix a technology company or a media company? If you answered "both" to all of the above, then you'd be right. The truth is, the days of being in a con- sumer business and not also being a technology company are over. To relegate technology to something that just the "IT Department" does is to ensure failure. "Adapt or perish, now as ever, is nature's inexorable imperative." - H.G. Wells. We are now fully underway in a Digital Revolution that history may judge as being greater than the Renaissance or the Industrial Revolution. The field is littered with the remains of those com- panies that failed to adapt quickly enough. Consumers demand a new level of service and conve- nience. And even the largest play- ers are not safe from disruption: Blockbuster, Circuit City, Toys R Us, Nokia—where are they now? In 2007, Forbes published an article about Nokia, entitled "One Billion Customers—Can Anyone Catch the Cell Phone King?" Later that year, Apple released the iPhone and changed the world. I keep this issue framed in my office to remind myself that the entire world can change overnight. Reimagine Everything W hat does that mean for the mortgage industry? First, it means we have to reimagine our business and embrace change. It's easy to say, but it's hard to do. We all like consistency, but the phrase "we've always done it this way" is the surest path to extinction. The best way to ensure your success is to disrupt yourself before someone else does. To challenge the status quo. And work tirelessly to improve every single part of your business. You may not think of yourself as a technologist simply because you're not the one writing the code. But every time you propose a way to improve your process or automate something in your department, you're furthering your growth as a technology company. Big Tech, Small Budget W ith so many larger competi- tors spending hundreds of millions in technology, how are smaller monoline and mid-sized banks supposed to keep up and stay competitive? Well that's the million dollar question (pun intend- ed). It's easy to be intimidated by the sheer size and scale of industry giants. Once upon a time, technol- ogy was so expensive to build that most of the innovation came from colossal institutions with the wherewithal to do so. But the land- scape has changed drastically in the last few years, and now the bulk of the innovation is coming from small, scrappy startups. Rupert Murdoch said it well, "The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow." This is one of the big reasons why we decided to launch the Flagstar Mortgage Technology Accelerator; the first FinTech Accelerator in the country focused exclusively on mortgage technology. It helps early stage FinTech startups with mentorship, access to equity investment and debt financing, and the ability to test their technology in live lending environments. It's tough to compete head-to- head with larger competitors who already have the high ground. The good news is that the ground is always moving. Like Wayne Gretzky famously said, "skate to where the puck is going to be, not where it has been." There is much to be gained for those who can get there first. Either as an in- novator or as an early adopter. In being agile, quick responders, and early adopters, we can actually turn our small size into our biggest advantage. I spent 10 years of my career at two of the largest and techno- logically sophisticated banks in the world (JPMorgan Chase and Capital One) where resources were never in short supply. There was adequate capital at all times for us to pursue anything we thought made business sense. And the inevitable misfire of investing in a technology that did not produce the desired results was not a severe blow to the business. Neither of these things are true of smaller companies. On the contrary, resources are often in limited supply and bad investment can be devastating to the business. Since joining a mid-sized bank, our team has had to push our thinking from a new perspective. Here are 10 thoughts that have helped us succeed in pursuing an ambitious technology agenda with limited resources. 1. Know where you're going. Have a vision. And take the time to formalize that vision into a documented roadmap. It's okay for the vision to change, but it's not okay not to have one. Not having one is the surest way to a "Frankensystem" of technologies that will cause more problems than they solve. I typically like to have a have a three-year roadmap with quarterly milestones, which we update every three to six months. 2. Stay focused. There is a differ- ence between agility and being undisciplined. Commit to seeing through phases of your roadmap to completion. It's easy to get distracted by NSTS (New Shiny Toy Syndrome) and want to quickly pivot your roadmap to adopt a newly discovered technol- ogy. Resist this temptation. Keep the bar for new additions to your roadmap for the coming three to six months extremely high. 3. Focus on technologies that deliver near term, tangible ROI first. It's easy to get caught up in "whiz-bang" We all like consistency, but the phrase "we've always done it this way" is the surest path to extinction.

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