Tim Hague of Sagis shares his views on how lenders can deliver better experiences and achieve efficiency gains by focusing on the advantages of digital ecosystems.
According to chaos theory a small event like a butterfly flapping its wings can, through a series of connected events, cause a tsunami. An extreme and unlikely scenario perhaps but we can draw many comparisons to business and, increasingly, also our digital eco-systems.
The phrase eco-system has been appropriated into our digital lexicon to encompass not only the solutions we build and employ for our own organisations but also how they interact with others. From internal dependencies between origination and core banking infrastructure to APIs with distributors and credit bureaux, the digital eco-system is about understanding how an organisation’s digital approach supports and interacts with everything necessary around it to thrive.
As many have found to their peril, failing to upgrade old and antiquated legacy systems, selecting service providers with limited or unproven connectivity, or choosing components that simply don’t talk to each other without major modification can be extremely expensive, time consuming and potentially disastrous, ultimately. A tsunami, if you like…
Success is about understanding the complex without making it complicated. Critically thinking holistically rather than focusing right into the nub of an issue.
Understanding the dependencies and contingencies of business practice such as overnight batch processes verses real-time updates, the impact of change upon financial and regulatory reporting and the volume of data that needs to be stored will have a significant impact upon the decisions you can (and should) make.
Even if a third party solution is the best at what it does, you risk compromising the whole end to end mortgage experience if it cannot connect to your digital mortgage eco-system. When you fail to adequately take into account the impact of a single change on the multitude of other, connected applications you risk breaking the bank. We can all probably recall famous examples of that…
Improving customer experience, automating buying processes, streamlining affordability underwriting were all objectives held by lenders, brokers and estate agents long before 2020. The past year has galvanised the industry to act, however, with firms alive to the fact that failure to adapt fast means inevitable decline.
Large lenders may have the budget and the resource to build bespoke solutions connected to their exacting requirements. But that has often historically resulted in an endless, complex spaghetti of legacy systems – many of which few people know how to maintain. And so organisations may feel wary of changing them.
Mid-tier and smaller building societies may also have legacy technology but their scale affords them more options to change more quickly. They, and non-bank lenders, can be more savvy about where and how they deploy their digital strategies. But buying digital solutions ‘off the shelf’ is only the start of the journey. The clever bit is configuring it to suit specific needs, supporting people and processes where automation is simply not possible or cost prohibitive, and joining the dots to make sure the back-office outputs all continue to work seamlessly, too.
The wrong approach can take considerably longer and cost considerably more than thinking through the complexity and planning it properly at the start – absolutely critical when budgets are already tight.
Solutions built for today have to be malleable to meet the demands of tomorrow however and whatever they may be. Agile technology needs agile thinking and behaviour. The mortgage market has long been a web of relationships between parties in an analogue ecosystem. Rather than simply thinking about the move to digital as being about the choice between technology ‘solutions’, the key to getting this right is to understand where you want to be in the wider and increasingly digital ecosystem in the future.
Lenders need to think through their strategy carefully. They need to identify and build the right component processes with partners and experts who know how to join it all together safely and efficiently. Independent experts – that understand both the business imperative and also the commercial advantages IT and organisational change offers – can bring unencumbered clarity to that process. And prevent the occasional tsunami at the same time…