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Lopez: Real Estate Finance Must ‘Evolve or Vanish’
DALLAS–The real estate finance industry must continue to evolve–because any business that fails to will cease to exist, said Mortgage Banker Association Chairman-Elect Rodrigo Lopez, CMB.
Speaking here yesterday at the MBA Commercial/Multifamily Servicing and Technology Conference, Lopez, executive chairman of Northmarq Capital Finance, Omaha, Neb., said mortgage bankers must adapt to a rapidly changing environment.
“Change is not easy,” Lopez said. “It is much easier and more comfortable to accept business processes the way they are and keep going down the known path. After all, we have been successful and if it is not broken, then why fix it?”
But Lopez noted that while this might seem a safe path, “it will only be safe for a short time, because eventually growth will cease and so will businesses that do not evolve. We must evolve in order to keep pace with change happening around us.”
Lopez cited four distinct but interconnected areas that mortgage servicers should concentrate on to find new customers and business opportunities: transforming technology, diversity and inclusion, political engagement and demographic evolution.
“To survive and grow in today’s complex regulatory environment, real estate finance leaders must make greater investments in technology,” Lopez said, noting that new technologies can attract both more customers and new generations of employees. “We must also manage risk and data security concerns through technology. [But] for technology transformation to happen, information management and information technology must be owned at the corporate leadership level–a culture of technology must start with the CEO in order for it to be incorporated throughout the organization.”
For example, Lopez said commercial and multifamily lenders should adopt digital signatures. The ESign Act took effect in October 2000, but most businesses still do not use this simple technology that would both improve efficiency and the customer service experience, he said.
“We should also embrace social media as a way to communicate with and attract new customers and partners as well as a new generation of employees to the commercial/multifamily real estate finance industry,” Lopez said. “In some ways, social media is still the great unknown, but if the industry does not learn and take advantage of social media’s usefulness, we could miss out on a great number of new customers and new employees.”
Lopez noted that technology advances bring some risks as well as opportunities–“both cost risk and data security risk, which if left unattended could lead to reputational risk,” he said. “Nonetheless, we cannot let these risks limit our opportunities. Finding the right and responsible balance of embracing new technology with protection from these risks is the key to our success.” He noted that database technology advancements, the use of social media, email, intranet and cloud technology all make businesses run smoother. “But they also provide a target-rich environment for hackers…When we think about how much business and personal information is exchanged during the life of the loan, the number of cyber security threats multiply exponentially.”
“The political and regulatory landscape is also constantly changing around us,” Lopez said. “Next year, we will have a new administration and possible changes in control of the Congress. These changes could become business disruptors. But if we engage with policymakers on a regular basis, we can mitigate or minimize the effect of these disruptors and sometimes we can even eliminate them–we can help policymakers craft legislation and regulation that make sense for consumers, businesses and the market.”
Lopez noted that both the country and the mortgage finance industry are experiencing demographic transformations. “A culture that supports the importance of technology also includes a culture of diversity,” he said. “Building diversity within our operations, starting at the corporate leadership level, can also help us grow our businesses.”
When a firm diversifies its workforce, that brings more strategic vision to its business and allows for better decision making, Lopez said. “We must transform as an industry to be successful,” he added. “We can and should evolve in the use of technology, while being inclusive and broadening our perspective. This is the path to a successful future in a world of constantly evolving technologies, policies and economic cycles.”