Duwaine Thomas, Patrick Kehoe on Communicating with Customers
Duwaine Thomas is an executive consultant with Newbold Advisors, serving a portfolio of national housing finance organizations. He has more than 30 years of experience managing and servicing debt settlement sales organizations and extensive experience leading staff across multiple sites, credit loss management, escrow management, quality assurance, quality control, servicer/vendor management, investor reporting, claims management, customer service/complaints and MSR valuations.
Patrick Kehoe drives product strategy in collaboration with the product development team at Messagepoint, a provider of customer communications management software. He brings to the company more than 25 years of experience delivering business solutions for document processing, customer communications and content management.
MBA NEWSLINK: Let’s discuss the process and importance of effectively communicating with borrowers after a mortgage closes. Let’s start with the state of the industry when it comes to these types of communications. What do you see working or not working?
DUWAINE THOMAS, NEWBOLD ADVISORS: I believe there is more pressure on mortgage servicers now than ever for two reasons. The first is that consumer expectations have changed. The pandemic accelerated the adoption of digital technology and increased consumer comfort with using digital channels, even for these kinds of important communications and processes. A lot of consumers don’t want to wait for a printed letter in the mail. They want information quickly and at their fingertips. Customer expectations have also changed regarding the clarity of communications – they expect information to be precise and easy to understand, which is certainly a change from what financial services has traditionally delivered. These factors are putting pressure on mortgage servicers to up their game in this area.
The second major pressure is that the regulators and GSEs are in a constant state of change reacting to the market. These trickle down to the mortgage servicers, who then must change the communications sent to the consumer.
While there has been some very good investment and progress on modernizing the origination side of the mortgage business, the same can’t be said for servicing. We polled MBA members recently in a webinar on what they saw as their biggest challenge with borrower communications and 48% cited the time it takes to create and update communications and ensure compliance.
The typical process consists of passing Word documents around so that getting communications out the door is costly, slow and very manual. The time has come to look at our processes and recognize that the landscape is going to be in a constant state of flux. Mortgage servicers need to make changes to the different communications very quickly and have good controls around regulations and compliance in order to be effective.
PATRICK KEHOE, MESSAGEPOINT: On the mortgage servicing front, there has been some investment in basic web portals and apps to try to enable online payments or provide statements and that is a step in the right direction. That said, as Duwaine mentioned, we still see core communications being managed with largely manual processes using Word or legacy letter generation systems that require technical IT resources to program and update content changes. Not only are these approaches inefficient, but as soon as you start supporting multiple channels, your complexity and costs begin to multiply. Different IT teams need to update content in the letter system, the portal, email and SMS and that introduces the opportunity for inconsistency and errors, which can lead to compliance issues.
NEWSLINK: Many mortgage servicers have outsourced almost the entire process of building and managing these communications. Doesn’t outsourcing the process to service providers help address those efficiency and technology issues?
THOMAS: Conceptually, outsourcing represented a way of removing some of the headache associated with having to run those very manual processes, but in reality, the same poor processes are just loaded onto another group of people. The mortgage servicer still pays for the process and it’s still incredibly slow. In some cases, smaller mortgage servicers have to wait in line behind a much larger servicer to get their changes made, making the process for them even slower.
Don’t get me wrong, print service providers play a key role, but today, the technology exists that enables mortgage servicers to take back some control and directly handle changes in communications very rapidly.
KEHOE: It’s critically important to understand how your outsourcing partner is managing your communications. If your partner has IT teams coding content and rules changes and doing so across several systems, the process is going to be fragmented and slow. It may be hidden from the mortgage servicer’s direct view, but that doesn’t mean the same ugliness isn’t still happening. There is an opportunity with the technology that exists today to put control over the creation and updating of communications into the hands of business teams. That aspect of modern communications management systems alone can cut significant time and money out of the process.
The better solutions out there focus on providing intelligent control over content by offering advanced capabilities that accelerate time to market even more. Take content sharing as an example, which enables you to centrally share a logo, a phone number or a disclosure and use that content object with all the communications that require it; so, if you need to make a change, you only make it once, versus adjusting dozens of individual letters, emails, portal pages, etc.
Of course, you should be looking for a system that also enables you to centrally control content across all your channels of communication. This enables teams to manage and maintain the content and rules in one spot and eliminate the risks and redundancy of having content live in the multiple systems we talked about earlier. Using a content hub will not only increase efficiency, it will also help to ensure compliance.
NEWSLINK: There is a lot of movement towards digitalization of core processes in all areas of financial services, including mortgage applications and approvals. What are your thoughts on the digital transformation of mortgage servicing communications and customer experiences?
THOMAS: Mortgage servicers need to think about the digital communications process from the perspective of meeting consumer expectations, as I mentioned before, while also seizing the opportunity new technologies provide to help us run our businesses more effectively.
For example, often during a natural disaster, we haven’t been able to make phone calls, but text messaging has been available. Customers get displaced during these events and they can’t receive mail at a home that may be under water or has been reduced to a pile of ashes. These customers are experiencing a high degree of stress and we need to be able to reach them to reassure and inform them of what is going to happen and what their options are. New channels can be a critical enabler of operating our businesses more effectively.
Very soon, broader adoption of digital channels won’t be optional and the mortgage servicers that do a good job will become the preferred partners of originators and consumers. Of course, all the regulatory requirements need to be adhered to in the process, but we will likely see these evolve over time as well.
KEHOE: It goes without saying that digital transformation is critical and the benefits are far reaching. Mortgage servicers typically run on relatively thin margins and digital transformation can offer significant efficiencies and cost savings. Think of the savings print suppression alone offers.
The trick is to digitally transform in a way that provides a great customer experience. To accomplish this, servicers need to break free from their current modes of operation and ways of thinking of the communication. The default of delivering a PDF on a portal is a poor digital experience. Consumers expect responsive experiences that are easy to navigate and built for each specific channel where they attempt to access the information. This necessitates a paradigm shift in thinking.
Financial services firms need to start considering the content that has to be delivered versus the document that needs to be delivered. I am talking about taking a modular approach to managing the content that used to be locked up in individual document templates. Picture a disclosure that varies by state. If that disclosure is a modular content object that is dynamically presented or inserted as required, you can deliver it to the right customers in the right states without having to create multiple versions of your documents or pages or communications for each state. This kind of paradigm shift in thinking will lead to more efficiency in delivering both print and new dynamic digital experiences over mobile apps, messaging, etc. It also requires, of course, a new way of managing the content – ideally centralizing control in one system that feeds all channels into an intelligent content hub.
NEWSLINK: Where do you see the biggest wins for mortgage servicers in transforming their mortgage servicing communication process?
THOMAS: We have talked a lot about the ability to take back control in order to increase speed and reduce costs. Those are the immediate wins that I see. In the medium to longer term, there are two other areas where mortgage servicers can benefit. Improving the customer experience is one. This happens not only by being able to get communications out the door faster and sent via a customer’s channel of choice, but also through improved quality of the communications. There are tools out there that help with readability to ensure comprehension, or sentiment, even brand compliance that can support better communications and experiences.
I also see agility and efficiency as being key to competing in this space. Transforming these outdated processes goes a long way to improving operations on so many fronts, including cost savings, speed and customer experience.
NEWSLINK: Where should a company start?
KEHOE: Sometimes it helps to pair modernization with another initiative that already requires broad scale changes, such as a rebranding exercise, a digital transformation, a new originator you’re bringing on or a customer experience initiative. This can help streamline approval processes and help you tap into budgets that already exist.
It’s also a good idea to identify a starting set of communications that have the potential to deliver quick wins with a transformation. Is there a group of communications with similar formats, such as correspondence? Is the information ideally delivered to customers via multiple channels? Are there variations of a set of communications by customer brand or product versions that have you managing multiple versions of what is essentially the same communication?
From there, you really need to start looking for a solution that provides an intelligent content hub to help you manage content and communications across channels. It’s important to find one that breaks free from that document-centric paradigm and moves you to a modular content one to support digital channels more efficiently. Again, you also want one that enables your business teams to manage content to bring back the balance of power in-house. There are a number of other key capabilities to look for, such as the use of AI to improve the quality of your content, integrated approval workflows, a cloud deployment model, the ability to serve content headlessly via APIs, etc.
Lastly, you need to sell your internal stakeholders. Be ready to demonstrate how you can help IT free themselves from the burden of those low-value content management tasks and move to an API-based model to simplify integrations. The approach can help them modernize and be ready for future expansion and adoption of communication delivery channels that have yet to be invented. Operations will want to know how to ensure approvals, increase control, accelerate processes, control costs and improve customer experiences. Finally, legal will want to ensure they can reduce compliance risk and eliminate redundant work.
THOMAS: Servicers have a great opportunity now to manage their communications in a completely different way than they did before. They need to look at what’s out there for transforming their processes, so they can more effectively meet customer needs and manage both traditional print and new digital channels. At the same time, new content management systems offer an opportunity to have tighter controls, so they can rapidly respond to regulatory changes or adapt if their print service provider goes bankrupt.
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