MODERN DELIVERY IN HOUSING FINANCE

MODERN DELIVERY IN HOUSING FINANCE

  • Arsalan Rahman and Erik Johnson
  • Published: 08 October 2019

The pace of technology change seems relentless and accelerating for businesses today. These days, 'disruption,’ ‘digital’ and ‘transformation’ are etched into our vocabularies, putting pressure on both technology executives and business leaders to deliver differentiated solutions at market speed, all while preserving customer trust and meeting regulatory requirements.

The housing finance industry, with so many players surviving on increasingly antiquated infrastructure, is quickly being flooded by new entrants boasting more sophisticated, flexible, and customer-friendly technologies.

For mortgage firms to compete and take advantage of the myriad of new opportunities, these organizations must possess a full collection of technology capabilities. Modern delivery approaches incorporate ideation, funding, development, and delivery into solutions that are iterative, fast, reliable, and continuously improving.

What is modern delivery?

Modern delivery is the alignment of business strategy, workforce management, program and project funding, and change delivery methodologies (often using ‘agile’ or ‘hybrid’ approaches) to enable the business to be more customer-focused and adaptable to constantly shifting market dynamics. It applies design thinking concepts and a modern, flexible operating model; and, is tuned to an organization’s unique business, cultural, and operational attributes to promote the company’s most desired outcomes.

Why pursue modern delivery?

In recent years, housing finance firms have been able to drop regulatory challenges down their list of concerns. Instead, attention is turning to driving up volume while combatting growing originations and servicing costs. Technological competition also continues to grow as average costs to develop new platforms declines, and new players enter the market.

As modern, customer-centric approaches more effectively address these concerns, interested financial services firms face two primary challenges: how to react to the market with speed, and how to organize around outcomes rather than being married to one singular process. Modern delivery is a people-oriented, iterative and adaptive model that helps CIOs and entire technology organizations deliver value more rapidly, reduce failed deployments, and create a culture of continuous improvement. It goes beyond customer-centric, agile delivery methodologies, also encompassing the related cultural, organizational, funding, and HR-related activities required to support its transition and ongoing success. In short, it is about instilling a mindset shift. 

Common challenges in modern delivery:

The shift to new delivery models (Scrum, SAFe, etc.) is generally the easy part of modern delivery integrations. The most significant challenges lie in organizational, culture, and role changes. These are fundamentally transformational; cost-savings should not be the primary motivation. Instead, the transition from a traditional framework requires organizations to make significant structural changes to focus more on the team and product for agile development.

Trust within and between teams is the bedrock of positive change, empowering individuals to make smart decisions daily with end goals in mind. This trust requires management buy-in and overt sponsorship of designated teams to use good judgment and abide by mutually agreed upon governance policies. This governance requires thoughtful consideration of ‘best practice’ execution tactics to free teams from unnecessary process friction.

Effectively adopting and executing modern delivery:

The success of modern delivery is measured by how effectively an institution can continuously adapt ways of working, build technical capabilities, and reassemble technical components to deliver functionality rapidly to outpace the competition. Based on our experience, organizations must:

  • Invest in changing the culture first – Organizations must train staff and executives separately and efficiently, encouraging teams to adopt shared responsibility and fostering collaboration.
  • Fund people over projects – As funding is flexible within the department or program, building a proper team should take precedence within project budgets. Positioning key experts, whether lead management, underwriting, servicing, loss mitigation, or other steps in the value chain, is critical.
  • Embrace change and failure – Conduct frequent retrospective meetings and take them seriously; these reinforce positive behaviors and identify recommended changes going forward. Common metrics like originations pull-through rates and reports such as burndown charts are valuable references.
  • Understand realistic transition timing – Start with a hybrid agile approach and slowly mature to faster-paced methodologies. It’s essential to be realistic about defining MVPs and the necessary timing to get there.

Seeking experienced partnership to facilitate the modern delivery journey:

In committing the organization to adopt a modern delivery approach, firms should find a partner to help facilitate the new alignment of strategy, culture, funding, and delivery methodologies.

Leveraging this previous experience augments the ability to respond rapidly and effectively to changes in the technology, regulatory, and competitive landscapes through creative and holistic transformation tools and techniques.

Beyond subject matter experts, direct experience, lessons learned, and a broad industry perspective, the right partner, also possesses a suite of tried-and-true tools and accelerators, including design thinking, user journey mapping, test automation capabilities, hybrid agile models, and minimum viable product planning.

Together with a capable partner and a plan to address the most common integration challenges, you and your organization will be well-positioned to complete a successful modern delivery transformation.