Special Session: Thoughts on the Digital Evolution Mortgage Bankers Association 4/16/2019 Special Session: Thoughts on the Digital Evolution April 15 4:30 PM – 5:30 PM Garth Graham Senior Partner STRATMOR Group Daryl R. Grant Managing Director KPMG LLP POLLEV.COM/MBAMeeting Conferences are a great place to see cool tools, cool vendors and to hear from forward-thinking lenders. In talking with attendees at these conferences, individually and in sessions, there are a lot of vendors offering new technology (digital!) and a lot of lenders who are spending more money on technology (ooh I need digital!). B But many of the attendees of these conferences didn’t have a clear sense of the problem they are trying to solve, other than a general sense of making the mortgage process “better.” Today, I will share what I have learned and the five tips for making the most out of your digital mortgage investments. Mortgage Bankers Association

Mortgage Bankers Association 4/16/2019 Digital Unbound: Tip 1 1. Be sure you clearly know the business case for the investments you’re making. Without a very specific business case, it is very difficult to generate the additional revenue or lower the expense necessary to handle the investments that are being made in new technology — to generate the ROI. LG: This brings us to the first of five tips we’ll be sharing today: Be sure you clearly know the business case for the investment you’re making. All five tips are included in an article I (or Garth) wrote for the monthly magazine my (his) company publishes. The article is called “Digital Unbound: Five Tips for Making the Most of Digital Technologies,” and a link to the article is included at the end of our presentation. DG: Analyze the costs and intended benefits to inform investment decisions and establish baseline from which to measure results Also align the business case to a delivery roadmap that Prioritizes investments based on benefit and implementation complexity ensuring you have a few quick-wins that allow momentum to build Digital investment should be self-funding.  However, business case should also contemplate qualitative benefits like quality enhancement and risk reduction Mortgage Bankers Association

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Digital Unbound: Tip 3 Here’s the trick — you don’t want to achieve ease of use by stripping out too many features. When you look at systems that are super slick but will not handle enough of the actual tasks performed by the user, then the technology is not going to be used because it’s just not valuable enough. In other words, it becomes easier to NOT use.

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Customer Satisfaction is Dramatically Impacted by Turn Times Mortgage Bankers Association 4/16/2019 Customer Satisfaction is Dramatically Impacted by Turn Times Purchase Service Levels Only 20% of the time closes in less than 30 days Customer satisfaction is MUCH lower when turn times are > 45 days Net Promoter Score (NPS) drops dramatically — losing the promoters Source: STRATMOR Group MortgageSAT Survey DG: I agree that cust sat is correlated to turn time; however, I’d say that process transparency and meeting commitments are equally important as a fast close… And so as we think about engaging customers thru a digital channel, we still have to ensure that the communication is seamless, relevant and timely throughout the process… A properly designed digital experience should enhance your ability to be transparent and collaborate with customers This will show up in Garth’s 7 deadly sins a bit later in the presentation Mortgage Bankers Association

Technology Investment Has Gone Up! Large banks, who mostly have custom built technology solutions, spend over $1,000 per loan Independent Mortgage Bankers, and Smaller Bank lenders spend an average of ~ $250 - $350 per loan Source: PGR: MBA and STRATMOR Peer Group Roundtables

Approach for Change Management Mortgage Bankers Association 4/16/2019 Approach for Change Management LG: STRATMOR uses a Plan, Build, Run approach in managing changes in organizations. ADD COMMENTS DG: Some of the more successful digital projects/programs I’ve been involved in were framed in broader transformation context (e.g., strategic cost reduction, new market expansion) so that the emphasis is on holistic business model transformation (people, process, tech) with digital tools as key enablers as opposed to bolt-ons to existing processes. Important because maximizing the value of digital automation often requires broader operating model change (e.g., redesigning processes to avoid the trap of accelerating a single task within an E2E process only to create more process wait time) Optional Commentary What is the basis for differentiation in an environment when digital is the norm? The ability to engage with purchase clients earlier in the journey (e.g., digital marketing, ecosystem expansion) True operational agility and scale; leveraging process & cognitive automation tools to create workforce capacity and an operational model that supports a higher degree of volume variability with fixed staff levels. Mortgage Bankers Association

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Garth Graham “Five Tips For Making The Most of Digital Technologies” Digital Mortgage “Five Tips For Making The Most of Digital Technologies” Garth Graham Garth.Graham@STRATMORGroup.com www.linkedin.com/in/garthgraham/ http://www.stratmorgroup.com/stratmor-insights/ https://twitter.com/garthgraham (954) 325-7816

Special Session: Thoughts on the Digital Evolution Mortgage Bankers Association 4/16/2019 Special Session: Thoughts on the Digital Evolution April 15 4:30 PM – 5:30 PM Garth Graham Senior Partner STRATMOR Group Garth.graham@stratmorgroup.com Daryl R. Grant Managing Director KPMG darylgrant@kpmg.com Conferences are a great place to see cool tools, cool vendors and to hear from forward-thinking lenders. In talking with attendees at these conferences, individually and in sessions, there are a lot of vendors offering new technology (digital!) and a lot of lenders who are spending more money on technology (ooh I need digital!). B But many of the attendees of these conferences didn’t have a clear sense of the problem they are trying to solve, other than a general sense of making the mortgage process “better.” Today, I will share what I have learned and the five tips for making the most out of your digital mortgage investments. Mortgage Bankers Association