Building an Innovation Department at a Mortgage Company

Digital innovation is no longer optional; it's necessary, especially for mortgage companies striving to stay ahead. With technological advancements and shifting customer expectations, establishing an innovation department can be the key to unlocking new opportunities and maintaining a competitive edge. Your Director of Innovation should have a diverse skillset and fluently speak the languages of sales, marketing, and technology to understand the business needs and deliver vendor suggestions that solve problems.

Innovation in mortgage companies drives efficiency, enhances customer experiences, and uncovers new revenue streams. By fostering an innovative culture, mortgage companies can better adapt to regulatory changes, economic fluctuations, and technological advancements. Encouraging a continuous improvement mindset ensures the organization remains agile and proactive rather than reactive.

Key Areas of Innovation

Most innovative ideas in a mortgage company can be categorized into three main types:

Efficiency Improvements

Efficiency improvements focus on streamlining processes to make managing loan data cheaper, more accessible, or more efficient. This can include automating routine tasks, leveraging data analytics to optimize decision-making, or implementing advanced software to enhance customer relationship management. Mortgage companies can offer their clients competitive rates and improved services by reducing operational costs and increasing productivity. This may include everything from POS, LOS, CRM, reporting, and overall business tracking systems.

Complementary Innovations

Complementary innovations involve creating new products or services that align with your existing offerings and are highly acceptable to your current clients. For example, white-labeling financial planning tools or apps, home equity management services, or personalized mortgage advice can add significant value to your customers. These innovations enhance the customer experience and increase customer loyalty and retention. Future customers may want a hybrid online approach with opt-in human advice, and the companies building that future will win.

Marketing Innovations

The reality is that a highly skilled marketing team can deliver just as many leads and loans to a company as 1,000 originators. In my past, this has certainly been the case, and it was accomplished by manipulating data and using very smart marketing based on behavior—and tools like Adtech and retargeting.

Building the Right Tech Means Teamwork

Proper infrastructure is critical to transforming a 2024 mortgage company into a revenue-generating machine in 2025, but this effort demands group thought. An internal incubation group ensures that your company develops and owns ideas before generating significant transactions, but this group must be people with an eye for the future. If people don’t understand where tech is going, the group will not be successful. Everyone has ideas but look around your C-suite and listen discerningly before appointing people to this group.

Internal Incubation Group

An internal incubation group is the breeding ground for new ideas and should be led by your Director of Innovation. This team is responsible for nurturing early-stage mortgage marketing and tech concepts, taking originator feedback into account, and looking for redundancies in current vendor partners. By maintaining control over the initial stages of innovation or expense, mortgage companies can ensure that their ideas are strategically aligned with their long-term goals and market needs and that the company has the staffing and budget to deploy the strategy correctly.

Reducing Risks and Maximizing Success

Innovation inherently involves risk, but with the right strategies, mortgage companies can minimize these risks while maximizing their chances of success.

Risk Mitigation Strategies

• Pilot Programs: Before rolling out innovations company-wide, conduct pilot programs to test their viability and gather feedback. This allows for adjustments and improvements based on real-world data from your trusted originators.

• Cross-Functional Teams: Involve employees from different departments in the innovation process. This diversity of perspectives can highlight potential pitfalls and enhance the overall quality of the innovation. Sales and operations should both have seats at the innovation table.

• Continuous Learning: Establish a culture of constant learning and improvement. Encourage employees to stay abreast of industry trends, attend relevant workshops, and participate in professional development opportunities. A new mortgage vendor demo is out every week, but staying on top of innovations is critical for finding new ways to source and manage loans more efficiently in the future.

Measuring Success

Establishing clear metrics for success is essential so that innovation efforts yield the desired results. Key performance indicators (KPIs) might include reduced processing times, increased customer satisfaction scores, or additional revenue from new products. Reviewing these metrics allows mortgage companies to fine-tune their innovation strategies and maintain a steady growth trajectory.

Building an innovation department within a mortgage company is a strategic move that can transform how the organization operates and competes in the market. By focusing on efficiency improvements, complementary innovations, and independent innovations, mortgage companies can unlock new opportunities for growth and success. The path to innovation becomes achievable and sustainable with the proper infrastructure, risk mitigation strategies, and continuous learning. This journey towards innovation is about survival and thriving in an ever-evolving market.

Ready to take your mortgage company to the next level? The power to innovate and transform your business is in your hands. Start by fostering a culture of innovation today. As a former Director of Innovation, I know there are consultants and resources to help your company succeed. Together, we can build a future where your business thrives in an ever-evolving market.

I was recently interviewed about innovation by Chris Vinson . This is a great one to watch this week!