Lykken on Lending

In our Hot Topic this week, we have John Weinkowitz,(WAYNE-KO-WITZ) Global Head, Product Marketing for Universal Banking at Finastra, discussing how “Transformation” means many things, so creating the right vision is the key, and “Transformation = Change,” as well as the “transformational divide” is a real thing, and finally how the “Transformational business drivers” in banking have changed yet remained the same.

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Hot Topic: The Unspoken Reality Of Transformation!

Welcome. It is so good to have you on the show with us. This show is created by mortgage professionals for mortgage professionals. We’re so grateful to have you as our reader. Our commitment is to bring you timely information you can read anytime and anywhere. In this Hot Topic segment, we’ve got John Weinkowitz with us. He’s the Global Head of Product Marketing for Universal Banking at Finastra. He’s going to be talking about one of my favorite topics. In fact, this is a topic that came in as a result of a request from one of our clients. We’re going to be talking about transformation and what it means and the right vision. It means many things.

Creating the right vision is key. Transformation means change. One of our readers, Bobby Nicely, over at ALCOVA Mortgage, said, “I’d love to hear you talk about how people are handling change.” The bottom line is we’re thrilled to have you here with us. You’re going to want to stay tuned to the Hot Topic segment. If you’re tuning in on a downloaded basis, that’s going to be the next episode we air right after this one. We do live. You can dial in live. If not, then you are getting on the two episodes. Read the next one, which is the Hot Topic segment, which we’ll be doing live here after the mortgage update.

I have some really quick information. I want to say a big thank you to Jungo, who put out the latest article. I’m so grateful for Jugo. They published three of the episodes that we do, one of which we did feature Finastra. It’s on this show. They feature the top thirteen shows that every loan officer should tune in to. Shout out to Jungo and for what they did. We’re grateful for adding us to the list and making us 1 of the top 13 shows to tune in to in the industry. We are very grateful. Also, what we did there, we featured the Brian Montgomery interview. We also feature Troy Anderson along with Lori Brewer. There is a lot of good information out there. There is a list of all the episodes that they’re promoting.

We want to say a special thank you to our sponsors. We have Finastra, who is our hot topic. The gift is Fusion Mortgagebot solution, which is the market-leading point of sale and origination platform along with FormFree. Brent Chandler has got so much great content. We get so much feedback on the content that he provides us because it’s so innovative. With some of the things they’re doing over at FormFree, you got to check out the website. Go to our sponsorship page.

Along with Lender Toolkit, Brett Brumley and our friend Brent Emler are there. They do such a great job. We’re hoping to get them back on the show to share some of the things that are going on with them. It is very exciting. As well as Snapdocs. They help lenders overcome the obstacles of adopting the eMortgage technology. It is a challenge. They have this new product called eMortgage Quick Start Program. Check it out. We had Briana Ings on March 28th, 2022. Go back and read that.

For Total Expert, we got the Total Expert Accelerate ‘22 conference coming up from June 12th through the 15th, 2022. Josh and I are going to get together during one of the breakouts. Be sure to check out the Total Expert Accelerate ‘22 Conference in Nashville, Tennessee. I hope to see you there. As well as SimpleNexus, they do a great job helping you in so many different ways. Go check out the interview we did with Andria Lightfoot on May 23rd, 2022.

Also, the Mortgage Bankers Association of America, Lenders One, Mortgage Collaborative, SuccessKit, Knowledge Coop, Mobility MMI, Modex, and Mortgage Advisory Tools do a good job, as well as DW Consulting. Debbie Wemyss does a great job to help you get your LinkedIn profile bright. A special thank you goes out to Adam with the MBA, Les Parker, Matt Graham, and Alice Alvey. I’m very excited to have her and Jack participating in this episode. Let’s get into the Hot Topic segment.

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Welcome to the Hot Topic segment. We’re excited to have John Weinkowitz here with us. He is the Global Head of Product Marketing for Universal Banking at Finastra. He’s going to be talking about one of my favorite topics, and that’s transformation. Vision is the key.

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John, it is so good to have you here on the show. We’re thrilled to have you joining us. How are you doing?

I’m doing great. I appreciate the time. I love the topic. I’m looking forward to the discussion.

I want to give Bobby Nicely a shout-out from ALCOVA because he’s the one that requested this topic. You’ve done a great job of answering and getting into what transformation and change mean in this market. Before we go there, I got the chance to meet you as I moderated the panel at ICBA, a conference in San Antonio. I met you for the first time. It was a joy how articulate you were on so many of the topics. We’re thrilled to have you here. Let our readers get to know you a little bit. Tell us about yourself and your journey to where you’re at.

That’s an interesting one. I got started young, as many of us did back then, finding a way to pay for a university. I lived in Wilmington, Delaware. I worked for the defunct-but-once-great giant credit card company, MBNA America. From there, I spent probably the next ten years in technology startups. We didn’t call them fintech, but they were a number of startups around software development, managed services, and digital marketing.

I had a pretty nice run. After we sold the last company, I said, “I come from a blue-collar background. It’s time to start a family.” That’s when I started sinking my teeth into financial services and going to work for Chase at the time. It was a bunch of folks I already knew from my old MBNA days who went to First USA and started the first direct bank called Wingspan.

I spent a number of years, probably about fifteen, in financial services at Chase and TD, a $3.5 billion community bank, and then I came to Finastra. It was 2018 when I did a lot of work in post-merger around the portfolio strategy and then had a chance to run our retail core business. I then moved over to startup global product marketing, a need we wanted to fill here.

It’s interesting. A little-known fact about me is that I am a closet behavioral economist. I love everything to do with behavioral economics. It drives my wife crazy. It causes a lot of rolling eyes from my seventeen-and-a-half-year-old daughter at home. I also studied music. I played the drums probably since I was four years old. I always tell people, “Running a business is not very different than driving a band when you’re playing in a concert. You sit back there. Every night is a little different, but it is the same set. The audience could be different. The sound system could work or it could not work. The singer could decide to sing the lyrics or go off on a tangent. Your job is to take all that in as the drummer and make sure we get to where we need to get to with all those dynamics.” It’s an interesting parallel.

Reality Of Transformation: Running a business is not very different than driving a band. Same set, but every night is different.

I’m glad you’re here to beat the drum on transformations, one of the key things I like to focus on. One of the things I wanted to go to first is that transformation can mean many things to many people. Creating the right vision, I’m going to assume, is key. How do you create the right vision as it relates to transformation?

There are a number of ways to do it. One of my favorite quotes from Lewis Carroll is, “If you don’t know where you’re going, any road will get you there.” You feel successful doing that, but the cost of the lack of direction is high. What I mean by that is you’ve got the business economics impact, the age of missed opportunity. The other one is the impact that it has on people within the organization.

I’m hitting on what I love about behavioral economics. When you have a lack of clarity, people cannot connect with what their contribution is to the bigger picture. What I’ve seen most successful and something that I employ all the time is you certainly need top-level executive support from the top, but you need to build that bottom-up plan. You can then execute and adjust.

The key is if I think about the mortgage industry, we could say, “We’re going to transform the mortgage industry,” but what are we transforming? Are we transforming the borrowing experience? Are we transforming the go-to-market strategy by enabling banking as a service solution? Are we changing the whole distribution, the fulfillment, and all of that? We got to answer those questions In order to make sure we get the investments correct and get the alignment correct, and the execution and results that we want.

That’s a great point. I love Lewis Caroll’s quote. If you don’t know where you’re going, any road will get you there. It’s a great quote. A lot of people are wondering, “Where are we going?” Alice, over to you.

That was fascinating. You listed off so many areas where a company may say, “We are transforming.” Transformation based on what you described equals change. That’s a lot for our company to take on, so how can you tell if an organization is ready for this type of change?

What I often say is, “Do you understand your organization’s capabilities? Have you done the assessment? How far behind is your tech stack if you think you need to improve that? Do you have the right operational skillset or operational tool set to scale if that’s the direction you want to go?” You need to have that assessment and plan accordingly. In my time at TD, I got to meet some great leaders.

The head of retail at TD Bank, America’s most convenient bank, told me once, “Do not run ahead of the organization.” I didn’t understand what she meant until we got a little bit further into the weeds, which was, “It’s great that we’re going to shift the distribution of mortgages from the branch to online because that’s where the marketplace is going. I got to do some work over here in the operations and the fulfillment side in order to make sure we can handle that volume and maintain the right risk profile we’re looking for.” It wasn’t until we got into those conversations that I understood what she meant.

Reality Of Transformation: It’s great that we’re going to shift the distribution of mortgages from the branch to online because that’s where the marketplace is going, but we must do some work in the operations and the fulfillment side in order to make sure we can handle that volume.

I also love to run. For the runners out there who are amateurs like myself, you have to build your own plan whether you’re a business or you’re approaching a race. In running, we say, “Run your race.” We want to be competitive in the market, but you have to run your race and understand that. That’s probably the best way to go about determining transformational readiness.

Let’s get over to Jack. Over to you. 

Is there a transformation divide? Is it a real thing? 

The original thought around that was we used to talk about a digital divide. If you think about the evolution of digital over the 2000s and 2010s, we would talk about it between the front and back office of the end users. It has become something that, in my view, has become a moot point. It’s a fifteen-year-old question that I look at this way. I say, “Can you transform the user experience and ignore the operations experience that needs to follow for that?”

A lot of times, I see people within our organization. Our clients say, “If I had $1 to invest in the user experience, I would put it towards the end user.” Let me break it down. Back to the question, it is a real thing because we’re asking these questions. I went through the mortgage experience and I had a super easy UX experience with the apps. I love the fact that I could upload all of my documents through the portal. It is fantastic.

I get a package in the mail to sign physically. I’m traveling and it needs to be done within five days. My wife’s trying to coordinate all that. I email them in and I’m thinking to myself, “Why are we not using DocuSign?” We need to look at the journey that a buyer’s on and look at the back office as something we need to change to remove friction as much as we need to address those evolving customer experience demands. It’s a real thing. It’s something I see a lot of financial services companies struggling with.

That’s a great point. One of the questions that came in is, what is the transformational divide? A lot of people are trying to figure that out. They hear it and they go, “That’s a cool, catchy phrase,” but how don’t you recognize a transformational divide?

The way that I look at it is you’re transforming, let’s say, the borrower experience from the app perspective. We know all of the things that have to happen from the documentation all the way to fulfillment. We’re automating the front end of that. The back half of that is fifteen years behind where we need to be, so we’re only addressing and removing friction from some of the processes but not all of the process. When you do that, then you have to ask the question, “Are you transforming?”

If I broke that down from a P&L perspective, you look at how you’re increasing your top of the funnel, but maybe you’re not increasing your margin, which is critical in a mortgage business from a return and assets perspective. You’re doing partially. That’s maybe the front end, but you’re not giving your banker a portal. You’re not giving him a tablet. We’re not allowing those digital capabilities to extend back to the bankers or the loan officers.

Reality Of Transformation: You’re increasing your top of the funnel, but maybe you’re not really increasing your margin, which is really critical in a mortgage business from a return on and assets perspective.

Jack, back to you.

Transformational business drivers in banking are constantly changing. Yet, everything seems to remain the same. Why is that?

It’s a great conversation point. I have been fortunate enough to have been in this business for 30 years. I love technology. When I look at what’s changed, the current demands and the user experience demand have changed along with digitization and streamlining the end-to-end processing. We’ve got robotic process automation, AI and ML changes, underwriting, and the fulfillment experience. We knew years earlier there were other key drivers out there and that 10 to 15 years from now, there’ll be other key drivers in here.

This is what I love about the mortgage industry and banking as a whole, but it’s still a first-time home buyer on the other end of that or parents putting their kids through college. That hasn’t changed. There’s still a requirement from a business perspective to get the right return on that asset. The P&L is critical. It’s understanding that what’s remained the same would drive the strategy.

When we let technology push us to make changes at a pace we may not be ready for, if we go back to some of the opening comments around the transformational change, or push us down a path that we’re not quite sure what road we want to go down, you start to create the opportunity loss that I spoke of earlier and some incremental expenses. We can’t forget that banking is a people business. We’ll always have different external drivers, but what remains the same is getting it right for the customer and enabling the right business key metrics that we’re looking to drive. That’s how I always talk about that side of it.

Alice, let’s go back to you for a question. 

You mentioned people. We know they’re a critical part of the business. Why is it the most important part of this business? From your perspective of people, how would you describe that?

It goes back to one of my favorite subjects, behavioral economics. If I could share this story really quickly, I had the good fortune to work for a commercial real estate community bank in the Philadelphia market called the Firstrust Bank. It’s a wonderfully run organization. It’s a third-generation family-owned. The chairman at the time, Dan Green, said something to me. This was my first day on the job. My job was to create digital and channel transformation. He said, “Don’t forget. This is a people business.” He went on to clarify, saying, “Don’t forget. It’s not just that banking’s a people business. The people in this organization are critically important.” That was the same sentiment we had at TD.

If you think about the nature of mortgages, it’s completely centered around people. With transformation, the success of it is only going to be as good as the people that are able to get on and change. The ones that will be the most successful are the organizations where the people who are our greatest gift are driving that change.

When that happens, you start to see transformation move in directions that you had a pretty good idea could happen. It goes beyond the KPIs when people start driving transformation. You start to see the culture change. That is what you have to focus on when you’re looking to transform. Bring your people along. Let them drive it. It’s scary. We know it’s uncomfortable, but embrace that unknown in many ways. Be there for folks. The results that people will bring are tremendous.

One of the other questions that come in is what’s the difference between transformation and innovation? There are so many other words that can seem synonymous there, like transaction and servant leadership. I’m hearing all these different things. What is the thing that stands out in your mind? How does transformation differentiate from other things like innovation? Innovation can be transformation. What’s your perspective on that?

Innovation is a tool. Innovation doesn’t always have to be technology. We talk about the sales process and customer engagement. I look at innovation as a tool. It could be technical and it could be non-technical. Throw digitization into that. Digital is great, but that’s an aspect of what needs to get done. Transformation is change because you’re looking at what needs to happen not just at a technology level.

Banking is a service. As an example, when we see our customers who are running ahead, they’re saying, “I’m going to use these open APIs to innovate and open up new distribution channels. I get embedded finance. I’m going to do that.” I also recognize that I have to transform my organization in order to sell differently, be more operational already, or determine, “How do we move the ship forward?” To me, transformation is much broader than innovation in and of itself.

There’s a great discussion there I want to get on because a lot of people want to pull on your behavioral economics perspective. For those who may not understand that, behavioral economics combines elements of economics and psychology to better understand how and why people behave the way they do in the real world, especially as it applies to economics. Given where we’re at, I’d love to get you to pontificate on where we’re at from your perspective in economics and from a behavioral standpoint.

I step back and look at the software world, which because of financial service, bleeds into all areas, like lending, retail banking, and commercial banking. The business of software hasn’t changed. What has changed is the incentive drivers and the definitions of what success look like. For example, what’s the right digital life balance? How is a flat organization viewed versus a hierarchal organization? How is the new workforce coming in looking at that?

As we shift out of a post-pandemic world and look at the quality of life in those particular incentive drivers, compensation has risen. What’s equally risen is, “Do I own or control my own schedule? How important is that to me? Am I being involved in decision-making?” There’s much more weight on non-traditional incentive drivers in order to create what I look at as a profitable business. Looking at how people react to coming into the office is funny. Coming into the office 2 days or 3 days isn’t that much. There’s a difference. People like to come in, too.

That’s interesting. I looked at the article that showed up in my feed. Elon Musk is mandating that you work at least 40 hours a week in the office. That hit the headlines in a big way because a lot of us are thinking, “We’re in a new reality. The world is at a place where we’re going to be changing.” That’s a form of behavioral economics. 

Freakonomics Radio, I listened to that. That’s probably one of my favorite topics. For any of your readers out, that’s a good supplement. Let’s go back to your book, the American Icon. That’s all about transformation and change in leadership. This topic was on Freakonomics. It was from March 2022. I was fascinated by the topic. Why do we create bad leaders? In short, it was because most individual contributors are not good leaders. That’s not what they want to do. It’s not what their skillset is.

Our organizational dynamics and culture is that if you want to succeed, you have to rise up and manage. We’re starting to see a shift in that thing. I tell people all the time, “You don’t have to manage to be highly recognized within this organization.” This is why I love behavioral economics. You can only do this by looking at the psychology of the individual and figuring out the right way to connect with them at an individual and an organizational level in order to serve those individuals the most. In return, you’re going to get the most benefit for your organization.

Reality Of Transformation: Behavioral economics is looking at the psychology of the individual and figuring out the right way to connect with them at an individual and an organizational level.

That’s what happened. Alan Mulally capitalized on that very thing right there. It was this phenomenal turnaround. Alice, let’s get over to you.

Thank you. You hit a nerve there in talking about a couple of things. First of all, the workweek lengths with Gen Z want to tell us how they want the world to be. At the same time, you mentioned psychology at the individual level. Can you help us out here with whether there is any kind of group thinking for us to better manage Gen Z, or is it that we’ve got to get down to the individual level? Do you have any thoughts there? 

I might have had this conversation with my mother-in-law. I have a soon-to-be eighteen-year-old daughter. You got to get down to the individual. Anytime you try to compartmentalize people in the groups and then make impactful decisions around more of a profile, you’ve completely missed the opportunity to listen.

The only way I have found to hear is to talk to folks on an intimate level. In order to have that intimate conversation as a leader, and I’ll share your phrase with senior leaders in our respective industries, we have to have a level of vulnerability that recognizes that there’s a world that’s progressing that’s foreign to us. The best way to understand how to serve that groundswell is to listen. You have to recognize that each individual, regardless of their stage in life, is an individual. You get so much when you think about it that way when you act that way.

Jack, we’ll let you wrap it up.

As I’ve sat here and I started knitting the kernels of information you’ve talked to our audience about, I get that people are important to successful transformation. Can you talk a little bit about how having an effective change management program can help optimize transformation in a particular environment or a particular corporation?

Yeah. It’s critical. You need the right change management program in place because you’re not addressing the change impact on folks within the organization, but you’re also trying to manage scope, set clarity, and have grounding KPIs. If you go back to if you don’t know where you’re going, any road will get you there by Lewis Carroll, the other pitfall is that it’s easy to get distracted and start running in a different direction.

Making pivots are fine, but you need to make pivots around the structure and they need to make sense. You need to be careful about not being too disruptive. That’s what a change management process does. You need to hire professionals to do that. There are firms out there to do it. People like to think that they have the skillset because they have a project management background. Hire other folks to go through that change management. It’s a process. That’s a great question. Thank you for that.

I encourage our readers to go visit the Harvard Business Review, which is HBR.org. Look for the article. We still don’t know the difference between change and transformation. It’s written very well. It’s an article from a number of years ago from January 15th, 2015. It drives home a lot of the points you’re making here. What a delightful guest, especially with the added bonus of a behavioral economist thrown in here. I have even more insights into why I enjoyed sitting across from you at dinner a couple of months ago down in San Antonio at the Independent Community Bankers Association, where Finastra presented. It was a joy to get to know you then. It’s been a delight to have you on the show.  I enjoyed it.

It’s my pleasure. I look forward to seeing you and everyone else soon.

I look forward to it as well. John, thank you so much. Our guest has been John Weinkowitz. He is the global head of product marketing for universal banking. He brought great points home. I encourage you to share this episode with others and then with the added bonus of behavioral economic insights. This was excellent. Jack, do you have final thoughts as we wrap up the episode here?

One of the most important things that I heard was about the transformational divide. I know that a lot of mortgage bankers are investing money in the client experience technology, but if you don’t approach this with a holistic view, you’re still going to be producing loans at a cost of $8,500 alone. John spoke about return on assets. I get why everybody’s focused on the customer experience. It’s important that we bring the back room or the manufacturing component of this along on the journey with us as we transform, or else we’ll still be stuck manufacturing loans with $8,500 and the return on assets won’t move. One day, you’ll hit your theoretical cap in terms of how many loans you can push through the system. To me, the transformational divide was an important concept in approaching this in a holistic manner. 

We’re so grateful to have John on. This has been good. I appreciate you dialing in. In the next episode, we’re pre-recording our interview and sharing with Brendon Weiss and Amy Moses of EscrowTab. We were talking a little bit about why is it that the whole digital experience is moving at such a ridiculously glacial speed. We’re going to be talking to two experts on this.

Brandon and Amy used to work at MERSCORP. That’s when I first met Brendon. Amy seemed such a good friend. She talked about how she respects Brendon as a leader. We’re going to get some great context from a leadership perspective. We’re also going to be talking about the latest technology and the transformation this is taking. It’s going to be playing nicely with what we talked about with John in this episode.

I want to say a special thank you to our sponsors, Finastra, Fusion Mortgagebot Solution, FormFree, Lender Toolkit, Snapdocs, Total Expert, SimpleNexus, the Mortgage Bankers Association of America, Lenders One, The Mortgage Collaborative, SuccessKit, knowledge Coop, Mobility MMI, Modex, Mortgage Advisory Tools as well as DW Consulting. We appreciate you. Check out all our sponsors in the links on the website. We’re grateful to have you here. Have a great weekend, everybody. We look forward to having you back here in the next episode.

Important Links

• Finastra
• Brian Montgomery – Hot Topic: Rough Waters in the Housing Market Currently!
• Troy Anderson – Hot Topic: 5 Key Things to Consider for Mortgage LOS and POS
• Lori Brewer – Hot Topic: The Benefits of Business Intelligence Software
• FormFree
• Lender Toolkit
• Snapdocs
• eMortgage Quick Start Program
• Briana Ings – Hot Topic: How Lenders Combat Recent Margin Compression Trends
• Total Expert
• SimpleNexus
• Andria Lightfoot – Hot Topics: Top Strategies for a Purchase Market
• Mortgage Bankers Association of America
• Lenders One
• Mortgage Collaborative
• SuccessKit
• Knowledge Coop
• Mobility MMI
• Modex
• Mortgage Advisory Tools
• American Icon
• HBR.org