Residential Magazine

Is the Tech Spending Spree Worth It?

Mortgage companies should zero in on bottom-line results

By Keith Kemph

Over the past decade, the mortgage banking industry has spent countless dollars on new software technology. With financial institutions continuing to move to new application programming interface-based tools, the tech-spend trend will not slow anytime soon. Given this bullish move toward digital, are businesses really achieving the projected return on investment (ROI)?

The money spent on technology is generally justified by a strong business case with aggressive ROI projections. These projections range from promised efficiencies that will lower operational costs to improved client experiences that increase sales. 

But is all of this new technology really achieving internally solid ROI figures? In one example, the Mortgage Bankers Association reported that the average cost to originate a loan from 2008 to 2019 was $6,435, but that figure hit record territory last year at $9,299. This occurred despite a recent survey indicating that, across the board, CEOs feel their compliance-management costs have dropped significantly in the past couple of years. 

After a decade of new tech implementations, shouldn’t these cost-to-produce numbers be going down? Sure, there is always a cost to compete, but the numbers do not lie ­ companies are not getting the full value from their existing technology. Research company The Standish Group noted that only 29% of business information-technology projects were successful, while more than 70% were considered challenging or utter failures. 

This is not to say that all tech implementations are complete failures, but the vast majority never prove to achieve targeted ROI goals. In the end, failed implementations mean companies are simply spending a lot to have the same look and feel of their competitors without ever truly gaining a competitive edge.

Bottom line, buying a product with trendy buzzwords that lacks a comprehensive road map for implementation will deliver no value.

Troubling statistics

Moving forward, what is a chief financial officer to do? It really boils down to two options. Option A is to spend but start holding business and technology teams rigidly accountable to innovate and successfully execute implementation while adopting and achieving the targeted ROI goals. 

If you choose to go down this road, focus more on program management and stop focusing only on project management. This one change alone will reduce the failure rates. What does this mean? Project management is focused only on output and getting a new technology installed. Program management, meanwhile, is focused on the outcome and making sure the tech project achieves the desired ROI. 

Option B is to stop spending and start optimizing at a fraction of the cost of buying a new system and process. If a company cannot get implementations right, it will not actually innovate during implementation and it won’t ask for professional help to implement. Maybe it is time to reconsider these massive spends. Instead, avoid the agony and the cost of taking on new projects.

Let’s be honest — sometimes the better answer for your company is to sit tight on existing technology and get help to fully optimize what is already in front of you. Consider the following eye-opening statistics: 

  • 60% to 73% of a company’s internal data goes unused for analytics that can help lower costs and drive efficiencies, according to market research company Forrester.
  • A four-year study concluded that U.S. organizations wasted $30 billion in unused software, according to business and technology media company
  • Utilization rates of business software features shows that 20% are used often, 35% are used infrequently and 45% are never used, according to The Standish Group.
  • 45% of C-suite managers reported not knowing where to start when it comes to creating digital-transformation strategies, according to software provider Celonis.
  • 47% of chief information officers (CIOs) strongly believe they are providing employees the applications they want, but only 24% of employees strongly agree, according to a study by Forbes Insights and VMware. 

Path forward

Let’s not dwell on the lack of connection between the viewpoints of CIOs and staff, or that a sizable percentage of C-level executives looking to purchase transformation software don’t know where to start. The data suggests a need to better leverage existing platforms, features, functionalities, configurations and customizations to achieve the success desired by a company.

For the record, the idea of optimizing existing tech and software rather than purchasing new tools may not be popular among vendors. This too shall pass. It is time to get real about failed implementations and talk about how financial institutions, such as mortgage lenders and originators, need to underwrite their own organization. This will help them determine if they are truly going to be successful in implementing new technology and achieving their ROI. Bottom line, buying a product with trendy buzzwords that lacks a comprehensive road map for implementation will deliver no value. 

Although consultants may thrive on selection and implementation projects that promise extensive billing hours over long periods of time, the focus needs to change. Moving forward, be sure your professional help is dedicated to serving you best based on where you are truly at as an organization — with either Option A or B. Option A can be, and has been, the better path for increasing your market share but only if you’re committed to innovation and successful implementation. ●


  • Keith Kemph

    Keith Kemph is president and CEO of BlackFin Group, a boutique management consulting firm that specializes in the financial-services and mortgage banking industry. Working with lenders, banks and credit unions of all sizes, BlackFin Group routinely moves clients forward by effectively guiding the implementation of both business strategies and technology initiatives. BlackFin Group has founded proprietary strategies, technologies, models and frameworks that routinely reduce expenses while increasing productivity and revenue. Visit

You might also like...