Introductions Tyler Sherman :: CEO, Motivity Solutions» Defining» How business intelligence is being used by mortgage bankers today Jim Connell :: CIO, Sierra Pacific Mortgage» Defining your scorecard» The art of scoring (normalization and weighting of metrics)» Applying scorecards to mortgage lending Shay Tengan :: EVP and GM, Helm Analytics» Environment» Start with data» What you will be hearing Tim Elkins :: CIO, PrimeLending» How We Are Using Today» User Adoption» Future Plans 2
Tyler Sherman :: CEO, Motivity Solutions :: Defining :: How it is Being Used in Mortgage Banking Today 3
Defining There is an Infinite Amount of Data Available» Difficult to harness» Not actionable Brings this Data Together» Proactive management / Manage by exception» Proactive decision making Components of» Key performance indicators» Scorecards Change the Culture of your Organization» Self-competitive» Performance-driven» Accountable» Self-compliant 4
Enterprise 5
Key Performance Indicators (KPI) Definition» Measure of performance» Evaluation and measurement of success activities» Identifies the level of achievement towards your goals Common Mortgage Examples» Cycle Time» Pull-through» Activity (closed loans, loans underwritten, etc.)» Loan Quality» Employee / Executive / Company Productivity 6
Key Performance Indicators (KPI) Loans Funded :: Loan Officer by Month Loans Underwritten :: Underwriter by Day 7
Key Performance Indicators (KPI) Loan Lifecycle Aging 8
Scorecards Definition» Graphical representation of specific KPIs over time» Normalization (Turn apples and bananas into oranges)» Weighting (Relative importance of one KPI over the rest) Common Mortgage Examples» Individual (Loan Officer, Underwriter, Closer, etc.)» Organizational (Department, Branch, Team, etc.)» Loan Level (Data Quality, Risk Profile, Profitability, etc.)» 3rd Parties (Brokers, Title Companies, Vendors, etc.)» Stakeholders (Warehouse, Investor, Federal, State, etc.) 9
Scorecards Loan Quality Scorecard 10
Jim Connell :: CIO, Sierra Pacific Mortgage :: Defining your Scorecard :: The Art of Scoring (Normalization and Weighting of Metrics) :: Applying Scorecards to Mortgage Lending 11
Defining Your Scorecard Defining Meaningful Metrics» What to measure» Determining KPIs to achieve strategic goals» The number of metrics» Ensure KPIs can be accurately measured Clean data required Process to maintain a clean pipeline of active loans. Loan Originator Scorecard Keep it Simple» Rank brokers, branches and loan officers» We started with about 30 metrics» Decided that 4 6 was all we need to provide a meaningful score» More metrics can always be added later 12
The Art of Scoring Agreed Upon Scoring Ranges (Normalizing)» Like a high school report card (A, B, C, D, and F)» The results of defined metrics (homework, mid-term, final exam)» Each metric has different scoring ranges (flat scale / curve) Weighting the Importance of Each Metric» Lock Fallout % = Homework» Funding Ratio = Mid-Term» Funding Volumes = Final Exam Metric Value Grade Weight Points Lock Fallout % - 90 days 22% 3.00 0.20 0.60 Funding Ratio - 90 days 75% 3.00 0.30 0.90 Funded Loans - 90 days 24 units 4.00 0.50 2.00 Score 3.50 Establish Metric Target and Acceptable Variances» Reasonable targets based on historic performance» Allows quick visual reference 13
Applying Scorecards to Mortgage Banking Example Corporate and Originator Performance Scorecards 14
Applying Scorecards to Mortgage Banking Example Performance Scorecard :: Originator Ranking by Score 15
Applying Scorecards to Mortgage Banking Perception is Reality (Review and Adjust as Necessary)» Reach agreement from various stakeholders» Relevant (e.g. Time periods)» Based on valid data Performance Report Cards» Executive view all metrics with drill down ability» Originator view summary of key metrics» Communicates how to improve business» Knowledge that performance is being measured can change behavior Performance Incentives (Carrot or Stick?)» Preferred pricing» Service upgrades (e.g. faster turn times)» Creative and unique around strongest motivators 16
Shay Tengan :: EVP & GM, Helm Analytics :: Environment :: Companies Must Get Better :: Next Steps 17
Environment Companies are enduring a "perfect storm" of difficult markets, increasing costs, shrinking profit margins, stiff competition and elusive customers. 18
Companies Must Get Better Start with Data» Internal, external, or both?» Capture» Cleanse» Leverage Do You Control Your Data or Does Your Data Control You?» The ability to use data determines success» Efficiency Cost reduction Risk Sales Marketing Targeting prospects Transparency Score Compliance» Tighter system integration Sharepoint.Net Microsoft technology stack 19
Companies Must Get Better What are you waiting for? 20
Companies Must Get Better 21
Next Steps You Will be Hearing About» CEP (Complex Event Processing)» Fluid Analytics Analytic engines that drive real-time decisions Analytic databases that process huge amounts of data Integrated data from disparate systems that provide deeper insights into business processes, customer relationships, and supply chains» Find the pain and start there» This is the first step an organization can take to Get Better 22
Tim Elkins :: CIO, PrimeLending :: How We Are Using Today :: User Adoption :: Future Plans 23
How We Are Using Today Tracking Return on Investment (Did we make the right decision)» Purchased a new LOS» Maintained use of previous LOS» Reporting dilemma» Comparing key metrics between the two origination systems Why Couldn t We Do This Before?» We needed to combine data sources» Once combined, we needed to apply metrics» Our Reporting Portal (BI system) allowed us to do both 24
How We Are Using Today Deciding What to Measure» Loan production Volume Efficiency» Loan quality Investor exceptions Suspended loans The Systems We Use to Compare» New LOS» Previous LOS 25
How We Are Using Today The Bottom Line Do the efficiencies created by the new LOS deliver enough of a return on our investment? The Answer? We don t know yet. But now we have the tools to make that determination. 26
User Adoption User Adoption is Critical» Tying the business intelligence to the goal of the organization» Tying business intelligence to the solution of employee pain Make their job easier Increase productivity Eliminate noise in meeting corporate goals Loan Originator Adoption» The pain? Uncertain environment (LO Compensation regulations) Uncertain compensation structure (How will I maximize my earning potential?)» The solution? Our Reporting Portal clarifies originator responsibility Our Reporting Portal will show you compensation status Business intelligence will guide you in maximizing your earning potential 27
User Adoption User Adoption Amongst Operation Teams» Rather than deliver a report, we deliver a dashboard» Dashboard Summary information Drill down to report level, if necessary They Must Use Reporting Portal Dashboard to Access Report» Gain familiarity with our Reporting Portal» Summary information highlights exceptions» User is immediately more productive (handling exceptions solves pain)» User buys into Reporting Portal 28
Future Plans Expanding P & L Insight» Loan level P & L What are our most profitable loans? Who are our most / least profitable loan participants? How can we maximize our production efforts?» Loan source P & L Who provides the most profitable loans? How many are they providing? Create incentives to capture more of the most profitable loans» P & L by Dimension Which loan originators are / are not profitable (Loan Revenue) - (Services Utilization + Resource Utilization + Investor Exceptions) = P / L Which underwriters are / are not profitable Number of investor exceptions Number of investor suspensions Since our systems are integrated with our Reporting Portal, all this and more is possible. 29
Contact Information Tyler Sherman :: CEO, Motivity Solutions» tyler@motivitysolutions.com Jim Connell :: CIO, Sierra Pacific Mortgage» jim.connell@spm1.com Shay Tengan :: EVP and GM, Helm Analytics» shay@helm360.com Tim Elkins :: CIO, PrimeLending» telkins@primelending.com 30