The One KPI to Rule Them All
By Dan Green, Principal, BlackFin Group
Dan Green starts his new BlackFin Research paper by explaining that, “Hyperbole is over-rated.” He’s not a fan, he writes. “I am not kidding when I say Productivity is the one metric that rules them all. The hyperbole, if you sense any at all, is warranted.”
In his first paper for the consultancy, Green takes a close look at Productivity as the mortgage lending success metric and concludes that if you “get productivity right, you unlock mortgage lending profitability.”
Green studied business administration, with an emphasis in accounting, finance and economics at Michigan Technological University and joined CUNA Mutual Mortgage Corp. in 1994. He left CUNA to join Prime Alliance Solutions, one of the industry’s first technology solutions developed specifically for Credit Unions. Green played a number of roles when Prime Alliance was acquired by Mortgage Cadence, including EVP of Marketing, EVP of Operations where he also lead the program and project management office, along with Human Resources. While at Mortgage Cadence, Green leveraged his experience in the credit union space and performed an 8-year study on high performance mortgage lending using public record and client supplied data. During this time, he unlocked the code for effective mortgage lending and uncovered the importance of Productivity to lender profitability.
“I am obsessed with Productivity because the mortgage origination industry is serially and perpetually inefficient,” Green writes in his report. “The largest single component of cost-to-close (CTC) is labor; it accounted for 70% of the cost-to-close in 2020! It is about the same in 2021, according to the MBA. The only meaningful way to decrease CTC, therefore, is to increase productivity. Increasing productivity always, predictably and explainably leads to increased profitability competitive advantage increase.”
The paper goes on to explain exactly how to calculate productivity, how to use it to determine the required headcount as well as future volume and productivity levels. He calculates what it will cost the industry next year to manufacture the expected loan volume and demonstrates the incredible financial impact even a slight improvement in productivity will mean to lenders.
Ultimately, Green points to a solution. Despite his years of experience as a mortgage technology executive, he says technology alone will not be the answer to increasing productivity. But he knows what the answer is and shares it in this paper.
“What Dan has done will absolutely make a bottom-line difference for the mortgage lenders who read this paper,” said Keith Kemph, BlackFin Group CEO. “Every client we have ever worked with was seeking the formula for higher profitability in a changing market. Dan Green has cracked the code and he gives them the answer they’ve been seeking.”
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