Navigating the Digital Shift: Digital Maturity Assessment with the Novus Digital Index in the Mortgage Industry

Jakub Cambor

June 14, 2024

Navigating the Digital Shift:  Digital Maturity Assessment with the Novus Digital Index in the Mortgage Industry

The landscape of the mortgage industry is evolving rapidly, driven by a digital shift that has become a pivotal element in today's market dynamics. Recognising this transformation, a significant majority of banking and lending executives now consider digitisation crucial for revamping mortgage processes. With the average homebuyer now below a certain age, and the rise of Gen Z entrants, the demand for low-touch digital procedures has intensified, emphasising the necessity for a comprehensive digital maturity assessment in the digital mortgage sector.

Moving forward, your business may benefit from the Novus Digital Index (NDI), offering a strategic maturity assessment framework that quantifies digital capabilities across essential areas of digital transformation. This index serves as a valuable tool to gauge and enhance your organisation's readiness for digital evolution within the mortgage sector, ensuring alignment with contemporary digital maturity models and a competitive edge in the industry.

The Digital Maturity Landscape in the Mortgage Industry

In the mortgage industry, the digital maturity landscape is rapidly transforming, necessitating lenders to reassess their capabilities and strategies to remain competitive. Here’s how the Novus Digital Index (NDI) plays a pivotal role in this landscape:

  • Benchmarking Digital Maturity:The NDI provides a detailed and quantitative assessment of an organisation's digital capabilities.It benchmarks your business's maturity against the industry, covering seven key pillars of digital transformation: Business Alignment, Risk & Compliance, Digital Capabilities, Stakeholder Engagement, Digital Business Strategy, Agile Innovation, and Customer Experience.By using the NDI, mortgage firms can identify their position as digital leaders or laggards, which is crucial as the gap between the two is ever-widening.

  • Digital Transformation as a Business Imperative:Digital maturity is not only about adopting new technologies but also about aligning them with business goals to drive efficiency, customer satisfaction, and profitability.Mortgage companies leveraging data analytics and AI can see a reduction in operational costs and a similar improvement in customer satisfaction.The NDI helps organisations to prioritise activities and improve their maturity, ensuring they are equipped to meet the digital expectations of modern consumers, particularly millennials.

  • Overcoming Industry Challenges with Digital Solutions:Digital process automation, including tools like eClosing and eVaults, is revolutionising mortgage lending by enhancing operational efficiency and accuracy.With a significant percentage of lenders having implemented some form of digital mortgage process, the focus is now on using AI and ML to address legacy inefficiencies and prepare for a new era of digitally savvy customers.The NDI assesses and provides a pathway to improve upon these digital initiatives, highlighting the importance of strategic interventions across the mortgage lifecycle.

By utilising the Novus Digital Index, your business can gain a comprehensive view of its digital maturity, compare its performance against competitors, and strategically navigate the digital shift in the mortgage industry. It's a tool that not only evaluates current capabilities but also sets a defined pathway for continuous improvement and adaptation in a market that is increasingly driven by digital innovation.

Exploring the Novus Digital Index (NDI)

Exploring the Novus Digital Index (NDI) is an essential step for mortgage businesses aiming to assess and enhance their digital maturity. The NDI provides a comprehensive framework to measure and benchmark digital capabilities, offering a clear pathway to digital transformation.

Let's delve into the key aspects of the NDI:

  • Measuring Digital Maturity:The Novus Digital Index offers a detailed and quantitative assessment of an organization's digital capabilities, crucial for businesses seeking to become more profitable and gain a competitive edge.It enables companies to accelerate their digital transformation effectively, improving their responsiveness to changing market conditions and ensuring the focused use of technology assets.

  • Benchmarking Against the Industry:The NDI benchmarks an organization's digital maturity against the market, utilising the seven key pillars of digital transformation: Business Alignment, Risk & Compliance, Digital Capabilities, Stakeholder Engagement, Digital Business Strategy, Agile Innovation, and Culture and People.By highlighting a business’s readiness for digital transformation, the NDI identifies areas that require attention to ensure the success of digital initiatives.

  • Advantages of High Digital Maturity:Businesses with high levels of digital maturity can respond, deliver, and succeed at a faster rate, which is increasingly important in the modern marketplace.The NDI helps to identify the growing gap between digital leaders and laggards, which is crucial as businesses with low digital maturity struggle to keep pace with competitors and are at the highest risk of disruption.

The Novus Digital Index is a strategic tool that aligns with broader industry developments, such as the Financial Conduct Authority's (FCA) Open Finance plan, which expands the scope of Open Banking to a wider range of financial sector firms. It also complements other diagnostic tools like BCG’s Digital Acceleration Index (DAI), which assesses digital capabilities across categories and provides insights from a database of companies. This extensive data aids in defining unique digital ambitions, developing strategic roadmaps, and building a solid foundation for digital transformation.

Aligning Technology with Business Goals

To effectively align technology with business goals within the mortgage industry, organisations must consider the following strategic steps, as guided by the Novus Digital Index (NDI):

  • Comprehensive Digital Maturity Assessment: Begin by understanding and utilising the NDI to conduct a detailed and quantitative assessment of current digital capabilities.Engage stakeholders in evaluating how your technology stack aligns with the seven pillars of Digital Transformation: Business Alignment, Risk & Compliance, Digital Capabilities, Stakeholder Engagement, Digital Business Strategy, Agile Innovation, and Culture and People.Highlight areas needing immediate attention to ensure your business is ready for Digital Transformation and can effectively compete in the modern marketplace.

  • Strategic Technology Implementation: Incorporate regulatory compliance into the digital product process early to avoid future hurdles.Leverage low-code and no-code platforms to accelerate development and empower non-technical staff to contribute to digital solutions.Utilise artificial intelligence and Robotic Process Automation to personalise the customer journey and optimise the value chain, ensuring a digital-first approach.Coordinate business units to work towards common goals, eliminating silos and ensuring that development objectives are in line with business strategy.

  • Operational Excellence and Innovation: Prioritise technology that offers ease of integration and supports a seamless homebuying journey, such as electronic signatures and online notarisations.Create a North Star architecture to guide incremental improvements and ensure that new technologies align with long-term business objectives.Foster a culture of continuous improvement, adopting new technologies and practices to enhance efficiency, quality, and resilience.Quantify and report the benefits of technology initiatives, emphasising both tangible and intangible values to stakeholders.

By following these steps, mortgage businesses can ensure that their technology strategies are not only aligned with their business objectives but also position them to gain a competitive advantage and reduce the likelihood of failed technology initiatives. Proper alignment with modern technology principles can eliminate legacy issues, improve interoperability, and accommodate new ways of interacting within the mortgage value chain, leading to significant cost savings and operational efficiencies.

Implementing NDI for Your Business

Implementing the Novus Digital Index (NDI) for your business involves a strategic approach to enhance your digital capabilities in the mortgage industry. Here's how you can effectively apply the NDI:

  • Digital Capability Assessment and Improvement Plan: Conduct a thorough assessment of your current digital capabilities and maturity using the NDI, which provides a detailed and quantitative evaluation.Identify areas for improvement and develop a strategic plan to address these, ensuring that your business is aligned with the seven pillars of Digital Transformation, as highlighted by the NDI.

  • Streamlining Operations with Digital Process Automation: Implement digital process automation to streamline and automate routine tasks, leading to increased operational efficiency, reduced manual errors, and improved customer service.Embrace technologies that allow for faster processing of requests and near real-time responses, contributing to higher customer satisfaction and a more efficient mortgage lending process.

  • Cybersecurity and Compliance: Prioritise cybersecurity by adopting a proactive approach, including regular risk assessments, updates, employee education, and investment in advanced technologies.Utilise cybersecurity services to safeguard your business in the home-buying market, ensuring the protection of customer data and compliance with regulatory standards.

  • End-to-End Digitisation of the Mortgage Journey: Digitise the entire mortgage value chain, integrating data flows among processing, underwriting, and closing teams for a seamless homebuying experience.Implement components of a digital mortgage, such as digital documents, online portals, electronic signing, and online notarisation, to streamline the loan process.

  • Leveraging Digital Solutions for Transformation: Consider partnering with Infosys BPM to utilise their comprehensive digital mortgage solution as part of the Live Enterprise suite, which includes document classification and extraction, automated conditioning, and the deployment of RPA in third-party order and wire processing.Utilise AXIS by AIO Logic for end-to-end digital transformation support, benefiting from its AI-powered automations and robust security features.

  • Embracing a Fully Digital Mortgage Experience: Explore how Novus Home Mortgage offers a fully digital mortgage experience, allowing customers to complete the entire loan process from application to closing on a mobile device.Stay informed during the escrow process with mobile alerts and messaging, ensuring a transparent and customer-centric approach.

  • Technological Investment and Differentiation: Differentiate your mortgage business by investing heavily in technology, as demonstrated by Novus Home Mortgage's use of the Directus platform, enhancing their technological capabilities and supporting their vision as a technology leader in the mortgage space.

By following these steps and utilising the NDI, your mortgage business can not only assess its current digital performance but also chart a clear path toward achieving full digital maturity, ensuring you remain competitive and responsive in a rapidly evolving digital marketplace.

Overcoming Challenges in Digital Transformation

Overcoming the challenges of digital transformation in the mortgage industry requires a strategic and multifaceted approach. Here are some key strategies to address these challenges:

  • Embrace Challenger Bank Practices: Look to challenger banks as models of digital efficiency; these tech-savvy entities digitise retail banking services to enhance the user experience, particularly for mobile banking users.Focus on creating an integrated, digitalised, personalised customer journey that aligns with customer preferences for digital self-service solutions.

  • Addressing Transformation Challenges: Recognise and tackle the hurdles of reducing discretionary spending, managing regulatory and resilience risks, and optimising digital channels to develop a more robust digital model.Draw on specialist expertise and form partnerships to embed digital solutions more swiftly and effectively into your business model.

  • Utilising Digital Maturity Assessments: Conduct a detailed and quantitative assessment of your organisation's digital capabilities using tools like the Novus Digital Index (NDI), which benchmarks against the seven key pillars of digital transformation.

  • Strategic Investment and Compliance: Prioritise investment in areas that facilitate digital transformation, such as eClosings and back-end processes, while ensuring compliance with regulatory norms.Address challenges such as resistance to change, transforming trusted processes, and aligning with the larger digital transformation strategy through comprehensive training and awareness programs.

  • Long-Term Digital Transformation Benefits: Aim for short-term improvements in operational efficiency and staff productivity, while setting sights on long-term benefits like enhanced data-sharing capabilities and an improved customer experience.Overcome key obstacles such as stakeholder buy-in, collaboration, financial investment, and legacy infrastructure by modernising infrastructure, improving intermediary interactions, and adopting a customer-centric digital approach.

By adopting these strategies, your business can navigate the complexities of digital transformation, ensuring that you are not only keeping pace with the industry but also setting the stage for future success and resilience in the digital mortgage sector.

Conclusion

Through the strategic use of the Novus Digital Index, organisations within the mortgage industry can vividly visualise their digital strengths and weaknesses, positioning themselves advantageously in the present market landscape. By measuring against the seven critical pillars of digital transformation, the NDI empowers businesses to accelerate their digital initiatives effectively, bridging the growing divide between digital leaders and laggards. This article has underscored the NDI's role in highlighting areas crucial for digital adaptation and the compelling necessity for businesses to embrace technological integration for sustained success.

Acknowledging the significance of digital maturity in the modern marketplace, it is clear that companies poised with higher digital maturity stand to benefit from enhanced operational responsiveness and long-term market relevance. Ready to begin your transformation? Let’s chat about how Novus can help you in your transformation journey. Now is the time for businesses to leverage tools like the NDI to navigate their digital path, ensuring they are not only competitive today but also primed for the opportunities of tomorrow's digital horizon.

FAQs

What are the recognised stages of digital maturity?

The four recognised stages of digital maturity are:

  • Incidental: This stage involves recognising the need for a strong digital foundation.

  • Intentional: At this level, organisations focus on building a comprehensive digital strategy.

  • Integrated: Digital transformation efforts become streamlined and are supported by organisational leadership.

  • Optimised: This is the peak of digital maturity, where digital processes are fully integrated and optimised within the organisation.

Are there different frameworks for assessing digital maturity?

Yes, there is another framework that outlines five levels of digital government maturity:

  • Level 1 - Initial (E-Government): Basic digital services are provided.

  • Level 2 - Developing (Open): The government starts to open up data and services to the public.

  • Level 3 - Defined (Data-Centric): Digital services are more data-focused.

  • Level 4 - Managed (Fully Digital): Digital processes are managed effectively across the board.

  • Level 5 - Optimising (Smart): Digital innovation using open data is deeply embedded in all government operations.

How is a digital maturity assessment performed?

To perform a digital maturity assessment, follow these best practices:

  • Define what digital maturity means for your organisation.

  • Identify your key performance indicators (KPIs).

  • Collect relevant data.

  • Assess your current level of digital maturity.

  • Determine the technologies that will support your digital transformation.

  • Regularly measure your progress to ensure continuous improvement.

References

[1] - https://nexval.com/the-big-digital-shift-in-the-mortgage-industry/ 

[2] - https://www.processexcellencenetwork.com/tools-technologies/articles/digitizing-the-mortgage-process-to-remain-competitive-and-enhance-customer-experience 

[3] - https://www.grantthornton.co.uk/insights/assessing-your-digital-maturity-model/ 

[4] - https://www.novus-strategy.com/digital-process-automation-in-finance-a-roadmap-to-efficiency-and-accuracy/ 

[5] - https://podcasts.apple.com/ng/podcast/digital-disruption/id1486147600 

[6] - https://www.grantthornton.co.uk/services/financial-services-advisory/business-risk-services/data-regtech-and-digital-advisory/digital-maturity-assessment/ 

[7] - https://www.bcg.com/capabilities/digital-technology-data/digital-maturity 

[8] - https://www.infosysbpm.com/blogs/digital-mortgage/barriers-to-a-successful-digital-mortgage-transformation.html 

[9] -https://www.notarize.com/blog/how-digital-transformation-is-changing-the-mortgage-industry 

[10] - https://www.novus-strategy.com/financial-services-novus-digital-index/ 

[11] -https://www.wolterskluwer.com/en/expert-insights/technology-and-digital-closing-solutions-are-top-priorities-for-the-mortgage-industry-in-2024

<All Posts

https://uk.linkedin.com/in/lucy-gregory-b8590917b