Magazine article Mortgage Banking

CRM R.I.P.? Compliance-Centric, Enterprise-Level Marketing Automation Delivers Where Traditional CRM Can't

Magazine article Mortgage Banking

CRM R.I.P.? Compliance-Centric, Enterprise-Level Marketing Automation Delivers Where Traditional CRM Can't

Article excerpt

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) software might not be dead--but it's certainly undergoing a major transformation. That's because in its traditional form, CRM will not produce the results you need. [paragraph] These days there are two new litmus tests that CRM-type systems must pass. They must: enhance management control and regulatory compliance; and boost sales performance through marketing automation. [paragraph] The fact is all products--however useful and popular they once were--will fade away unless they are able to mutate into something more relevant to a new set of circumstances. This is the classic product life cycle we're all taught in business school. [paragraph] Specifically in the mortgage industry, the new set of circumstances is being driven by seismic shifts in the technological, competitive and regulatory environment.

So, when it comes to choosing services to support how lenders take their loan products to market, solutions we've come to rely on might no longer fill the bill.

Customer relationship management is a case in point.

Brief history of CRM

Siebel CRM Systems Inc., acquired by Oracle Corporation in 2005, came out with the original CRM software in the early 1990s to support the operation of telemarketing call centers. Siebel's solution pulled together data from disconnected product-centric silos so as to provide a unified view of each customer. This enabled customer service representatives to communicate with customers holistically, in full knowledge of their transaction history and purchase patterns (recency-frequency monetary value [RPM]).

In the late 1990s, Salesforce.com Inc., San Francisco, led the way for the transformation of CRM into what might be described as online sales toolkits.

Since 2000 many other software providers, mortgage-specific and otherwise, have jumped on the CRM bandwagon. But these simple contact management solutions are inadequate in today's complex lending environment.

So the next transformation is now under way, to solutions that are designed and built to support all the players in the marketing process across the enterprise--especially where the demands of production and compliance intersect.

Automation is the key and originator-based CRM-type offerings won't cut it, even if they come with an added veneer of "corporate-ness."

Compliance and control

Mortgage lenders are being inundated with new rules and regulations even while, simultaneously, they are having to deal with unpredictable origination volumes. This combination has put intense pressure on lenders not only to boost their marketing efforts but also to implement measures that ensure regulatory compliance.

It's this ever-tightening regulatory environment that's the first factor driving the transformation of CRM to something much bigger.

The Federal Trade Commission's (FTC's) Mortgage Acts and Practices (MAP) Advertising Final Rule was instrumental in pushing marketing compliance to the top of every lender's agenda, although this is only one component in an expanding array of mortgage-specific regulations that now seriously constrain marketing activity.

My sense is that the Consumer Financial Protection Bureau (CFPB) is taking all pre-existing laws and regulations and creating its definitive set of rules, which it will use when auditing mortgage companies.

The MAP Rule was issued as a final rule by the FTC on July 22, 2011, and given the compliance effective date of Aug. 19, 2011. On July 21, 2011, the FTC's rulemaking authority for the MAP Rule transferred to the CFPB--but the FTC, the CFPB and the states all have authority to enforce the MAP Rule, according to the CFPB Forum, an online website.

The MAP Rule prohibits material misrepresentations in advertising or any other commercial communication regarding consumer mortgages. The FTC and the CFPB share enforcement authority over non-bank mortgage advertisers such as mortgage lenders, brokers, servicers and advertising agencies. …

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