01 Jul 2016

By Mark Blackwell, Lending & Surveying Director, eTech SolutionsMI 2016 July p45 cropped

Mortgage Introducer July 2016

‘Risk comes from not knowing what you’re doing’, said the sage of Omaha.   Logically then if a business can do more of what it does well and understands, this must present a very attractive, low risk approach to growth.  In an era of record low interest rates and returns businesses still have to invest and grow to survive.

This is especially true for small businesses, whether they are surveying firms, conveyancing firms or mortgage brokerages.  Only about half of start-ups and small business make it past five years, and less than that will last 10 years.  It means growth after the initial start can be problematic – especially if the business depends on its intellectual capital, which is not so easy to scale, and quality advice or judgments are the heart of what it does.  If a business doesn’t have any plans for its future, it’s skating on thin ice and is unlikely to remain sustainable and grow.   There are many strategies, of course, that involve varying degrees of cost and risk but some are easier fits than others.

Operational efficiency, in particular that which can also reduce operational is an increasingly important area especially in more mature markets, where businesses are identifying how they can increase their capacity to do more of what they are good at and grow market share.

If technology can offer advisers, surveyors or conveyancers the prospect of greater productivity without compromising the quality of the work they offer, it can afford small businesses the capacity to grow without costly headcount and without compromising the standards clients expect. Ultimately all growth involves headcount at some point but for all business today headcount presents significant risk, especially for smaller firms.  After all, increased headcount is not something that businesses can easily unwind and certainly not without some serious expenditure.   If technology can enable a business to expand further without this risk it is a huge opportunity.   From technology for advisers (robo-advice) to technology for surveyors (surveying hubs and mobile solutions) these technologies offer a way of doing more of the same without compromising quality and in many cases enhancing the process for the end customer.

Too few technologies for business use risk management as a means to securing growth and making the most of what a company already does.   And yet, if we can better service current clients and add value it is a hugely more cost efficient means to achieving growth in revenues than continually chasing new clients.   Technologies that allow consultants to improve the consistency of their advice and judgments, by accessing data in real-time, not only make those judgments more defensible but create time and space for the advisor himself to ensure judgments are not rushed.   Valuers, for example, are now enjoying access to more timely, real-time, data comparable that do exactly this.  Their values are more defensible and the job can be entirely executed on site, meaning far fewer late nights searching desk-top comparable hours after the visit when other pressures may be front of mind.

It seems curious that in an industry dedicated to risk management that technology providers have to date been reluctant to focus their attention on the gains available to businesses through better operational execution of that risk management.   If anyone should find a more risk free approach to growth appealing, the advisory and valuation industry should be ideal candidates.

By making more of what we have, and confronting the bigger market trends that will change the type and value of work surveyors see in the future, surveying firms can go some way to protecting themselves from top down change.

Possibly one reason for this neglect of operational capacity has been the onslaught of regulatory changes that keep the mortgage value chain occupied for the last decade.  However, with the FCA and other bodies keen to let the dust settle, scrutiny has turned on the operational effectiveness.   Business strategists have also been slow to grasp this as markets have typically driven expansion in the past.  Operational capacity was often an implementation consideration for a new product or service or jurisdiction.  Now it offers the opportunity itself.

Property risk assessment has always involved human judgment but now there is a vast array of data and evidence to support our conclusions and that means we have now the wherewithal to deliver more robust and defensible decisions.  Technology is a tool that can enhance a business’s strengths but can also radically transform areas of weakness that ultimately become areas of growth.  Productivity is a key driver – but in itself is not enough.  In property risk management businesses, efficiency is not a holy grail if it is not accompanied by uplifts in quality.  Choosing the right growth strategy will require thorough research and evaluation, as well as market analysis.

Read the full publication here

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