More than a decade ago, an article in Harvard Business Review stated that CEOs, in a quest for business growth, were “turning to their CIOs and IT organizations because technology is essential to two compelling sources of growth: innovation and integration” (HBR, 2008). This is still true today. However, while both innovation and integration can certainly help you and your clients get more customers and deliver more services, both also have the potential to dredge up their own sets of unique challenges.
It’s easy to say let’s be innovative, but it’s hard to do it.
At least that that has been my experience and the experience of Lana Johnson, defi SOLUTIONS chief operating officer. Lana and I have known each other for what, surprisingly, has been a couple of decades. We both started our careers in the auto finance industry. We have both at one time or another been the client and been the vendor in a client/vendor relationship.
Lana and I believe in the importance of innovation and integration especially by lending industry technology providers. It can be tough, but we both agree to remain committed to both in order to enable growth, improve performance, lower costs, and create opportunities for the lending industry as a whole.
That said, we have both experienced the ups and downs of innovation and the challenges of integration.
Innovation ups and downs
When you think of innovation, what comes to mind? High risk? Low return? High return … eventually? Something that may be useful to someone someday? To us, innovation isn’t necessarily about some far-reaching, “maybe someday” product or service. It can be, sure. But more often, it’s about an idea that surprises us because someone should have already been doing it.
Prior to 2012, we both were involved in several lending system automation projects. In each instance, we had really good ideas of what we wanted, but either a) the flexibility we wanted wasn’t out there, and b) even if we got close to it, the costs of upkeep and new features were prohibitive. Today, technology providers recognize the benefit of flexibility and giving lenders what they ask for at affordable prices.
But what had to happen during the last seven years?
Companies on both sides of the client/vendor relationship had to be open to innovation.
The upsides of innovation are obvious:
1. You could revolutionize the world or at least your industry
2. You might save (or make) yourself and everyone else money
3. You could beat out the competition
4. Your clients could beat out their competition and be a lot happier
5. You’ll probably be a lot happier, enjoy your job, and create a great workplace
Before you can enjoy the upside, you have to do a little work. We all know the definition of “crazy”… doing the same thing over and over and expecting a different outcome. We have all at one time or another fallen into the pattern of repetition in business and in our personal lives. But if we really want a different outcome, we have to be willing to do something different, to innovate, and plan for a good outcome.
First, you have to overcome the downsides of innovation:
1. You have to break mindsets: yours, your clients’, your new clients, and get investors on board
2. You have to find the right team and create a company culture that welcomes change and the chance to overcome obstacles
3. You will sometimes spend money that you won’t get back
4. You will likely fail a few times
5. You must be willing to admit when you’re wrong, adjust, and give your great idea a chance to succeed
When a company pursues innovation, persists in great ideas, refines them where necessary, and drops the ones that don’t pan out, the trust, recognition, and success will follow.
Integration challenges
Integration does not necessarily provoke the same excitement or hesitation as innovation, but integration involves some of the greatest innovation of the decade – in software development, initiative management, and partnership roles. Connecting, sharing, bringing together complementary information and complementary organizations allows more growth, faster growth, better tools and services for clients and industries. An innovative partner is the catalyst for the creation of opportunities that add value to its clients and its industry.
Think about innovative integrations that we’re all now benefiting from:
• Cloud computing and SaaS, where clients can use the latest version of a software application hosted in state-of-the-art facilities rather than attempting to maintain a private data center and running the risk of using out-of-date software.
• Expertise sharing, in all fields and especially financial services, where companies are reaching out to innovators not only for their products and services, but also to help them generate innovative ideas.
• Data integrations, such as those in loan origination and loan servicing technology, where both consumer-supplied information and third-party data is used in combination to allow for the most informed decisions.
But not everyone thought, or still thinks, these are good ideas to begin with. Some individuals feel that sharing – whether it’s software features, a hardware platform, expertise, or data – is the equivalent of giving away their “secret sauce” to their competitors. But we have seen, time and again, that giving the same tools to different teams doesn’t mean they’ll use them in the same way, and it doesn’t mean they’ll achieve the same results or even want the same results.
With the mind shift toward innovation and integration, you, your clients, your future clients (and they will come) will benefit from more cost-effective services that enable all to achieve unique business goals through:
• Greater efficiency and accuracy
• Better assessments of customer worthiness
• Compliance consistency
• Improved company performance
• Better use of their human expertise
With innovation and integrations, the downstream payoff in terms of controlling costs and giving clients what they want and need is well worth the time and effort.
Co-author Lana Johnson, chief operating officer of defi SOLUTIONS, has managed profitable loan originations and led critical initiatives in online, offline, indirect and direct auto lending for companies such as AmeriCredit, Santander Consumer USA, Chrysler Capital and CitiFinancial Auto.