in Blog, Metrics & Trend Data, Mortgage Lending, Performance Management by Kelley Mangel

Deep data insights trump deep pockets when it comes to running a successful mortgage business

Moneyball Copyright © 2011 Columbia Pictures
Copyright © 2011 Columbia Pictures

The MBA Annual Convention and Expo is just around the corner. At the same time, the 2018 Major League baseball season is winding down; the World Series begins October 23. The convergence of these events reminds us of another recent MBA conference: April’s MBA Tech, where MLB player and father of “baseball economics” Billy Beane was the opening speaker.

Beane famously used statistical data analysis to build the Oakland A’s into a baseball team that effectively competes with the sport’s leading franchises despite its small recruiting budget. His success was chronicled in the best-selling book Moneyball and, later, in a film by the same name starring Brad Pitt.

What makes Beane’s legacy so compelling is that he didn’t just transform the A’s — he transformed an entire industry. Before Beane, baseball front offices were old-school institutions, and talent acquisition was more of an art than a science. Scouts relied on a combination of long-in-the-tooth metrics and human judgment to identify high-potential recruits.

Instead of accepting these traditional methods as gospel, Beane used statistical analysis to identify new, more accurate indicators of player potential. He turned away from emotion-based assessments and human intuition in favor of rigorous application of an evidence-based methodology.

Beane’s draft picks for the A’s were wildly unorthodox — and, consequently, affordable. His methods proved successful when the Athletics reached the playoffs in the 2002 and 2003 seasons despite having one of the lowest team payrolls in baseball.

Mortgage banking is not baseball, and loan originators are not baseball players. Still, Beane’s story strikes a chord for a couple of reasons.

First, like the 2002 Oakland A’s, many independent mortgage lenders and small banks today find themselves competing with larger, better-funded organizations to secure top-producing talent. Understanding current, data-driven approaches to identifying, attracting and retaining top talent can be a great equalizer.

Second, like baseball two decades ago, mortgage lending is an old-school institution that is trying to grow up when it comes to the use of data and analytics. Although Beane’s methods were initially considered radical, they’re now viewed as a best practice and embraced by many Major League front offices. We believe mortgage lenders are at a similar inflection point when it comes to how they use big data and analytics to support organizational growth and maximize profitability.

The lenders that succeed in tomorrow’s mortgage market will do so because they have the deepest data insights, not necessarily the deepest pockets.

At LBA Ware, we understand the power of on-demand access to real-time business intelligence. Our revolutionary approach to managing LO compensation puts actionable insights into the hands of loan officers, branch managers and operations managers at many of the industry’s leading lenders.

We’re also helping the more than 133 lender members of The Mortgage Collaborative keep an eye on critical metrics with customized monthly benchmarking.

If you’re in D.C. next week, we’d love to talk with you about these and other data-driven solutions. Email Lori Brewer at lori@lbaware.com to set something up.

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