A New Era of Collaboration
Green. Nowadays, everything is coming up green. It is as if the financial services industry (FSI) has seen a leprechaun, and is now chasing after it for the fabled pot of gold at the end of the rainbow.
Poor humor aside, what does this “marketing” word really mean? Are all “green” solutions supported from the same foundation or are they merely a ploy designed to gain attention and sales? Moreover, if we create a green offering, who will purchase it, and within the mortgage markets is it something investors are seeking? Can technology help this effort and if so, how? There are lots of questions to be sure – the answers however are still sprouting.
The origins of green solutions and environmental responsibility transcend decades of activists and public awareness. However, just recently has the mortgage industry taken note of this movement as it wrestles with decaying margins and a withering customer base. While there has been considerable interest on the electronic automation of traditional manual processes and document interchanges, the real question remains, “Is that all there is to being green?”
In an effort to find and understand the comprehensive “green” value chain, I spoke with several known leaders and their corporate efforts to raise not only awareness, but adoption, social responsibility, and yes, shareholder returns. I chose one group that is well known within our industry and one global leader who truly enlightened my understanding of “green” and the value chain it can represent.
According to Mr. L. N. Balaji, head of U.S. Operations for ITC Infotech, “Organizations must understand the value chain of green responsibility – the triple bottom line. Corporate leaders need to recognize the interrelationships and demands between environmental performance, social responsibility, and of course, economic returns. People often associate green initiatives only with the environment, but there is much more.” In fact, Mr. Balaji is correct as his organization is one of the premiere operations demonstrating a holistic approach that not only works, it is auditable and internationally award winning.
Tim M. Anderson, President of SigniaDocs, Inc., a longtime torchbearer for electronic mortgage solutions and their green implications, weighs in -- “the current green initiatives within the mortgage industry are good starting points. The real value is not singularly with paper removal, but process enhancement that encapsulates certified data and its usage. While elimination of the physical wastes is very important, we cannot lose sight of the real value locked within the end-to-end value chain of mortgage origination, servicing, exception processing and securitization. A foundational principle of mortgage green will be when investors advocate and demand green operations, products, and services. We cannot lose sight of the investor as it relates to the borrower and the products they are offered.”
Echoing these executive beliefs, a study published by the United Nations at the end of 2007, “Green Financial Products and Services,” identified several unique insights on existing and proposed FSI products and services. However, what was the most relevant for our green actions were the key questions posed throughout. For me, as a result of my executive discussions, these questions in turn were “planted” and produced new ideas that we should address:
- How can our organization be green while balancing shareholder interest, community responsibility, and process accountability?
- Can we achieve a critical mass of acceptance for our product and service that supports the “green supply chains?”
- What should be the timing of our green products and can they become innovative?
- How will our shareholders and community activists react to our efforts?
- Will green products be transitory in nature as global environmental responsibility takes hold and new and better solutions emerge? What will that do to our strategy and infrastructure?
- Will investors and “The Street” purchase bundled green securities for a premium, discount, or not at all?
- What is really the total value chain that must be defined in advance of announcing green solutions?
- Can our green solutions be traceable, auditable, and independently verified as compared to simple marketing slogans? Can they be solutions or enhancements to “Reps and Warrants?”
- What are the new measurements and dashboards that are yet to be defined to ensure returns and achievement of said goals?
Green is not a panacea. It is not a shield for loss or failure. So how can it be used? Mr. Anderson states, “Using a comprehensive approach for green offerings, organizations can avoid many of the challenges consuming precious organizational resources. Green solutions, if properly implemented, imply integrated electronic interchanges, data integrity, due diligence, compliance, collection, dispersion, and various forms of intelligence. When you cohesively review the financial impact for many mortgage operations, the use of green benefits everyone that touches or has an interest in the process – borrowers, lenders, politicians, lawyers, and of course, the investor.”
Mr. Balaji proved very passionate, yet pragmatic about his beliefs and actions for their corporate green approaches. “Organizations must create models for shareholder value. These models cannot be in conflict with environment and social concerns. Sustainable contributions can only be achieved with internalization and empowerment of individuals carrying out the green ideas, products, and services. Specialized and proven social technology has been developed and will continue to accelerate. Organizations must utilize the lessons learned from others and seek help or assistance if they are struggling where to begin. Monitoring, controls, benchmarks, and accountability must be ingrained within the delivery processes.”
As a result of these discussions stimuli and research, I endeavored to create a “picture” from the seeds of green that exist in the marketplace. What grew was a tree.
What became obvious when the tree grew, was that green is far more than a one-off idea or product. It’s more than the buildings, energy, or even electronic documents. Green is a model that requires layered offerings, forward thinking, short-term profitability, and long-term growth. It is, perhaps, as Mr. Balaji states, a “triple balance.” Call it what you will, define it how you must; it is the right thing to do for not only the environment, but perhaps our operating survivability within a very troubled industry.
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