Over the next several weeks, our financial services team will be sharing observations on the current state of the mortgage industry, as well as trends we see gaining traction in future months and years. We’re calling this series Mortgage Matters, and it will feature insight on technology road-mapping, reducing loan origination costs, improving customer satisfaction, navigating the fluctuating regulatory environment, and retaining top talent.
State of the Mortgage Industry: Loan Origination Costs
Lower-cost mortgage origination is one of the key drivers of growth in the fintech lending industry. In fact, the American Bankers Association recently noted the rise in fintech lending and the need for others in the industry to take note and “respond to the fintech revolution.” In our second installment of State of the Mortgage Industry, we review using data to lower loan origination costs.
A key ingredient in implementing an effective cost-cutting plan is visibility into the cost and speed of manufacturing a loan – specifically the data produced by the loan origination system, which can be leveraged to drive better business decisions. Simply put, in order to lower the cost of originating and closing a loan, you need to know how much it’s already costing you to do so.
One way to do this is to aggregate that data into what tech types call a Single Source of Truth (or an Enterprise Data Warehouse). Establishing a SSoT/EDW should be a foundational element of your firm’s digital roadmap, your overall strategy to utilize technology investments to solve business goals.
Mortgage firms nationwide are struggling to develop these digital roadmaps. Many firms are struggling under the weight of legacy technology accumulated over time and exacerbated by volume growth. Their technology stack is outdated, not integrated, and ill-suited to handle a modern data payload. Such a stack depresses new technology initiatives and creates a vicious cycle of IT triage. The only upside is that the cost of maintaining such bloated and inefficient systems has opened up a window of opportunity for fintech and mortgage companies able to sort through the mess and create a digital roadmap for the future.
Other firms, eager to claim the title of “early adopter,” invest in buzzworthy, emerging technology – but without regard for how that technology will help them solve their business goals. Often, these investments become expensive digital paperweights.
The real-time visibility afforded by a well-drawn digital roadmap gives firms the ability to identify bottlenecks and other areas of friction. By automating and/or creating more efficient workflows, lenders can more quickly manufacture loans and do more with less. Automation done right can help ensure that headcount and loan volume are not linked.
The practical application of technology – beginning with the creation of a comprehensive digital roadmap – can lower costs across the board, including those associated with loan origination and closing.
Enter Saxony Partners. As the only management and digital consulting firm that combines deep experience in the mortgage industry and data management technologies, we can guide you down the right path.
Saxony Partners’ financial services team works with mortgage companies and services large and small, advising them on how to navigate rising interest rates, decreasing loan volumes, evolving regulations, and the never-ending need to differentiate from competitors.
Our goal is to help our clients do more with their data by turning it into a competitive advantage. Nowhere is this need more acute than in the mortgage industry, where data utilization will be the most pivotal factor in determining a firm’s future viability.
- Loan Origination Costs
- Customer Experience in the Age of Amazon, Netflix
- The Regulatory Change Environment
- Talent acquisition and attrition