Mortgage Lenders Can Improve Their Profitability in The Existing Market
by Shamit Vohra
The financial crisis combined with the rising Federal interest rates have resulted in a significant slowdown in the business prospects for mortgage lending. Both new mortgage originations and refinances have dried up.
Dwindling Number Of Mortgage Originations In The US (Source)
Large reputed lenders like JP Morgan Chase and Wells Fargo have been forced to cut down their costs. The challenges for the medium or smaller players in the industry are even higher. Unfortunately, the demand side scenario also appears unlikely to change, as the Fed is expected to continue raising interest rates at least until the end of 2019.
Now, given this challenging environment, there is a pertinent need for lenders, especially the mid-sized and smaller ones to take some steps that ensure the survival of their business.
The Way Forward – Technology Adoption & Outsourcing
An optimistic answer to the bottom line related question lies in adopting technology and outsourcing routine tasks within the operating framework. A combination of these two can be a quick solution that drives tangible results. That’s because leveraging technology and outsourcing to offshore teams helps:
- Raise operational efficiency
Technology brings efficiency. It automates redundant aspects of the workflow, increases processing speed and reduces occurrence of costly manual errors. Outsourcing work to offshore teams helps operations run like clockwork. It lends immense workflow efficiency as on-site routine tasks can be delegated at the end of the day to the offshore teams to carry out before the next working day.
- Cut Down Operating Costs
Technology helps to cut down costs by reducing expensive labor hours required for manual tasks, and eliminating the possibility of errors. This along with the labor cost arbitrage brings significant savings on the operational front.
- Carve Out A Competitive edge
Naturally, with a higher speed of processing combined with lower costs, any adopting company stands the chance to provide a better service experience to its customers. With the right combination of automation and delegation, the in-house resources can focus more on business acquisition and higher customer satisfaction, carving out a competitive edge for their company.
The Only Challenge With This Solution
Now, even though the above solution looks ideal in terms of moving checklist driven processes and helping the lenders, its applicability for all lenders may be limited. Investing in a brand-new custom technology stack, or maintaining your own offshore team can cost a lot of money. Both of them require a high upfront capital investment which is usually out of reach for the mid to small sized players. Moreover, large time span is needed to iterate towards efficiency in a custom solution. As the loan volumes are highly fluctuating in nature, what lenders need is actually a variable cost structure that is bundled with the option of on boarding efficient technology and a flexible workforce on a need basis.
The Answer Lies In Zero Cost Technology & Hybrid Models
In order to counter the budgetary challenges and the low risk capacity, the most intuitive solution lies in the zero cost technology and flexible hiring model. It’s a winning proposition that allows catering to the fluctuating demand in a very cost effective manner.
Zero cost technology basically provides all the benefits of technology and comes with no upfront capital costs. It is a ‘pay-as-you-go’ model that allows companies to benefit from technology without taking the risk of raising their fixed costs. Charges of usage totally depend on the workload, and need not be incurred at all during lean periods.
On the other hand, following a flexible hiring model that deploys both on-shore and off shore talent teams in a hybrid fashion is another very smart approach to optimize on talent costs. Visionet offers its services tailored for the mortgage industry needs. With the help of their digitally powered outsourcing services and technology innovations, you can scale your business easily and maximize your profitability. Learn more about our flexible engagement and variable pricing models here.