Originating Relationships
Obtaining a mortgage often is a once-in-a-lifetime event for consumers that provides lenders an opportunity to secure customers for years to come. Yet, this steady relationship can be a double-edged sword. Since mortgages are not transaction-heavy products, mortgage bankers sometimes are unable to create the same dynamic relationships with customers as with other lines of business in the bank. As a result, many on the mortgage side are turning to IT to help foster a more customer- centric focus with an eye on future revenue generation. >>
The trend likely is a reflection of the overall push in financial services to build a service-oriented culture. However, the movement is even more pronounced in the mortgage area with the slowing of the refinance market.
"People are concerned about the slowdown in refinancing volume on mortgages [because] they're getting less business at tighter margins," explains Brian King, practice manager for consumer lending and mortgage banking with Atlanta-based Benchmark Consulting International. "Also, the cost for mortgage origination increases every year because a lot of mortgage companies ramped up staffing and capacity during the boom. They were able to spread this over fixed loans. Now, they can't do this as much."
There is a definite concern among mortgage bankers about making money in such a capricious sector. "From an operations point of view, being able to handle the fluctuation in demand and maintaining proper staffing levels is a major concern," comments Tom Wood, director of operations for Wachovia Mortgage, a division of Charlotte, N.C.-based Wachovia ($521 billion in assets).
As the refinance bubble starts to deflate, it is even more important to look at one's customers, stresses Linda Zack, vice president of the mortgage group with Columbus-based Huntington Bancshares ($32 billion in assets). "The industry is moving into a new, more normalized climate now," she says. "So we have to make sure we're still addressing our customers' needs as the refinance boom comes to a conclusion."
To transform their shops into customer-focused operations, mortgage bankers face the same challenges as bankers in other lines of business. Platform complexity and data quality are integral when a bank's focus suddenly switches to targeted cross-selling and service.
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