New Opportunities, Old Silos: Why Mortgage Lenders and Servicers Must Break Free


The mortgage industry was traditionally marked by silos that got in the way of customer experience and operational efficiency. A borrower experience survey found that just 39% of customers were “very satisfied” with their lenders in 2018, leaving the vast majority of customers either dissatisfied or largely indifferent. This can be traced back to deep-rooted silos in the backend that cause effort duplication, slow down processes, and add to your overheads – distracting mortgage lenders and service providers from focusing on the value-adding part of their business. It is no surprise, therefore, that the industry is now looking to adopt digital transformation at a record pace. By addressing these old silos, you can pave the way towards new opportunities and business growth.

Siloed Infrastructures Are Costing Lenders and Mortgage Service Providers

Data and system silos are pervasive in the mortgage industry. The average mortgage repository is broken into multiple disparate systems with no unified metadata to manage it all. This complicates the query process whenever a mortgage customer asks to retrieve a history of activities, or a regulatory change needs to be applied to an information set.

Also, documents are duplicated many times over as they travel through multiple systems and see multiple versions. When a mortgage is securitized or sold, the problem intensifies. Some of the ways in which a siloed infrastructure could be costing your business include:

  • Unnecessary effort duplication – To answer a single query, more than one staff member must search through several systems. There is no single source of truth, and the risk of error remains.
  • Fines and penalties – If an incorrect query result is returned to a mortgage customer, the lender may incur a fine. Over time, these penalties add up – despite being fully avoidable.
  • Fragmentation of documents – Inefficient handling of documents in mission-critical processes like, say, asset-liability management (ALM) could negatively impact decision-making. Maintaining documents as they grow year on year is time-consuming without a centralized infrastructure. And, in case you need to fetch all the documents related to a single mortgage in response to a subpoena or a regulatory query, the time, effort, and cost involved is formidable.
  • Technical challenges – In the long-term, silos cause a plethora of technical risks in your organization, from data quality issues to limited readiness for analytics.

Ultimately, it is both the end-customer and the mortgage business that suffer. It is for these reasons that nearly 3 in 4 lenders now believe data initiatives to be crucial for success and are actively investing to break free from silos.

The Benefits of Integration and Building a Single Source of Truth

A single source of truth is vital if lenders are to modernize their business.

To achieve this, you need intelligent digital transformation with a focus on integrating the legacy systems that have evolved over the years to keep pace with the industry. According to a 2020 survey by Freddie Mac, 81% of mortgage lenders are pursuing digital transformation “aggressively” or “very aggressively”, with 48% looking to transform their front and backend systems, including integration. This unlocks the following benefits:

  1. Improve data accuracy and consistency

This is the most attractive quick win you will see when breaking free from silos. By implementing consistent data standards and connecting backend systems, organizations can identify errors, remove duplication, and enforce data retention rules as per the law. 41% of lenders who have undertaken data initiatives report consistency and accuracy as the biggest benefit.

  1. Prepare your landscape for cutting-edge digital programs

Most of the newest innovations in the mortgage digitization space require integration as a prerequisite. For example, you cannot run business intelligence and predictive analytics on datasets spread across multiple systems, or are marked by duplication/errors. Similarly, it is impossible to automate a workflow if different interfaces exist in silos, without any interoperability. By integrating your infrastructure, you can lay the foundations for digital maturity and eventually adopt tools that will help add to your margins.

  1. Reduce costs and boost productivity

Without silos, you are likely to see efficiency gains from a number of sources. First, fewer employees are required to handle the same volume of knowledge management tasks, so you can save on FTEs. Second, employees can perform the same task in a much shorter period of time. Finally, the risk of fines and penalties will decrease, improving both your market positioning and the bottom line. Together, these translate into a massive cost advantage – for example, research suggests that digitization and integration can reduce loan origination costs by 25-50% and pull-through rates by 20-25%.

  1. Nimbly adapt to new regulations

Mortgage has always been an arena for constant regulatory change. In the wake of a crisis scenario like the 2008 economic turmoil or the recent pandemic, lenders can expect a new spate of rules and regulations. For instance, the Consumer Financial Protection Bureau (CFPB) is looking to alter mortgage lending requirements, which includes revisiting the current 43% debt-to-income ratio limit. Foreclosure rules have already undergone several iterations, and all of these put pressure on lenders to quickly adapt their systems and processes.

An integrated infrastructure – without silos – makes it possible to institute sweeping changes at one go without having to tinker with multiple, disparate configurations and business rules. This increases business agility while ensuring that you stay compliant.

Partner with a Mortgage Tech Guru

There are two problems you could face when pursuing integration in a bid to break free from silos. Mortgage lenders and servicers typically work with engagements that have lasted for years or even decades. Standardizing and migrating data that has accumulated as well as evolved over this period can be a challenge. Also, companies may be using multiple software tools that aren’t designed for native integration. That’s where an experienced and vendor-agnostic mortgage technology expert can help.

At Nexval, we bring several decades of experience in the mortgage industry, combined with field-tested expertise in silo mitigation and data integration. Our end-to-end solutions are built on a total experience approach, incorporating artificial intelligence and machine learning to fast-track your time-to-value from digital systems.

As digitization becomes a market differentiator for mortgage leaders, you must start by questioning silos. Speak with a mortgage tech guru to kickstart your journey today.

Subhankar Saha

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