The Mortgage Banking market has been through some good times and some turbulent times in past 20 years. From the mid 90s when the market was at its lowest and then reaching its peak in early 2000, then tumbling again during late 2000 to catch up again again around early 2010, it has been nothing short of a roller coaster ride for the market players.
The table below depicts how technology and outsourcing has evolved over these years. Outsourcing will play a crucial role that for the industry players to remain competitive, profitable and most importantly remain in compliance with complex federal, state and local regulations.
|Prime events||Origination Market||Servicing Market||Technology Play||Outsourcing Play||Management Focus|
|Phase I||1995-2000||Y2K Era||Beginning of Technology Outsourcing to cope up with Y2K challenge||Coldest||Coldest||Lowest||Lowest||Do More with More at More|
|Phase II||2000-2005||DOT Com burst & Housing Surge||Economic downturn followed by re-bound due to low interest rates to reach peak in 2003||Hottest||Cold||Low||Low||Do More with More at Less|
|Phase III||2005- 2010||Sub-prime Crisis & Market downturn||Economic crisis lead by sub-prime. Companies focus on “Cost”, offshoring is the new management mantra to stay afloat in crisis||Cold||Warm||Medium||Medium||Do Less with Less at Less|
|Phase IV||2010-2015||Quantitative Easing Era||Government keeps the Economy afloat with QE.||Warm||Hottest||High||High||Do More Accurately with Less at Less|
|Phase V||2015 & beyond||Road to Recovery||Government QEP to be relaxed, market cautiously moving back towards Non-Agency private label securitization||Cold||Hot||Highest||Highest||
Do More Accurately and Efficiently with Less at the least
Clearly the market has slowly but steadily embraced technology and outsourcing as their core enablers to grow during market peaks and maintain sustenance during market lows.
In the future, players in mortgage banking who optimize both the levers of internal production readiness and outsourcing will be the ones who will endure and lead in the future. Organizations that do not have the tools and technology and appropriate variable capacity management plans do not keep up have a fair risk of losing competitiveness in the market. On the contrary organizations that innovate with new tools and technology and consistently fine-tune their workforce are likely to sustain, grow and lead.