Deploying advanced analytics in mortgage originations
Mortgage interest rates have been plummeting to historic lows resulting in skyrocketing demand. Total mortgage originations in the US for Q1 of 2021 breached the trillion-dollar mark; it stands at approximately $1.094 trillion. It was the highest quarterly figure since Q2 of 2002. With the dynamic mortgage market expecting further expansion, mortgage lenders are banking on advanced analytics to achieve greater operational efficiency, reduced costs, lower risks, and accelerated business growth.
Mortgage origination is the first touchpoint in mortgage life cycle. Traditional mortgage origination processes were highly manual. They are long, sluggish, paper-based, and prone to human errors. Today, mortgage lenders are increasingly deploying descriptive, diagnostic, predictive, and prescriptive components of advanced analytics. Advanced analytics provides tools and techniques, such as predictive modelling, machine learning algorithms, and business process automation tools that help identify opportunities, accurately capture and analyse customer information, pre-empt risks, and make better decisions. By adopting advanced analytics, mortgage lenders lay the foundations for an enduring and trust-based relationship with their customers.
High-impact use cases of advanced analytics in mortgage originations
Let’s explore how advanced analytics leads to meaningful outcomes in the area of loan origination.
1. Recruit top-performing mortgage loan officers:Advanced analytics helps mortgage lenders identify the best mortgage loan officers in specific markets using parameters such as educational background, work experience, expertise, and characteristics. Mortgage lenders can then recruit similar mortgage loan officers based on extrapolated information.
2. Increase leads and improve lead management:With advanced analytics, mortgage lenders can meticulously assess the quality of each lead and formulate a good sales and marketing strategy. The insights gained can be used to capture leads that are likely to convert better. Furthermore, advanced data analytics facilitates systematic lead nurturing for future engagement.
3. Implement adaptive loan routing:Multiple predetermined criteria can be fed into advanced analytics-powered routing systems to assign loan officers accurately. Moreover, skill-based routing can help assign each lead to a loan officer best suited to handle it, eliminating conscious and unconscious bias.
4. Enable real-time performance management:Using advanced analytics tools, mortgage lenders can activate live monitoring of loans to anticipate and address performance issues. These feature-rich tools also help in locating underutilised employees for reassignment and high-performing ones for retention. In addition, they allow the tracking of interventions, to improve the effectiveness.
5. Develop a future-focussed distribution strategy:Deploying predictive analytics for qualitative and quantitative projections helps mortgage lenders forecast customer demands. This way, mortgage lenders can optimise supply decisions based on market analysis and capacity models; this helps them match products with potential growth markets and the most profitable partners, such as brokers or realtors.
6.Make instant decisions on large-scale mortgage pre-approvals and mortgage loan approvals:Advanced analytics tools allow mortgage lenders in automating pre-approved loan offers and clearance of underwriting, based on internal data such as deposit statements and external data such as credit scores. They also enable mortgage lenders to apply rule-based logic for approvals and large-scale pre-approvals, limiting manual intervention only to exceptional cases.
7. Predict customer propensity for mortgage loan prepayment or repayment:Advanced analytics helps mortgage lenders leverage predictive variables based on customer data, such as payment history, credit score, income flows; as well as macro data, such as mortgage rates, inflation, and unemployment rates, to assess the propensity of a customer to prepay or repay the mortgage loan.
8. Improve customer retention:Advanced analytics tools make it simple to ensure customer retention through targeted and personalised retention programs to nurture customers, cultivate referrals, and identify cross-selling and upselling opportunities. These tools also help measure customer retention rates, enabling the calibration of customer retention strategies.
Key benefits of advanced analytics in mortgage
Lending has become a highly data-driven process. Mortgage lenders are increasingly opting for process automation, augmented by advanced analytics techniques. This helps reduce the time required to extract meaningful data as well as for real-time decision making. Advanced analytics employed in the mortgage origination domain helps mortgage lenders:
Select and segment customers
Formulate strategies for mortgage offers
Predict the probability of delinquency
Detect credit fraud
Digitise and automate complex workflows
Reduce turnaround times
Accelerate the ROI
Improve customer satisfaction
How Infosys BPM can help?
Infosys BPM provides an end-to-end or customised mortgage process outsourcing solution. Our proven expertise spans processes across the mortgage value chain — from origination through secondary marketing, servicing, and default management. Our offerings include:
Origination support services
Pre-fund QC audits
Post-close QC audits
Warehouse line QC compliance audits
Whole loan purchase review
Mortgage repurchase and indemnification support
Advanced data insights enable mortgage lenders to establish and retain competitive advantage by consistently outpacing emerging trends. This provides agility and hyper-productivity by streamlining workflows, automating the underwriting process, and enabling real-time decision making.* Advanced analytics is geared to helping mortgage lenders push the frontiers of loan origination with a parallel view and robust understanding of past, present, and future data.
*For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet a modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.