Industry's Technology Spending at All-Time High
The lending community realizes the benefit of automating in a down market as technology spending is at record highs, according to research shared by Jordan Brown, chief executive officer at consulting firm MarketWise Advisors, at the 10th Annual SourceMedia Mortgage Technology Conference here.
In 2006, the top 50 lenders spent $30 million in technology alone, he reported. "Technology spending fluctuates depending on the market. We saw a dip in 2003 - probably because lenders were preoccupied with record volume - followed by a rebound in 2004 and 2005. Spending continued to increase in 2006 and will likely level off this year at a record high.
"The key areas of technology payback for lenders looking to invest are workflow integration, automating business flow and offshoring. In deciding on what to spend on I stress that lenders rely on what they know and forget intangibles," noted Mr. Brown. "ROI from intangibles will come, but should not be counted on."
Sheer number of dollars being spent aside, most observe that the majority of the money isn't going toward innovation. "Despite all the spending very little is going toward innovation," added Brian Fitzpatrick, president at integration vendor Lydian Technology Group. "Lenders seem to think that if they change an old system everything else will break.
"In spending technology dollars lenders need to take steps to avoid vendor lock. I'm happily married to my wife, but I don't want to be married to my vendor. Lenders need to invest in open systems to prepare them for the future. Old legacy systems won't cut it."
"The top 150 lenders have to be making decisions based on a strong need to get out legacy systems," said Michael Jackman, chairman of Web-based LOS vendor Lending Space. "Beyond that, lenders want to reduce cost. They're looking at automating business flow and doing more with less."
One way to use technology to gain a competitive edge is to focus more closely on the point-of-sale, advised Bill Adamowski, CEO and co-founder at origination vendor MortgageHub. "Lenders should be looking at technology at the point-of-sale to help them capture the borrower. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com