MBA 2004 Technology Study: Top Mortgage Industry Leaders Committed to Technology Investment
WASHINGTON - If credit unions involved with mortgage lending had any doubts about the impact technology has had on the mortgage industry, they just need to consider the following finding from the Mortgage Bankers Association's 2004 Technology Study: technology operating budgets in 2003 increased by 24% over 2002, and they're...
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WASHINGTON – If credit unions involved with mortgage lending had any doubts about the impact technology has had on the mortgage industry, they just need to consider the following finding from the Mortgage Bankers Association’s 2004 Technology Study: technology operating budgets in 2003 increased by 24% over 2002, and they’re expected to increase by an additional 12% in 2004. In addition, the study showed the technology capital budget increased by 153% in 2003 and expects to increase by an additional 47% in 2004. MBA SVP and Chief Economist Doug Duncan said the findings demonstrate the commitment to technology spending – both capital and operating – that has resulted from five key factors. Those factors include: * industry consolidation that has left companies in the position of needing to merge multiple and duplicative systems in to one for the sake of efficiency; * business is realizing the need to eliminate manual processes which lead to errors and increased costs; * the continous drive to integrate technology solutions from borrower to investor; and * the new regulatory and compliance requirements with more detailed reporting and an increased focus on customer retention initiatives in the face of increasing competition. The 2004 MBA Technology Study was designed to benchmark information technology costs, related practices in mortgage lending and servicing among a focus group that was made up of nine of the top mortgage industry leaders in the U.S. Other key findings of the study included: * total 2003 technology spending averaged $140 million per firm with 67% of technology spending dedicated to origination functions and 33% of technology spending to servicing functions. As mortgage volume declines, company technology budgets over the next few years are expected to focus on loan origination system conversions, consolidations, or systems development. * approximately 32% of technology operating expenses were related to outsourcing technology functions performed by business partners; * attitudes towards technology spending and project implementation have changed in the past year as a result of the need for better alignment business strategy, faster payback, and higher return on technology investment; * factors determining the value of technology investments are often difficult to readily quantify. While many consider Return on Investment analysis to be a priority, the original value propositions used to justify initial investments were not always revisited post-implementation of the technology. -
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