Magazine article Mortgage Banking

How Can You Grow Your Revenue and Profitability Now?

Magazine article Mortgage Banking

How Can You Grow Your Revenue and Profitability Now?

Article excerpt

The answer: Look to untapped loan servicing options while market conditions are challenging traditional production channels. This is the time to generate more revenue by getting in front of your customers with right-time offers for additional lending products. It's also the right time to protect your margins with an efficient back office.

With current market conditions, it has never been so important to understand all of the loan relationships a customer has--and does not have--to fuel cross-sale opportunities. To see the credit capacity of a customer requires a technology platform that ties all of the customer's loans--including mortgages, home-equity lines, unsecured lines, installment and indirect loans--together without the limitations imposed by disparate and potentially outdated systems.

By managing all loan accounts on one system, financial institutions will be best-positioned to cross-sell new products and grow customer relationships. In addition to revenue generation, a multi-product servicing system holds down costs--the other critical factor in increasing institutional profitability.

Combining mortgage and consumer back offices creates opportunity

Imagine the operational benefits and cost savings of being able to support all types of collateral, interest and payment calculations on one platform. With a loan servicing platform that manages all the nuances of today's consumer and mortgage loan products, servicing operations will have distinct cost-containment, product-creation and customer-service advantages.

Information technology (IT) costs will drop dramatically as multiple servicing systems and wraparound technology and interfaces are eliminated. Think of the time and cost savings an organization gains by having just one system and set of interfaces to maintain. In fact, one platform would manage payment processing, customer service, collections/default, escrow and securitization for all loan products.

Guaranty Bank, Brown Deer, Wisconsin, a full-service retail bank, has elected to consolidate its consumer and mortgage lending back offices to generate operational cost savings. To benefit from economies of scale, standardize its processes and accelerate cross-training across its lines of business, the bank uses Brookfield, Wisconsin-based Fiserv Inc.'s Fiserv Loan Servicing Platform.

Guaranty Bank currently services its 70,000 mortgage loans using the technology, and is in the process of converting its home-equity lines, auto loans, indirect loans and installment loans to the platform.

"By moving all of our consumer and mortgage loans to the Fiserv servicing platform, we will derive benefits from a process perspective, a cost-to-service perspective and from an efficiency perspective," says Steve Petersen, vice president of loan servicing for Guaranty Bank. "Efficiencies are created when the same process is applied to all loans."

Generate revenue by supporting consumer loans with mortgage functionality

Convergence of consumer and mortgage products is one factor Jeff Morrow, executive vice president of Dollar Bank, Pittsburgh, says was behind the financial institution's decision to put both its mortgage and home-equity loans onto a single platform. With more than 50 branches located in the metropolitan areas of Pittsburgh and Cleveland, Dollar Bank originates primarily prime mortgages and a full range of consumer loans.

"A significant portion of our home-equity portfolio has evolved into a first-lien position. Years ago, Dollar Bank didn't have to worry about collecting tax and insurance payments for a home-equity loan because it was a second lien, and the first-lien holder was doing the escrow accounting," says Morrow. "The functionality that used to be exclusive to the traditional mortgage market is now required on the consumer loan side. We now have the need to escrow for home-equity accounts, and that is one of the reasons we decided to go to the Fiserv platform. …

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