As 2015 comes to an end and we gear up for a new year, we’ve pulled together some financial and mortgage servicing trends to anticipate in 2016:
1. Increased Importance of Risk and Compliance Roles
With CFPB regulatory changes perpetually rolling down the pipeline, financial institutions and mortgage servicers are working double time to meet compliance standards. As a result, they are spending millions of dollars on compliance resources alone.
A recent article in eFinancial Careers states that “with CCAR deadlines in March, [financial institutions] are going full throttle with hiring permanent employees, as well as seasonal consultants” in risk and compliance roles. Because of this increase in hiring in financial institutions, a greater emphasis on regulation standards, as well as cost analysis, will need to be in place. The “all hands on deck” mentality in risk and compliance will continue to be a challenge for institutions as they focus on core competencies.
2. Loan Interest Rate Hikes
Mortgage servicers anticipate a little reprieve in 2016 with rising interest rates to help balance portfolios. That being said, the challenge will still lie in managing existing non-performing loans.
To read more on National Mortgage News, click here.
3. Alternative credit-scoring models available to Fannie Mae and Freddie Mac
FICO will no longer be the sole resource for credit scoring in the mortgage space thanks to a recent bill introduced by U/S/ Rep. Ed Royce and U.S. Rep. Terri Sewell.
“Together, Fannie Mae and Freddie Mac occupy 90 percent of the secondary mortgage market. The use of one credit scoring model has nearly created a monopoly in this field. Reps. Royce and Sewell suggest that additional credit scoring models would "foster competition and innovation in the credit scoring industry." -DS News.
4. Increased Federal Reserve’s Fed Funds Rate
According to the August NCUA Report, The Federal Reserve’s Fed Funds rate is forecasted to reach 2.5% by the end of 2016. The economic improvement means consumers will be more likely to invest in bigger ticket purchases such as car loans and mortgages, which make up approximately 85% of a credit union’s aggregate loan portfolio. For more information on how the increased Federal Reserve’s fed funds rate can help credit unions, visit CUNA.org.
With the presidential election around the corner, there are likely to be many additional changes and trends to the financial and mortgage servicing landscape in 2016. What are your predictions for 2016 and how do you think they will affect your organization?
IN-HOUSE VS OUTSOURCING: 2 CRITICAL POINTS TO CONSIDER IF YOU ARE PROCESSING YOUR CUSTOMER DOCUMENTS IN-HOUSE
Businesses managing their customer document production and delivery in-house typically do so because they feel they have more control over materials and production costs. While these objectives are synonymous with positively affecting a business’ bottom line, there are a few things to consider in ensuring your business is efficiently achieving these goals and simultaneously adapting to constant technological changes in the marketplace.
1. Do you measure your response rates and look for ways to increase them?
One of the main objectives in sending documents to your customers is to encourage a response from them. Electronic Adoption is a hot topic these days- and it will continue to grow in importance in the realm of customer response rates. According to an article on Forbes.com, there are eighty million millennials in America alone, representing about a fourth of the entire population. This generation has grown with the rapid changes in the technological landscape, meaning the traditional way of reaching customers by mail has decreased dramatically. What does this mean for your business? It means that evaluating operations beyond what your business does today is crucial. Real process improvements require strategy and direction.
Outsourcing document production and delivery to a partner who doesn’t just duplicate your current efforts, but instead understands the importance of process improvements and staying ahead of the technological curve are vital. The right partner will not only look for ways to save your business time and money, but also for effective ways to encourage revenue growth.
A great outsourcing partner can be used as a consultant and will be a valuable source of information on new trends, electronic adoption and delivery methods, advances in equipment technology, and software. As a consultant, your partner should work to understand your objectives and present ideas, workflows and cost savings ideas.
2.How much are you REALLY spending?
Typical in-house operations have evolved over many years, yet they continue to use fully depreciated equipment and dated technology. Additionally, it may be inefficient to leverage staff members for document processing when their main responsibilities are to respond to the daily demands of the business’ core competencies. Some questions to ask yourself about how much your business is really spending on in-house document processing are as follows:
-What is the annual maintenance for your document composition software? The upfront costs of document composition software are costly. Tack on annual or bi-annual software updates, and your business can find itself either spending more money to stay on pace with the technological advances, or falling behind the curve.
-How much space is dedicated to your print shop? This includes printers and warehouse space for consumables, as well as printed documents that are being held before mailing.
-How much do you pay for parts, maintenance and consumables? Printers handling high volumes of documents are bound to require regular maintenance, as well as replacement parts. Toner and paper are, of course, the core consumables to consider when producing paper documents.
-How many employees are you using to format documents, run the printers, insert and mail documents, and manage return mail? Time and manpower directly correlate with your business’ cash flow.
In-house processes may seem to be working for you today, but considering these points will give you a better idea on what to do moving forward.