Data in the Modern Age

Why is Data so Important?

Nowadays we are overwhelmed by the data that is available to us. It is easy to get lost in numbers until it becomes data.

As a Business Intelligence Analyst/Data Analyst/Data Engineer/Data Scientist with all these buzz words the end goal of it is to give the organization or ourselves the right information to make meaningful decisions that can make a positive impact. That is the power of data.

Let us step into the real-world problems that we have, and I want to talk about the importance of data in the mortgage industry.

The mortgage industry is a heavily data driven industry. With the vast amount of data that is collected by banks, mortgage aggregators, brokers and third-party services that act as a bridge between the aggregators and banks, this industry has undergone significant transformation, and with the use of modern tools this has led to efficient operations and innovative services.

Having worked in the mortgage industry in Australia for good amount of time, I can definitely tell you that this is one of fastest growing and highly competitive sectors in Australia.

As we all know, with Great Power comes Great Responsibilities

The bigger the aggregator or bank, the chance of fraudulent loan applications also increases. This is where with the help of data and modern tech becomes really handy. With the implementation of AI and data mining we can definitely make out if the mortgage application is a fraudulent one or not.  One of the most commonly used algorithms for this is Regression Analysis.

Now imagine the power of this; the mortgage aggregator catches the fraudulent application well in advance and informs the bank about that application and the bank picks it up. This not only enhances the relationship between them, it will also make the bank feel safe accepting applications from the mortgage aggregator. This is definitely a win-win for both of them.

Giving Power to the Brokers and Customers

With heavy competition within the aggregator industry, imagine empowering the brokers and customers showing them the data on the quickest lender in terms of processing a loan application within the different stages of the loan. With the power of big data that dream has in fact come into reality.

Benchmarking and Positioning

With the data available now financial institutions now are in a position to benchmark their performance against competitors and also identify strengths and areas of improvement.

Benchmarking and positioning are critical strategies in the mortgage industry, helping companies to understand their performance relative to competitors and to carve out a distinctive market position.

Benchmarking

Benchmarking involves comparing a company’s processes, performance metrics, and services against those of industry leaders or best practices. In the mortgage industry, this can encompass a variety of metrics and practices.

Here are some of the key points:

• Interest rates and fees:
  1. Comparing the interest rates, origination fees and closing costs charged by competitors.
  2. Analysing how these costs affect market share and customer satisfaction.
• Loan processing times:
  1. Evaluating the average time taken to process and close loans.
  2. Identifying bottlenecks in the approval process to enhance efficiency.
• Customer service:
  1. Measuring customer satisfaction through surveys and feedback.
  2. Comparing customer service metrics such as response times, issue resolution and overall customer experience.
• Default rates and risk management:
  1. Comparing default and delinquency rates with industry standards.
  2. Assessing risk management practices and their effectiveness.
• Technology and innovation:
  1. Evaluating the adoption of new technologies such as digital mortgage platforms, automated underwriting, and AI-based customer service tools.
  2. Benchmarking the impact of these technologies on operational efficiency and customer experience.
• Market share and growth:
  1. Analysing market share in different segments such as first-time homebuyers, refinancing and jumbo loans.
  2. Tracking growth rates and identifying factors driving success.

In Conclusion

Data is the cornerstone of the mortgage and finance industry, underpinning every aspect of operations from risk assessment to customer service, operational efficiency, regulatory compliance and strategic planning. The integration of big data analytics and advanced technologies continues to drive innovations, enabling financial institutions to better serve their customers, manage risks and maintain competitive advantage. As the industry evolves, the importance of robust data strategies will only grow, making data literacy and analytics capabilities essential skills for financial professionals.