MBA 2004 technology study: Industry leaders committed to tech investmentMortgagePress.commortgage,industry technology
According to the Mortgage Bankers Association 2004 Technology
Study released in mid-March, technology operating budgets in 2003
increased by 24 percent over 2002 and expect to increase by an
additional 12 percent in 2004. In addition, the MBA study shows the
technology capital budgets increased by 153 percent in 2003 and
expect to increase by an additional 47 percent in 2004.
Doug Duncan, MBA's senior vice president and chief economist,
cited five key factors for continued technology spending: industry
consolidation for increased efficiency, the elimination of
error-prone and costly manual processes, a continuous effort to
integrate technology solutions from borrower to investor, new
regulatory and compliance requirements with more detailed
reporting, and, finally, an increased focus on retaining customers
despite mounting competition.
The MBA 2004 Technology Study was designed to benchmark
information technology costs, related practices in mortgage lending
and servicing among a focus group consisting of nine of the top 15
mortgage industry leaders.
Other key highlights from the study included:
†Total 2003 technology spending (operating expenses plus
capital expenditures) averaged $140 million per firm, with 67
percent of technology spending dedicated to origination functions
and 33 percent of technology spending to servicing functions. As
mortgage volume eases, company technology budgets over the next few
years are expected to focus on loan origination system conversions,
consolidations and/or systems development.
†Approximately 32 percent of technology operating expenses
were related to outsourcing technology functions performed by
†Attitudes towards technology spending and project
implementation have changed in the past year due to the need for
better alignment business strategies, faster paybacks and higher
returns on technology investment.
†Factors determining the value of technology investments
are often difficult for companies to readily quantify. While many
companies considered return-on-investment analysis to be a
priority, the original value propositions used to justify initial
investments were not always revisited, post-implementation.
For more information, visit www.mbaa.org.