Bundling: Is your company prepared?Shawn McGowanbundled services, pros and cons, bundling partners
The Real Estate Settlement Procedures Act (RESPA) reform that
was proposed last year by the U.S. Department of Housing and Urban
Development created a stir among many market professionals, but
also opened eyes and sparked interest in others. The prospect of
RESPA reform may have been shelved temporarily, but new business
trends were born from underlying concepts driving the proposed
regulation, one of the most notable being bundling. Even businesses
outside of the housing arena have become privy to (and are
currently taking advantage of) the benefits of an all-in-one
solution. These companies are making efforts to combine synergies
and offer consumers competitive advantages.
Much debate continues in the marketplace as to exactly what
constitutes a bundled offering. Is it simply a pricing package that
lenders can offer consumers or is it actually bundling product data
and delivering merged underwriting information? Additionally, much
uncertainty remains as to how and when the bundling issue will
resolve. No one knows whether business models or regulations will
drive the service, but one thing is guaranteed: bundling is a
rising trend in the marketplace and is catching on quickly. Is your
company strategically positioned to remain competitive and
successful in a bundling world?
Advantages of bundling
The RESPA proposal created additional momentum for bundling within
the marketplace, motivating many firms to evaluate current
settlement services strategies and prepare for a bundling platform.
Proponents of bundling have touted the advantages of a complete
platform for years. There is some industry reluctance in terms of
forced regulatory reform, but combining settlement services can be
advantageous to all parties involved in the closing process.
Consider the circumstances. The consumer wants a simplistic and
pain-free process. Providing one fee for all closing costs is not
only time-efficient and cost-effective for borrowers, but also
brings a value-add to the marketplace. Obviously, packaging
settlement services is a win-win for the consumer and when
approached tactically, it could result in huge savings for both
lenders and the various third parties involved. Therefore, it is
imperative for industry players to prepare for what lies ahead. The
underlying factor is that consumers drive business and revenue; as
an industry, we must adjust to their changing needs, which means
adopting the fundamentals of a bundling platform.
From an appraiser's standpoint, bundling provides a premium
opportunity to increase business and gain awareness in the
marketplace. For example, if an appraisal company bundles services
with a title company, both companies gain access to a number of new
prospective clients, while providing added value to existing
clients. It is a linear relationship that enables partners to offer
competitive services to consumers looking for the most convenient,
yet efficient solution.
All constituents of the closing process are important to
consider when bundling services and all parties can benefit from
combining offerings. In addition to saving time and resources, a
bundled platform is an excellent marketing opportunity for
companies. Being able to promote a bundled services offering could
be a key differentiator for companies in an increasingly crowded
marketplace. The central theme is this: The only way bundling makes
sense from a regulatory or business standpoint is that the sum of
two parts together is more efficient than the two standing
What steps can your company take to prepare for
If we now believe that bundled services are coming in some form, it
is just a question of when and how. What steps is your company
currently taking to prepare for the shift? There are many factors
to consider in the decision to become a bundling partner, but
perhaps the foremost areas to consider are operational and
technology capabilities, parallel initiatives and business culture.
Certain operational and technological capabilities must be in place
to become an efficient bundling partner. A viable production
platform is an obvious necessity to handle all orders. Further, the
bundling partners must have a solid integration of technologies to
make a more effective bundling solution.
Parallel strategic initiatives between
Making sure that strategic initiatives match with potential
partners is key to maintaining a successful bundling relationship.
First and foremost, the partnership must make sense. Understanding
your partner's business and operational model is the first step to
securing an affiliation. Two entities must efficiently exchange
product information and truly understand the process behind all
company decisions and procedures. For example, if a lender decides
to offer bundling services to their borrowers through an appraisal
and title company bundling initiative, the lender should take every
initiative to understand the synergies created by the bundled
products in order to better serve their borrowers. In this way, a
value proposition is created that benefits all of the participants
in the bundling initiative. This is a way to proficiently handle
resources and create a partnership that will guarantee a true
return on investment (ROI).
Combining settlement services provides consumers with a more
attractive product offering that should drive more business and
create an ROI to the lender. Partners should hold the same
responsibility to manage more successful ROIs by creating workflow
efficiencies. This is accomplished by acquiring partners that match
not just in size and stability, but more importantly, in culture as
well. Two companies must truly believe in a partnership that will
bring added value to both companies and provide a bundling solution
that will offer prices that are more competitive. When the bundle
has found balance with all participants, it is likely durable
enough to withstand the pressures of an ever-increasing competitive
What makes a good bundling partner?
It is important to choose your bundling partners wisely. Each
company and/or person may have differing views on what makes a
successful partner. I believe one important aspect of securing a
strong partnership is the value each party places on customer
service. A good partner understands all product offerings along
with their benefits and liabilities. All of these products become
part of one central domain and all parties should be coherently
aware of each one to prosper as a bundling provider. It needs to be
understood that the weakness of any one product or service weakens
the bundle and can affect all of the bundling partners. Said
differently, it is not just important to find a partner that can
create bundled products, it is more important to find partners that
deliver great products and services that can be easily and
efficiently bundled. In this way, all products, those bundled and
those delivered outside of a bundle, are assets to the partnership.
Bundling must be a true added value and not an offset to a product
weakness or service.
So, are you ready?
In order to answer this question, I would suggest the following
•Know yourself and your organization.
Whether you are a lender, a vendor or a value-added intermediary,
you need to know if bundling is part of the strategic plan.
Bundling will take commitment. Decide if this commitment fits your
•Know your products and services. It is
critical to know if your products and services will hold up their
end of the bargain in a bundling initiative. Otherwise, you are
setting yourself up for disappointment, along with your partners
•Know your prospective partners. No matter
how good your products are as stand-alone offerings, the wrong
partnership will be challenged to be successful. Choose
•Know your marketplace. This really speaks
to the pressures that any bundling initiative will face.
Flexibility and commitment will be two important keys to
Shawn McGowan is president and CEO of Valocity, a national
valuations solutions provider. He may be reached by phone at (866)
367-8611 or e-mail [email protected]