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Ellie Mae conducted a study that outlines how data and analytics have driven efficiencies in the mortgage industry, especially in a time where record-low interest rates have significantly increased volume for lenders. The findings were published in an eBook from the mortgage tech giant, now a part of Ice Mortgage Technology and Intercontinental Exchange.
"The proper use of data should create a virtuous profit cycle," said Joe Tyrrell, president of ICE Mortgage Technology. "As lenders shift to a data mindset and use it to identify and correct competitive disadvantages, market opportunities, cost reductions and blind spots in their workflows, they can increase their throughput and profitability to invest in their continued growth. However, many lenders don't have a defined data and analytics strategy, which means they're missing out on opportunities to contain costs and accelerate growth for their organizations."
In fact, Ellie Mae found that 39% of lenders could not say how much their companies spent on data and analytics in 2019. According to Ellie Mae, this number represents how inconsistent the industry's use of data is to inform strategic business decisions. Additionally, the study found that 60% of large lenders are more likely to have a clearly defined data and analytics strategy compared to 55% of the small and mid-size lenders.
"As the mortgage industry becomes more competitive, lenders will need to find new ways to leverage and analyze available data to be operationally efficient, differentiate, and grow their business," Tyrrell said. "It's not enough to use data to understand 'what' happened in the past. Lenders need to understand what is happening right now and what is likely to happen in the future, while they still have the ability to take corrective action and/or make critical decisions."
"Companies that implement and continuously improve their data analysis practices can reap the benefits of greater operational efficiencies, risk mitigation, transparency improvements, and streamlined processes. But the real value of data insights is to create a competitive advantage in positioning themselves in advance of emerging market trends, identifying ways to improve profitability before anyone else and most importantly knowing how to meet the expectations of their borrowers and drive differentiated customer satisfaction," added Tyrrell.