Today's blog comes from Peter Allen, Partner and Managing Director, TPI.
An update is in order on the world of mortgage processing outsourcing (MPO). A few weeks back I noted that most of the mortgage industry's top lenders developed their loan origination technology in-house and that there seemed to be some emerging interest in mortgage processing as a BPO.
Nowadays, the attitude is quite different. Most companies outsourcing mortgage processing are landing on the opinion that the marketplace is not mature enough to engage in MPO. That's because full turnkey MPO capability is just not evident today.
There are a multitude of service providers who claim capability, but what we've found is a high concentration on systems integration and applications-oriented services. Sub-functions do exist, but in terms of relevant operations, from origination, through servicing, payment services, and secondary market functions, the capabilities of the outsourcing industry are grossly incomplete.
If history holds true, what I suspect this implies is the potential for a spin-out, joint venture, or similar market-making move for creating a capability to service this increasing need. I remain convinced that the current fractured delivery model for mortgage-related services, with a preponderance of custom applications, must change in the face of the current market pressure around mortgages, especially in the US.
There's a fair amount of applications-oriented outsourcing underway for these legacy mortgage processes, so I wonder which service provider will step up and offer to build a real MPO business around their domain knowledge. Question is: Will the market-making move come from India, or from the more transformational players like Accenture and IBM?
