As lending volumes decline, many financial institutions are looking for ways to reduce overhead costs while increasing operational efficiencies, in order to maintain their competitive advantage in a down market. On Jan. 31, a group of industry experts gathered at the MBA's Residential Loan Production Conference in Los Angeles where they participated on a panel titled Alternative Work Methods: How to Improve Your Margins in a Declining Market. At the session, attendees learned different approaches to help reduce the costs of loan origination and increase operational efficiencies while stimulating production. A few methods the panel focused on included variable resource allocation, expanding business channels, leveraging technology for data analysis, workflow and automation of processes, and document management.

Moderated by Chuck Kimball, vice president of product management support for Mortgage Cadence, the panel included Kamel Boulos, IT director for Homefield Financial, Ed Figueroa, western area sales manager for Kofax, Craig Focardi, research director for TowerGroup, and Dianne Senechal, president of CLC Home Loans. Combined, the panel's knowledge spans many financial and technological arenas including mortgage operations, consumer lending, retail banking, risk management, document automation technologies, and information technology.

During the session, Senechal and Boulos spoke about their experience as lenders in the industry. Together they addressed how they have used their past experiences and applied them to the current market situation in order to strive even in a down market. Senechal suggested expanding across multiple business channels and finding ways to vertically integrate a company as ways lending companies can maintain a competitive advantage in the industry. In addition, she mentioned the importance of defining differences between your competitors' business channels as these can help improve your own process and flow. Boulos discussed marketing analytics, lead management, workflow, business process automation, and integrated compliance. He stressed the importance of maximizing marketing dollars by analyzing marketing campaigns, tracking drop off ratios and examining denials. Boulos also emphasized the significance of monitoring loan officer efficiency in order to decrease lead to funding times, and integrating compliance checks into the loan origination system for faster data analysis.

Figueroa, a vendor in the industry, understands issues critical to those in the financial services industry. As the concept of e-Mortgages grows increasingly popular, he has seen a corresponding increase in the public's interest of advanced data capture. Figueroa compared the paper-based process to the electronic process. He addressed not only the time savings but also the physical cost savings – such as a reduction in the amount of storage facilities, filing cabinets, and printer paper needed – that can be achieved with this technology and applied to a lender's bottom line.

Bringing an analytical perspective to the panel was Focardi who focused on production volume, profit margins and IT spending. Focardi discussed industry trends he has seen, including the fact that loan volume and operational costs are cyclical which disrupts industry IT spending cycles. Instead of decreasing IT spending during this time, he stated that automating processes through technology can actually reduce cyclicality and cost ratios. Focardi declared that many top companies have had great success achieving these goals and by continuing IT spending in down cycles they created a competitive advantage through their technology related cost advantage.

Throughout the session, the panelists produced firsthand experience of the challenges many are facing in the market today and provided some insight on how to get through these tough times. Together the panelists determined that both business and technology strategies will work to help reduce costs and increase efficiencies. However, the common theme in all of their presentations was the importance of leveraging technology to reduce the pains of a cyclical market, positively affect cost ratios, and automate processes that are costing lenders time and therefore money.