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Ellie Mae Study Shows How Data And Analytics Make The Mortgage Industry More Efficient

With interest rates near record lows, mortgage lenders are being inundated in the current high-volume market, increasing the need to use data and analytics tools to become more operationally efficient. A new eBook from Ellie Mae, now part of Ice Mortgage Technology and Intercontinental Exchange, Inc. (NYSE: ICE), analyzes how lenders are using data and analytics to increase efficiency, make better lending decisions, control costs, identify and mitigate risks, establish repeatable and measurable processes, and uncover new business growth opportunities. 

“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.” 

Ellie Mae’s Data & Analytics survey found that two out of five (39%) lenders could not say how much their companies spent on data and analytics in 2019. That shows how inconsistent the industry’s current use of data is to inform strategic business decisions. Lenders large to small are starting their data journeys from different points, have access to different resources, barriers to adoption, and abilities to implement a data and analytics strategy.

Ellie Mae found that it is far more common for large lenders to have a clearly defined data and analytics strategy (60%), compared to small and mid-size (55%) lenders, who are more likely to be in the early evaluation stage of their data journey. 

“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,” he added. 

According to Ellie Mae’s Data & Analytics survey, lenders are all over the map when it comes to their data and analytics journeys. 

  • Descriptive Phase: 37% of lenders have just begun their journey. They can see simple facts about past business performance. 
  • Analytical Phase: 36% of lenders have reached the stage where they not only understand what happened, but why it happened, too.
  • Predictive Phase: 24% percent of lenders have taken it a step further and are using data to see patterns and meaningful trends that affect their business. 
  • Prescriptive Phase: Only 3% of lenders are far enough along their data journey to conduct the type of prescriptive-level analyses that can inform how they should make future decisions, for example, recommending loan programs for specific applicants based on a set of predetermined factors.

Forward-thinking lenders know that data can unlock the secrets to understanding and anticipating the needs of their business, their customers, and the broader industry.