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Loan Servicing the Lone Bright Spot in Global Mortgage Outsourcing Market | Press Release

By | In The News

Non-banks have displaced traditional banks as leaders in the US mortgage lending market, spurring M&A activity and a strategic focus on customer experience.

Originations once drove the mortgage business process outsourcing (BPO) market, but more recently, with a decline in origination volumes, loan servicing activities are the primary source of the segment’s steady 6-10% growth rate, according to Everest Group. Loan servicing, with a growth of about 9-12%, is now being preferred by lenders to boost profitability because servicing offers a higher revenue per loan serviced. As of 2018, more than 50% of the FTEs in mortgage BPO were engaged in servicing-related activities.

In the U.S. mortgage lending market (the world’s largest geography for mortgages), lenders attribute the slump in origination volumes to higher interest rates and intensifying competition, particularly from non-banks, which command 51% of the market and have displaced traditional banks (40%) as leaders in the mortgage lending space. At a time when traditional lenders were focusing on providing a service channel to customers, non-banks focused on the entire customer journey, identified the pain points and designed experiences to address those challenges. As a result, non-banks gained market share despite offering higher or comparable rates. Today, banking institutions of all types rank customer experience—and not just customer service—as the top business priority for maintaining or improving competitiveness.

These forces—lower origination volumes, eroding profitability, the need for operational efficiency, and the drive for differentiation through customer experience strategies—are fueling numerous mergers and acquisitions (M&As) among mortgage lenders and consolidation among service and technology providers as well.

Other recent shifts in the mortgage BPO market include the following:

  • The midsize and small buyer segments have seen growth, with over 50% of the deals being signed by them.
  • The shoring mix has become more balanced, with almost 45% of the delivery happening from onshore and nearshore locations in 2018.
  • Newer geographies such as Germany, Canada, Australia and the United Kingdom are on growth trajectories as growth in the U.S. plateaus.

These results and other findings are explored in a recently published Everest Group report: “Mortgage BPO Annual Report 2019: Reducing Margins, Rise of Non-Banks, and Declining Volumes—The Triad Shaping the Mortgage Industry?” The report covers key trends in the industry such as interest rate changes, merger and acquisition activities, changing market dynamics with non-banks, and increasing focus on customer experience.

***Download a complimentary abstract of the report***

“The steady global growth rate of the mortgage BPO market belies the significant upheaval occurring in the mortgage industry, where non-banks are taking the lead from traditional banks and origination margins and volumes are eroding,” said Manu Aggarwal, practice director, Business Process Services, at Everest Group. “As the focus of lenders shifts to customer experience and efficiency gains in an effort to squeeze better margins, technology adoption in the mortgage segment, which is currently quite low, will surge and become a key lever in future outsourcing deals.”

Other Key Findings

  • Q4 2018 saw the highest levels of loss reported per mortgage loan originated.
  • Interest rates are rising gradually with 2018 recording the highest levels in the last eight years.
  • Consolidation in the industry is happening at a fast pace with several mergers and acquisitions observed in the last few years.
  • Non-banks led the U.S. mortgage market with a control of about 51% of the market in 2018.
  • Quicken Loans, the market leader in the U.S., was ranked highest in a customer satisfaction study despite offering mortgage loans with rates higher than most of the lenders.
  • The United Kingdom is witnessing a trend similar to the United States, with challenger banks and specialist lenders increasing their market share rapidly.
  • Unlike the United States, the intermediary channel controls about 70% of the loans originated in the United Kingdom.
  • Technology inclusion in BPO deals remains 15-20% of the total deals.

About Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.

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Panaya Is Back In Business At Infosys With Fresh Push | In the News

By | In The News

More than a year after Infosys put automation software company Panaya up for sale and failed to find a buyer, the Bengaluru based software services exporter has begun to invest in the Israel-based company again as it looks to make the Vishal Sikka-era acquisition successful.

“In the end, the long-term strategic value exceeded the price they were offered. By doubling down, they are attempting to repair an asset which does, in fact, fit well into their digital direction. They still have the significant learning curve to come down on how to run a product company next to a services company,” said Peter Bendor-Samuel, CEO of IT consultancy Everest Research.

Read more in Economic Times

Polska trzecia w usługach | In the News

By | In The News

Mimo to Everest Group, firma badawcza zajmująca się tym rynkiem, przewiduje, że Polskę czeka świetny rok – podaje “Puls Biznesu”.

“W latach 2019-20 liczba pracowników usług biznesowych urośnie o 12-14 proc., a Polska przeskoczy Kanadę i stanie się trzecią spośród najważniejszych lokalizacji na świecie, po Indiach i Filipinach” – oceniła dyrektorka w Everest Group Parul Jain cytowana przez gazetę.

Read more in londynek.net

Polska w światowej czołówce usług dla finansów i IT | In the News

By | In The News

Pod względem zatrudnienia w centrach usług biznesowych i IT większe od nas są już tylko Indie i Filipiny – podaje “Puls Biznesu”.

“W latach 2019-2020 liczba pracowników usług biznesowych urośnie o 12-14 proc., a Polska przeskoczy Kanadę i stanie się trzecią spośród najważniejszych lokalizacji na świecie, po Indiach i Filipinach” – powiedziała dyrektorka w Everest Group Parul Jain cytowana przez gazetę.

Read more in pulshr.pl

Digging Deeper | Azim Premji: The End Of An Era | In the News

By | In The News

A few days ago, Azim Premji, the executive chairman and MD of Wipro, announced his retirement. He will serve until the end of July. Media reports indicated that Abidali Neemuchwala will be appointed Managing Director of Wipro Ltd from July 31. Azim Premji’s son, Rishad A Premji, who is currently chief strategy officer, will be reappointed Whole-Time Director as well as Executive Chairman of the company. Premji will continue as non-executive director and founder chairman.

So while the digital portfolio paid off, accounting for about 35 percent of the total revenue, Wipro’s legacy business has not improved. An analyst pointed out that profitability was also affected as the company is still shedding unprofitable businesses. However, they are in a much more stable position now, compared to three years ago. Yugal Joshi, Vice President, Everest Group, a consultancy firm, said, “The key challenge for Rishad and Neemuchwala is to bring market-leading growth…They will also have to invest in talent who can orchestrate such large deals for them, understand clients better, enhance their thought leadership and value proposition for the new world.” This means that to keep up with changing trends, Wipro needs to balance next-gen services, which typically come at lower tickets and the traditional business, that usually yields large deals.

Read more in Money Control

Five Ways To Improve Your Digital Transformation Efforts From The Top Down | In the News

By | In The News

Most executives would probably say digital transformation is imperative. But they might be hard pressed to cite an example of a successful digital transformation.

Another reason I believe it’s hard to point to successful digital transformations is that few actually exist. Everest Group analyzed the digital transformations of more than 328 companies in 2018 and found that 73% failed to get a sustained return on their investments.

Read more in Forbes

AI in Documents: Where AI Makes the Most Impact in Business | In the News

By | In The News

We are witnessing unprecedented change in the way companies do business. Companies are finding new and imaginative ways to improve their business and customer interactions by employing transformative digital technologies. It’s how digital startups turned into industry behemoths such as Airbnb, Uber and Venmo.

Currently, only 15% of enterprises are using AI, but 31% said it is on the agenda for the next 12 months. One area proving to deliver the most impact to companies is applying AI technologies to content. Sarah Burnett, Executive Vice President and Distinguished Analyst at Everest Group, agrees saying executives are searching for the best approach to get started on the AI automation journey and notes that intelligent process technology (IDP) is the catalyst for launching AI in the most critical area of a company – within its documents.

Read more in Martech Series

Task Cut Out For Rishad Premji: Match Wipro’s Growth With Industry’s | In the News

By | In The News

Wipro, under chairmandesignate Rishad Premji, faces a key challenge of matching industry level growth, after the IT services company struggled with client bankruptcies, bad market bets and acquisitions over the past few years.

Although Wipro hived off its cloud business, restructured its India operations and bet on businesses that leveraged the gig economy workforce to deliver services, the effort is still work in progress. “Challenges for Wipro remain, it must continue to address portions of its business which are underperforming, while moving quickly to build the new digital business which is its future,” said Peter Bendor-Samuel, chief executive, Everest Group, a global IT advisory firm. Rishad has been “carefully groomed to take his father’s place,” he said.

Read more in The Economic Times

Is Your Organization Ready for Cognitive Procurement? | In the News

By | In The News

Organizations’ expectations of their procurement functions are changing – CPOs are being asked to move beyond cost containment to become contributors to corporate growth. Consequently, business impact and risk management are now important KPIs for the procurement team.

While technologies such as robotics, cloud, and analytics have set procurement on the digital path, true transformation is only possible through the integration of cognitive within the function. Cognitive solutions not only improve process efficiency, but also provide smarter business insights and transform user experience.

Read more in Intelligent Sourcing