Mortgage companies can reap tons of benefits from utilizing data and analytics tools, according to Ellie Mae. But most are still overwhelmed and clueless on how to use all this data effectively.

“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, a recent Ellie Mae survey found that most lenders don’t have a defined data and analytics strategy. It is far more common for large lenders to have a clearly defined data and analytics strategy (60%) than small and mid-size (55%) lenders, who are more likely to be in the early evaluation stage of their data journey.

Lenders are in varying stages when it comes to their data and analytics journeys, the survey showed.

  • Descriptive Phase: 37% of lenders have just started 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 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.

“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.” 

Greater operational efficiencies, risk mitigation, transparency improvements, and streamlined processes are only some of the benefits of implementing and continuously improving their data analysis practices, according to Tyrrell.

“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 said.