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Microchips and Mortgage Banking – A Surprising Cost Comparison
Jim Deitch

Microchips and Mortgage Banking – A Surprising Cost Comparison

On a recent flight back from an MBA event, I happened to be sitting next to an Intel (the semiconductor manufacturer) executive on the flight and asked him what happened to the cost of a microprocessor from 2009 to 2017.  His answer:  A dollar’s worth of processing in 2009 cost about 5 cents eight years later, or a decrease of about 95%.  As we talked about our industries, the Intel executive stated the obvious, “Lenders have a productivity problem!  You get 20 times the performance for every dollar spent on computer technology versus 2009, but closing a loan costs twice as much as in 2009.” 

Many lenders use a business process that was designed years ago, in a different regulatory, technology, product and cost environment. The process has been modified to meet the prescriptive regulatory and secondary market requirements, but the basic business process has not changed for most lenders.  And the process leaks revenue in many places.

Lenders that have done an end-to-end review of ‘why do we do this step this way, and how could we do it faster, better, cheaper’ report productivity improvement of 15-20%.  Check out this link for ideas on how to evaluate your lending process for efficiency:

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