Cost management remains a significant challenge for mortgage lenders and consumer finance organizations, with many either starting or already midway through cost reduction programs with public commitments to reduce ongoing expenses. The pressure to maintain and grow profitability is made more challenging by the need to absorb the costs of new regulatory requirements such as servicing standards and qualified mortgages, and potential changes in other consumer lending product lines to address any perception of unfair or discriminatory lending practices.
Margins are also coming under increasing pressure as rates change and organizations compete more aggressively to gain share. Additionally, there is also further regulatory pressure to improve transparency and consistency of fees, penalties and interest rates.To create sustainable reductions in cost requires a comprehensive review of the organization, its strategic positioning and the underlying cultural attitudes to cost management. A positive approach to cost cutting can be a catalyst for more strategic change, providing companies with the opportunity to truly transform their business model and strategy, and to position themselves for future success in the market place.
This paper discusses four critical elements that should be considered if an organization is to deliver sustainable cost reduction through transforming its expense base.