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Lenders alert: Prepare for 'Battle of the mortgage platforms'

Fujitsu Australia Limited

Sydney, February 22, 2008

Australian lenders were today alerted to move towards integrated platforms to secure their place in the nation’s $850 billion mortgage market.

The Next Generation Mortgage Platform, a Fujitsu Australia and New Zealand white paper, produced in association with RP Data Valuation & Risk Services, highlights existing inefficiencies and opportunities for early adopters.

Mortgage platforms are IT-enabled, multi-faceted business systems that:

  • Set lending policies
  • Specify lending processes;
  • Provide faster and less expensive valuation products; and
  • Automates the management of the mortgage life cycle.

“Australia’s annual mortgage market will break the $1 billion mark this year,” Fujitsu Australia and New Zealand’s Managing Consulting Director, Martin North, said.

“Over the last decade, rapid growth fuelled by favourable macroeconomic conditions has seen banks, building societies and credit unions lose market share to more than 30 new entrants.

“Drawn by the strong prospect of healthy returns, the non-bank lenders are generally more agile than their traditional counterparts and have proven capable of initiating rapid innovation.

“However, while there are more players, products and relationships than ever before, neither lenders nor their customers are getting the best bang for their buck.” Mr North said Fujitsu’s research highlights the fact that Australian mortgage lenders are significantly less efficient than their UK, USA and Canadian counterparts.

“For instance, it takes an average of 16 days for front offices to generate initial offers and a whopping 52 days to finalise a drawdown,” he said. Carl Hampel, RP Data’s General Manager, Valuation and Risk Solutions confirmed this.

“Existing valuation methods and the reliance on manual administration of lending risk policy are key bottlenecks for lenders attempting to execute loans quickly and inexpensively.”

Early implementations of mortgage platforms in the United Kingdom and the United States have shown dramatic improvements in mortgage application turnaround, cost savings and product innovation.

“The Next Generation Mortgage Platform will define the DNA of mortgage operations in Australia,” Mr North said.

“We see significant opportunities for industry players who make the first move towards implementation of the next generation of mortgage platforms, including:

  • Increased margins and reduced loan approval costs;
  • Opportunities to improve loan competitive offerings;
  • Retention and market share gains driven by higher broker and customer satisfaction; and
  • More efficient compliance with new anti-money laundering and counter-terrorism financing laws.

“While it is not practical or prudent to design a mortgage platform from scratch, the good news is that the Australian mortgage industry can draw on parallel lessons from the local wealth management industry, which faced similar inefficiencies a decade ago.

“The adoption of investment platforms allowed greater access to more investment products and a reduction in manual labour, freeing advisors to focus on providing better investment advice to clients.

“The challenge facing the Australian mortgage industry requires joint effort and input from a range of players, including lenders, aggregators, brokers, valuators and government agencies.

“Fujitsu advocates a disciplined approach that builds on existing policies, processes and systems and map tactics against a blueprint that covers the entire mortgage value chain from front to back offices.”

Fujitsu Australia and New Zealand

Fujitsu Australia and New Zealand is a leading service provider of business, information technology and communications solutions. Throughout Australia and New Zealand we partner with our customers to consult, design, build, operate and support business solutions. From strategic consulting to application and infrastructure solutions and services, Fujitsu Australia and New Zealand have earned a reputation as the single supplier of choice for leading corporate and government organisations. Fujitsu Australia Limited and Fujitsu New Zealand Limited are wholly owned subsidiaries of Fujitsu Limited (TSE: 6702).
For more information, please see: au.fujitsu.com

About Fujitsu Limited

Fujitsu is a leading provider of IT-based business solutions for the global marketplace. With approximately 160,000 employees supporting customers in 70 countries, Fujitsu combines a worldwide corps of systems and services experts with highly reliable computing and communications products and advanced microelectronics to deliver added value to customers. Headquartered in Tokyo, Fujitsu Limited (TSE:6702) reported consolidated revenues of 5.3 trillion yen (US$53 billion) for the fiscal year ended March 31, 2008.
For more information, please see: www.fujitsu.com

Date: 22 February, 2008
City: Sydney
Company: Fujitsu Australia Limited