ANZ looks to back office savings in mortgage processing

AN industry-wide crunch in home-lending profit margins has led ANZ to embark on a three-year program to automate its mortgage processing operations.

The $70 million program will enable ANZ to offshore a "small" proportion of around 900 back-office jobs in the mortgage area to Bangalore in India, where the bank has its own facility.

In the half-year to March, ANZ gave up four basis points of home-lending margin at a cost to group profit of $40 million.

"We have to get a lot of that back," ANZ managing director mortgages Michael Rowland said.

"We're still working through how much we will get back, but there's a reasonable amount of cost savings in it."

As lending volume turns down and competition intensifies, the big banks are increasingly looking to offshoring and big-ticket information technology projects to cut costs and maintain profit growth.

While other banks too had automated part of their mortgage processing function or other areas of their operations, Mr Rowland claimed ANZ was the industry leader in "end-to-end" transformation.

Apart from cost reduction, Mr Rowland said the new platform would enable better management of higher mortgage volumes, as well as deliver new products more quickly.

The automation part of the project, involving greater use of imaging rather than paper processing to digitise the mortgage process, will absorb most of the $70 million.

But ANZ will also use so-called Six Sigma** management techniques to make the process more efficient and reduce multiple handling of documents.

The time taken to fully process a mortgage from application to settlement of funds in the customer's account will be cut from up to a week*** to two days.

Source The Australian IT
By Richard Gluyas
May 15, 2007

** Six Sigma is a system of practices originally developed by Motorola to systematically improve processes by eliminating defects. Defects are defined as units that are not members of the intended population. Since it was originally developed, Six Sigma has become an element of many Total Quality Management (TQM) initiatives.

Source Wikipedia

*** Where does the writer get the statistic to quote a mortgage can be processed in a week from application to money in the account. I have been doing conveyancing for long enough to know a furphy when I see one!!