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BFSI BPOMarket Report: May 2015 – Preview Deck
Mortgage BPO State of Market Report 2014 – Curve of Time to Meet Mortgage Again?
Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
2Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
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3Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
Table of contents (page 1 of 2)
Background and methodology 6
Executive summary 11
Section I: Market overview 12 Summary 13 Global residential mortgage market 14 Global Mortgage BPO market 15 Adoption by processes 16 Adoption by buyer size 17 Drivers and challenges 18
Section II: Mortgage BPO solution characteristics 25 Summary 26 Context 27 Scope of services 28 Role of technology 29 Pricing structures 30 Analytics, regulatory, and risk management services 31 Delivery footprint 32
Topic Page no.
4Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
Table of contents (page 2 of 2)
Section III: Mortgage BPO service provider landscape 33 Summary 34 Classification of service providers 35 Mortgage BPO market share 36 Mortgage BPO M&A timeline 37
Appendix 38 Glossary of key terms 39 BFSI BPO research calendar 41 References 42
Topic Page no.
5Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
Background and methodology of the research
Background of the researchMortgage BPO stands out as the largest submarket within Banking BPO. As regulatory bodies continue to increase their oversight on mortgage activities of the banks, role of BPO has been increasing in the mortgage landscape. This, coupled with newer entrants in the space (for instance, small-sized banks), is also causing a spike in the demand for mortgage BPO. Buyers are now looking towards service providers to deliver more than just cost savings. Tools to ensure compliance and prevent banks from faltering in the future are increasingly gaining prominence. However, service providers still need to prove their capabilities to buyers (especially first-time buyers) before widespread adoption can be witnessed. With progressively changing landscape, service providers will be required to make the right set of investments to stay competitive. At the same time, buyers need to identify the providers who clearly understand their unique business challenges and can help mitigate them.
Scope and methodologyIn this research, we analyze the global mortgage BPO market. We focus on: Market size and buyer adoption Mortgage BPO solution characteristics Mortgage BPO service provider landscape
6Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
This report is based on various key sources of proprietary information
Note: Analysis for IBM is based on on Everest Group’s proprietary Transaction Intelligence (TI) database, service providers’ public disclosures, and Everest Group’s interactions with buyers for calculating market shares.
Note: We continually monitor the market and update the above list to include emerging service providers Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any contract-specific information collected, will only be presented back to the industry
in an aggregated fashion
Proprietary database of 14 mortgage BPO service providers (updated annually) The database tracks the following for each service provider:
– Revenue and number of FTEs– Number of clients – FTE split by different lines of business– Revenue split by region – Location and size of delivery centers– Technology solutions developed
Service provider briefings:– Vision and strategy– Annual performance and future outlook– Key strengths and improvement areas– Emerging areas of investment
Proprietary database of 200+ mortgage BPO contracts (updated annually) The database tracks the following elements of each contract:
– Buyer details including size and signing region– Contract details including service provider, contract type, TCV and ACV, service provider
FTEs, start & end dates, duration, and delivery locations – Scope details including share of individual buyer locations being served in each contract,
Line of Business (LoB) served, and pricing model employed
2
1
3
Ongoing buyer surveys and interactions:– Drivers and challenges for adopting mortgage BPO – Assessment of service provider performance– Emerging priorities – Lessons learnt and best practices
4
List of service providers covered in the analysis
7Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
Everest Group’s classification of mortgage value chain
Analytics
Regulatory compliance and reporting
Document management
Origination Servicing
Credit/collateral evaluation
Account closure / foreclosureSourcing ProcessingUnderwriting Loan funding
Credit risk assessment Default managementLead generation Loan setupCollateral risk
underwriting Document draw
Fraud risk assessment
Refinance / loan modification
Applicationmanagement Payment processingUnderwriting decision Condition clearing
and validation
Document verification Short sale / foreclosureLoan pricing Customer serviceUnderwriting audit Wire request and
approval
Rate lockingLoan document
indexing and verification
CollectionsRisk management Post closure document review
Credit reviewsSecuritization support Purchase review and approval
Collateral reviewMERS registration1
Post funding reviewHUD1 preparation2
Securitization support
1 Mortgage electronic registration system2 HUD1 settlement statement is a standard form in use in the United States of America
Note: This report covers vertical-specific BPO within the mortgage space. It does not include coverage of horizontal business processes such as F&A, HR, procurement, and contact centers
8Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
Overview and abbreviated summary of key messages
This report examines the multiple aspects of the mortgage BPO market. It focuses on changing market dynamics, drivers and challenges, key solution characteristics, and analysis of service provider landscape
Some findings of the report: The mortgage BPO market reached the US$1.3 billion mark in 2014, growing at a CAGR of 11%-
12% from 2012 to 2014 Rebounding mortgage rates and increased costs of originations in the United States, had a severe
impact on the BPO activity, emerging from the banks, in the first half of 2014 Originations accounted for a higher share of the market in terms of revenue, however, servicing is
growing at a faster pace Factors, such as emerging new entrants, expanded regulations, and adoption of analytics and
automation tools, are likely to impact the future of the mortgage BPO market
Market overview
Leaders – Accenture, IBM, TCS, and Wipro Major Contenders – Cognizant, Genpact, HCL, IGATE, Infosys, Mphasis, Sutherland Global
Services, and WNS Emerging Players – EXL and Xchanging
Service provider landscape
Process scope – while originations account for a higher share of the BPO market in terms of revenue, servicing accounts for a larger number of FTEs
Global sourcing – over 80% of the outsourcing currently takes place in nearshore or offshore locations
Technology model – adoption of platform-based technology is on the rise Pricing structure – buyers exhibit maturity by adopting more complex pricing mechanisms Analytics, regulatory, and risk management services – increasing competitive intensity, inflated costs,
and tightened regulations are driving the adoption of these services
Solution characteristics
9Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
This study offers three distinct chapters providing a deep dive into key aspects of the mortgage BPO market; below are four charts to illustrate the depth of the report
Source: Everest Group (2015)
Adoption of pricing mechanisms
Adoption of technology models in mortgage BPO contracts
Service provider landscape
Size of global mortgage BPO marketSize of global mortgage BPO marketUS$ million
2012 2014 2016 (E)
Originations
Servicing
Others
X% CAGR (2012-2014)
X% Projected CAGR
Adoption of pricing mechanismsNumber of active contracts
Input-based
Output-based
Fixed fees
OthersOutcome-based
100% =
2011 2014
Tie-and-run
Augmentation
Platform-based
2011 2014
100% =
Adoption of technology models in mortgage BPO contracts Number of contracts
Mortgage BPO market share2014; Revenue in US$ million; Number of clients; Number of FTEs in '000s
Revenue Clients FTEs
Service provider 1
Service provider 2
Service provider 3Service provider 4Service provider 5Service provider 6Service provider 7
100% =
10Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
BFSI BPO research calendar
Topic Release date
Q2 2015Mortgage BPO – Service Provider Landscape with PEAK Matrix Assessment 2015
Q2 2015Commercial Insurance - The Rise of Specialty Lines
Q2 2015BFS BPO – Annual Report 2015
Q2 2015Insurance BPO – Annual Report 2015
Published Current
Q3 2015Banking BPO – Service Provider Landscape with PEAK Matrix Assessment 2015
May 2015Mortgage BPO State of Market Report 2015 – Curve of Time to Meet Mortgage Again?
November 2014Capital Markets BPO – Service Provider Landscape with PEAK Matrix Assessment 2014
January 2015Capital Markets BPO – Service Provider Profile Compendium 2014
October 2014BPS Code of Conduct: A Shared Solution for Protecting Confidential Information
October 2014Service Delivery Automation (SDA) Market in 2014 – Moving Business Process Services Beyond Labor Arbitrage
November 2014Insurance BPO – Service Provider Landscape with PEAK Matrix Assessment 2014
December 2014Banking BPO – Service Provider Profile Compendium 2014
January 2015Insurance BPO – Service Provider Profile Compendium 2014
March 2015Reinventing Business Process Services (BPS) – Leveraging Technology to Deliver on New Expectations
March 2015Service Delivery Automation (SDA) - The Business Case for Robotic Process Automation in Insurance Services
February 2015Analytics Business Process Services (BPS) – Service Provider Landscape with PEAK Matrix™ Assessment 2015
Q3 2015Capital Markets BPO – Service Provider Landscape with PEAK Matrix Assessment 2015
Q3 2015L&P Insurance BPO – Service Provider Landscape with PEAK Matrix Assessment 2015
October 2014Banking BPO – Service Provider Landscape with PEAK Matrix Assessment 2014
11Copyright © 2015, Everest Global, Inc.EGR-2015-11-PD-1442
Additional BFSI BPO research references
The following documents are recommended for additional insight into the topic covered in this report. The recommended documents either provide additional details on the topic or complementary content that may be of interest
1. BFS BPO Annual Report 2014 – Low on Growth, High on Regulations – BFS BPO Adapts to the “New Normal”(EGR-2014-11-R-1191); 2014. This report assists key stakeholders (buyers, service providers, and technology providers) understand the changing dynamics of the BFS BPO market and help them identify the trends and outlook for future. In this backdrop, the report provides comprehensive coverage of the global BFS BPO market including detailed analysis of market size & growth, buyer adoption trends, banking & capital markets BPO solution characteristics, and service provider landscape
2. Banking BPO – Service Provider Landscape with PEAK Matrix™ Assessment 2014 (EGR-2014-11-R-1272); 2014. This report uses Everest Group’s proprietary PEAK Matrix to assess and rate service providers on various dimensions of their capabilities. It also discusses key emerging trends in the fast growing banking BPO market
3. Banking BPO Service Provider Profile Compendium – December 2014 (EGR-2014-11-R-1335); 2014. The objective of this compendium is to provide key stakeholders a snapshot of the offerings and capabilities of 20 major banking BPO service providers. Specifically, the report allows service providers to compare their areas of strength and those of development with other service providers in the marketplace. It also helps existing and potential buyers of banking BPO services to assess the service providers on the capabilities that they desire
For more information on this and other research published by Everest Group, please contact us:
Rajesh Ranjan, Partner: Anupam Jain, Practice Director:Amardeep Modi, Analyst:FS BPO Team:
[email protected]@[email protected]@everestgrp.com
Website: www.everestgrp.com | Phone: +1-214-451-3000 | Email: [email protected]
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