Power BI has long been used to transform raw data into meaningful insights to support business decisions. It can help commercial lenders and banks better manage their credit risk by providing visual representations of these risks in reports to enable deeper analysis. Power BI can also help lenders better understand their markets and customers by leveraging these analytics capabilities.
Power BI can help mortgage lenders gain greater visibility into their business operations so that they can adequately address inefficiencies before they spiral out of control. In this way, Power BI can help businesses achieve their goals. The presentation and analysis of information are key to supporting tactical and strategic decisions that will impact profitability and revenues.
There are many ways in which Power BI will impact the mortgage industry.
Here are a few notable ones that deserve to be mentioned:
Improve Credit Risk Assessments
Power BI can provide the insights it gleans from big data to lenders so that they can learn more about their borrowers, especially those with limited credit histories. Borrowers who have not tapped into enough credit to be given a credit score can still be evaluated for a mortgage loan. For instance, millennials who do not use credit cards, take out car loans or work as salaried employees may, at first glance, not be eligible for a mortgage. However, they can still be vetted since they pay cell phone bills, use mobile payment apps, and have bank accounts. All this financial information can still help lenders decide whether the borrower is a good credit risk through the efficient use of business intelligence in the mortgage industry. Power BI can also give lenders the ability to collate qualitative information, financial data and monitor risk profiles on dashboards to accurately assess whether a certain borrower is likely to default on their payments or not.
Help Detect Fraud
With Power BI, lenders can stay abreast of fraudulent activities, given how the mortgage industry is the most frequently targeted sector in the financial services industry. Lenders have a lot to deal with, between losing out on legitimate business and being blocklisted by regulators for aggressively rejecting applications. Fortunately, Power BI can help in balancing these competing goals. Instead of relying on manual processes and siloed data to distinguish actual fraud from just suspicious activity, Power BI can help lenders identify questionable transactions in real-time using powerful data analytics and visually stimulating dashboards. Lenders can then easily score their credit risk against hundreds of other variables to determine whether the activity being monitored is fraudulent in nature or not and evaluate the soundness of their credit decision.
Set up Diverse KPIs
KPIs are essential to understand mortgage operations performed periodically and the changes required for higher organizational success. The mortgage origination process could be broken down into varied KPIs to quantify performance in the loan lifecycle from loan application to actual funding. It could break down the benchmarks set for loan officers(LOS) and other professionals involved in the journey.
Relevance, reliability, and reportability are the three essential factors that make KPI feasible for the mortgage industry. KPI measurement should be based on real-time information derived from the centralized data warehouse. The KPIs must be displayed like a balanced scorecard with complete transparency.
With PowerBI, one can build customized scorecards that track and measure the overall performance of loan consultants, fulfillment personnel, and mortgage loan branches.
The precise use of Power BI can help you review strategic goals associated with the KPIs while being aligned with individual achievements. Associate the KPIs with high-level business goals and then check out reliable data sources to check for goals, including loan origination system or accounting software.
Although there are hundreds of possible KPIs for the industry, here are some of them:
- Loan Units Funded per Month (LO)
- Pull-Through Lock towards the Mortgage Fund (%)
- Days Required for Funding Process
- Revenue Generated for a Certain Period
- Volume Funded periodically (LO)
Managing compliance risk can be a massive undertaking due to the complicated mortgage lending regulations and government financing programs after the 2008 financial crisis. With the help of Power BI, lenders can integrate different models and systems that were previously siloed in various departments to speed up reporting. Using Microsoft Power BI, one can also upgrade a lender’s reporting quality by providing interactive visualizations and insights so that decision-makers can visually analyze business information before making any decisions. Lenders can also more accurately predict compliance issues before regulators point them out by leveraging machine learning models.
These models can process massive volumes of data in real-time to deliver essential insights into mortgage compliance issues. They can also test credit portfolios against a wide range of compliance criteria to determine where there have been breaches in compliance and correct them before incurring expensive penalties from regulators. Power BI can then be helpful for lenders as it helps them look at compliance and regulatory issues in a whole new light.
The applications of Power BI have long been used to find insights within an organization’s data. They can be used to help lenders, and banks better manage their credit risks, understand their customers and markets, and provide visibility into their day-to-day operations and efficiencies. From enhanced regulatory compliance and more accurate fraud detection to improved risk assessments, Power BI is set to revolutionize the mortgage industry in more ways than one.
Flatworld Edge has long been in the business of helping organizations in the mortgage industry generate powerful analytics reports and rich interactive dashboards to boost their revenues and support more intelligent business decisions. If you need assistance to get your Power BI solution up and running in no time, look to Flatworld EDGE to help you make that vision a reality.