By Stuart MacFarland
The ICE – Black Knight merger creates an end-to-end digital infrastructure that will reorder incentives and change how work occurs. New competitive pressures on long protected positions will force many to reinvent operations and rethink the markets they serve. The digital future is unknowable, but we do know that information power moves to consumers, value resides in networks and data rights are the new currency. These principles of digitization will challenge every segment of the housing ecosystem to adapt to a new reality. The most probable outcomes include:
Fewer than 50 primary market lenders will remain after the shift to digital. The cost of migration to new processes, methods and metrics will be substantial. Lenders should look to the ERP supply chain projects of other manufacturers to understand the nature of the change management process they face, Migration support services will be needed to meet the operating and legal requirements of an interoperable network. Servicing revenues will be key to sustaining profitability as competition for loans goes online.
Stuart McFarland, a friend and business partner, is the former EVP Operations and CFO at Fannie Mae, EVP General Manager at GE Capital Mortgage Services, and CEO at GE Capital Asset Management; current public companies board member, and co-founder of Places Platform