Interesting study from Rice University on lending and creditworthiness.
http://news.yahoo.com/s/nm/20090317/od_nm/us_creditworthiness_odd_1
A few things to think about based on the study and article:
What does trust look like?
What do trustworthy people look like?
How do they make us feel?
How do we know what makes us look trustworthy?
Interesting reading - check it out.
Wednesday, March 18, 2009
Monday, February 9, 2009
The echo boom and housing
Went to an economic seminar last week with Harry Dent, as he said explained the demographic life cycle of spending habits and it's effect on the economy he said something that made me think. You need to build your business for the 60 something or the 20 something.
This seminar gives some great insight into the changes taking place in marketing and relationship building going on in the economy right now.
Think starter homes and news ways to connect.
Thursday, November 6, 2008
What do I do now?
There has been alot of activity over the past couple of weeks to try and fix this market realignment. I've been stuck on where things might move to next. After watching this video on cnbc a few thoughts cleared up.
We have to rebuild the house- The fires have stopped, but now we are looking at a system that is structurally much different than it was a year, even 6 months ago. The challenge here is that the landscape has so drastically changed that it's hard to pick your starting point.
Systemically we are moving to a more realistic alignment of a sustainable lending industry- what we have not seen yet, at least from my perspective- is a more realistic alignment of consumer income statements and balance sheets to reflect the structural changes happening.
Based on this view, where's the opportunity? Depends on your perspective.
If you are a mortgage advisor, financial services advisor, private banking officer, are your clients personally ready for the realignment of credit risk and savings requirements that will be the norm in the new market.
If you are a tech company- are you looking at the financial services industry as a vertical for your product? As companies shed costs, they will need top line revenue growth and sustainable infrastructure costs so as to not end up in the same position a little further down the road.
I'm not sure where this ends up or what it looks like when completed- there are still many variables that need to be worked through - but this seems certain- if the house has burnt down- you will need a blueprint, a foundation and a structure to rebuild. Now's the time for imagination and innovation.
Ideas anyone?
We have to rebuild the house- The fires have stopped, but now we are looking at a system that is structurally much different than it was a year, even 6 months ago. The challenge here is that the landscape has so drastically changed that it's hard to pick your starting point.
Systemically we are moving to a more realistic alignment of a sustainable lending industry- what we have not seen yet, at least from my perspective- is a more realistic alignment of consumer income statements and balance sheets to reflect the structural changes happening.
Based on this view, where's the opportunity? Depends on your perspective.
If you are a mortgage advisor, financial services advisor, private banking officer, are your clients personally ready for the realignment of credit risk and savings requirements that will be the norm in the new market.
If you are a tech company- are you looking at the financial services industry as a vertical for your product? As companies shed costs, they will need top line revenue growth and sustainable infrastructure costs so as to not end up in the same position a little further down the road.
I'm not sure where this ends up or what it looks like when completed- there are still many variables that need to be worked through - but this seems certain- if the house has burnt down- you will need a blueprint, a foundation and a structure to rebuild. Now's the time for imagination and innovation.
Ideas anyone?
Tuesday, October 14, 2008
Social Capital and The Financial Services Industry
The Central Chapter of CAMB had a breakfast meeting today and I spoke there with Dave Savage of Mortgage Coach.
My topic was about Social Capital and the decision making process borrowers go through while shopping for a loan. The presentation was based on a Joint Center For Housing Studies report from Harvard University.
Here's the presentation:
If the currency of social capital is trust and based on some of the research it seems to me that it would be, the topic of conversation came up to day on how to develop social capital and build trust given recent market conditions and client confusion.
Here's a simple way:
Honesty
Transparency
Passion
Watch the presentation - there's a great example that you can see in the embedded video clip.
A great way to build honesty, transparency and passion.
Ask these three questions - just be prepared for honest feedback. (Have these questions take the place of your customer survey)
What three things would you like me to stop doing?
What three things would you like me to keep doing?
What three things would like me to start doing?
By asking these three questions you are setting the foundation of the relationship in an honest light- you are admitting you have room for improvement, you build transparency- part of my business process will be based on your feedback, and you you show your passion - I value your feedback and our relationship show much I am willing to change the way I do business to help you continue to find value in doing business with me.
Check out the presentation and share your feedback. This is a great chance for you and me to invest in our social capital.
My topic was about Social Capital and the decision making process borrowers go through while shopping for a loan. The presentation was based on a Joint Center For Housing Studies report from Harvard University.
Here's the presentation:
If the currency of social capital is trust and based on some of the research it seems to me that it would be, the topic of conversation came up to day on how to develop social capital and build trust given recent market conditions and client confusion.
Here's a simple way:
Honesty
Transparency
Passion
Watch the presentation - there's a great example that you can see in the embedded video clip.
A great way to build honesty, transparency and passion.
Ask these three questions - just be prepared for honest feedback. (Have these questions take the place of your customer survey)
What three things would you like me to stop doing?
What three things would you like me to keep doing?
What three things would like me to start doing?
By asking these three questions you are setting the foundation of the relationship in an honest light- you are admitting you have room for improvement, you build transparency- part of my business process will be based on your feedback, and you you show your passion - I value your feedback and our relationship show much I am willing to change the way I do business to help you continue to find value in doing business with me.
Check out the presentation and share your feedback. This is a great chance for you and me to invest in our social capital.
Thursday, October 9, 2008
Tripod of Trouble Part 2
As we discussed before regarding the tripod of trouble for the credit crisis (govenment, corporations and individual consumers)over the past two weeks one can clearly see that the govenment and corporate parts of the machine are deleveraging and working to rebuild new models. The last piece of the puzzle and the one that has me most concerned is the individual consumer.
Read the article on household income versus housing cost:
http://www.thetruthaboutmortgage.com/study-rising-housing-costs-greatly-outpaced-income/
It is no great mystery that the average American household is spending more thna they take in. As credit markets freeze, income growth stagnates or falls and living expenses continue to rise as the cost of doing business rise with increased borrowing costs and reduced cash flow flexibility, there stands a real chance that in our consumer driven economy a drastic slowdown in spending occurs in order for American households to deleverage and right their household balance sheets the same way the government and corporations have done in the past few weeks.
Any company operating in this environment has a few things to think about-
1) How am I connected to the cash? Where does your customer place your business in the context of their wallet?
At the end of the day- My wife and kids have to eat and have a roof over their heads- is your business tied into those two areas?
2) Is my business model right for this environment? if it comes down to an economy of basic choices how will you survive?
3) How will reduced household cash flow, rising job insecurity, and over leveraged households choose their new products and services?
I'm not saying I have the answers to these questions- but in a world of drastic and lighting fast change- the fundamental assumptions that people use to manage their business and lives needs to change in order to evolve and survive in the next go round.
How are you evolving?
Read the article on household income versus housing cost:
http://www.thetruthaboutmortgage.com/study-rising-housing-costs-greatly-outpaced-income/
It is no great mystery that the average American household is spending more thna they take in. As credit markets freeze, income growth stagnates or falls and living expenses continue to rise as the cost of doing business rise with increased borrowing costs and reduced cash flow flexibility, there stands a real chance that in our consumer driven economy a drastic slowdown in spending occurs in order for American households to deleverage and right their household balance sheets the same way the government and corporations have done in the past few weeks.
Any company operating in this environment has a few things to think about-
1) How am I connected to the cash? Where does your customer place your business in the context of their wallet?
At the end of the day- My wife and kids have to eat and have a roof over their heads- is your business tied into those two areas?
2) Is my business model right for this environment? if it comes down to an economy of basic choices how will you survive?
3) How will reduced household cash flow, rising job insecurity, and over leveraged households choose their new products and services?
I'm not saying I have the answers to these questions- but in a world of drastic and lighting fast change- the fundamental assumptions that people use to manage their business and lives needs to change in order to evolve and survive in the next go round.
How are you evolving?
Tuesday, October 7, 2008
Upside down economics
Saw this article today and it got me thinking. If one of the fundamental drivers of the credit crisis is declining home prices which is helping cause the deleveraging of the financial system we are seeing today, what then are the implications of the article below:
http://www.thetruthaboutmortgage.com/lenders-lost-more-than-500-per-loan-last-year/
According to the latest Cost Survey from the MBA, lenders lost more than $560 on each loan they originated last year. The main driver in the rising cost: rising production costs.
Net marketing income averaged $1920 per loan, down from $2180 per loan a year earlier.
Some thoughts- today's loan origination models are ripe for reinvention.
I spoke with a friend yesterday who is an AE for a semi still standing bank. The word on the street is that Citi is moving to a completely automated model (a'la ING), reducing the need for AE's in the field.
Technology can help banks here, look for a wave of tech companies coming into the space to help allieviate this growing and troublesome pain among lenders.
Banks typically view the mortgage as one of the best relationship products, but at $500 a loss per ion this environment, the pain cannot be ignored.
Stay tuned.
http://www.thetruthaboutmortgage.com/lenders-lost-more-than-500-per-loan-last-year/
According to the latest Cost Survey from the MBA, lenders lost more than $560 on each loan they originated last year. The main driver in the rising cost: rising production costs.
Net marketing income averaged $1920 per loan, down from $2180 per loan a year earlier.
Some thoughts- today's loan origination models are ripe for reinvention.
I spoke with a friend yesterday who is an AE for a semi still standing bank. The word on the street is that Citi is moving to a completely automated model (a'la ING), reducing the need for AE's in the field.
Technology can help banks here, look for a wave of tech companies coming into the space to help allieviate this growing and troublesome pain among lenders.
Banks typically view the mortgage as one of the best relationship products, but at $500 a loss per ion this environment, the pain cannot be ignored.
Stay tuned.
Wednesday, October 1, 2008
Amerifund Lending and Reinvention
Just finished up a webinar for Todd Shillington and Amerifund Lending- Reinvent Or Die. Thank You Todd and the good folks who shared their time with us.
Given all the stops and starts we've seen in the industry over the past two weeks, one must understand that no matter what happens the responsibility to change and adapt with the circumstances is ours alone.
Check out the presentation below:
Remember this quote from Charles Darwin:
It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.
Given all the stops and starts we've seen in the industry over the past two weeks, one must understand that no matter what happens the responsibility to change and adapt with the circumstances is ours alone.
Check out the presentation below:
Remember this quote from Charles Darwin:
It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.
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