Guiding an Australian bank through mortgage book partnership change
Our client is an Australian investment management firm that specialises in the retirement-age demographic. They have a number of business units under this umbrella – including a dedicated banking service – and manage over $100 billion in assets.
When a third-party service provider informed our Australian banking client that their mortgage book management services would no longer be available, they contracted 9Yards to help discern the organisation’s next steps.
Comparing mortgage book service providers
In their current state, the service partner our client had been utilising to run their mortgage book provided not only that core banking platform, but also the regular operational activities to fulfil service requests from customers. With that option no longer available, they needed to find a replacement solution that would not create any service gaps.
When we were engaged, they had already gone to market with a request for proposal, so our role was to undertake an internal discovery process before assessing those responses and developing recommendations.
We conducted interviews across the business unit and the greater organisation to gain a thorough understanding of both micro and macro levels of organisational strategy. We ran discovery sessions across their business units, with the original service provider and each of the service providers who responded to the RFP.
From here, we were able to narrow the running to three options to consider carefully: two respondents to the RFP and the internal business unit that operated the banking services.
Insource versus outsource became one of the key questions to resolve. We mapped the strengths and weaknesses, and articulated any shortcomings. We relied on our experience in migration projects in complex systems, like mortgage platforms, to carefully assess the responses and validate them against the realities of past projects.
Articulating the pros and cons of insourcing mortgage book management
As the banking business in this organisation’s group had the technology and capability services to replace the existing offering, insourcing might have seemed the obvious recommendation. However, our discovery process showed that this would first need decisions around greater organisational strategy to be made. As a one-off piece of work to insource this mortgage book, it wasn’t a prudent financial decision – the efforts to fulfil the requirement wouldn’t pay off for a single mortgage book. However, if pursuing a strategy to buy other mortgage books in the future (replicating this activity again and again) was a viable option, this cost breakdown would subside.
As we were able to articulate the greater business context, rather than simply a series of technical comparisons of platforms, our client was able to consider a potential new revenue stream that had not previously been in their vision. We presented an opportunity analysis that was not just a single dimensional answer to the question they initially thought needed answering.
We were able to take on the role of trusted advisor, as well as consultant, and pose these questions to the leadership team.
