Peter Gallagher, Princeton Mortgage Wholesale
As we’ve mentioned what seems like countless times before, 2018 hasn’t been the best of years for the mortgage industry. Originations are down, rates are up, and companies are cutting costs in favor of profits and efficiency. A few weeks ago, Frank Granata and I reported through one of our Effortless Updates that Wells Fargo has come out with the news that they plan to cut up to 10% of their total workforce over the next three years. Higher projections estimate that means 26,000 people will be out of jobs. Wells states the cuts are part of the bank’s “ongoing transformation” after several scandals surfaced across their platform.
A key reason Wells is going forward with this plan is the high demand from customers for a digital platform. CEO Tim Sloan states that Wells is “transform(ing) Wells Fargo to deliver what customers want -including innovative, customer-friendly products and services-and evolving our business model to meet those needs in a more streamlined and efficient manner”. The third largest U.S. bank believes the “adoption of digital self-service capabilities” is a major key in maintaining their large share of the market and will help them remain an industry leader.
Movement mortgage is the latest company to announce a round of layoffs. CEO Casey Crawford addressed his companies’ staff to address his actions and explain why the layoffs were necessary. In summary, his message was that the cuts were due to the tightening mortgage industry, and they needed to happen to ensure the company would thrive in the future. The former NFL tight-end states “It’s a tough market. And we want to play offense.”
I would assume this trend will continue among larger banks and lenders because of the shifting needs of the customer base. Seamless technology seems to be at the top of the list across many industries. We’re in an age where instant gratification is nearly demanded, and huge companies with thousands of employees will see a decreasing need of man-power to operate and generate profits. Customers love having the ability to speak to a real customer service representative, but that’s only after the technology fails.
This theme of downsizing to cut costs is a trend we can expect to continue. But it’s really a
major issue for the larger banks and lenders who already have thousands of employees. It’s much less taxing on a company’s culture to grow at a steady rate and hire the appropriate number of employees rather than to be too big and have to layoff employees due to the demand for technology. Job security can be one of the largest areas of stress for the average American, and no one wants to be sitting in their cubicle waiting for that dreaded tap on the shoulder. If you’re part of one of these larger companies, hopefully you can position yourself to be shielded from cuts by value by bringing inarguable value your company. Or, maybe you need to jump off the ship before it sinks.
Until next week,
Peter
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.
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