The Digital Age has triggered a technological metamorphosis, drastically changing the face of almost every industry you can think of for both the business and the consumer. To no surprise, the mortgage industry is no exception.
Customers now expect the fastest possible results, plus a wide array of digital tools to make the process easier and more convenient for them.
In fact, 80% of potential borrowers would prefer to keep their dealings with mortgage lenders entirely online.
Given this seismic shift, the changing mortgage market has seen lots of new opportunities and shake-ups as the industry faces the ever-changing backdrop of the 21st century.
Spurred state-of-the-art mortgage automation software
Automation is an everyday part of our lives, but when you think of mortgage applications, do you think of an automatic process? More than likely, the words “mortgage applications” conjure images of paperwork and hair-pulling headaches. Fortunately, inconveniences, such as shoddy customer service and instances of fraud, are a thing of the past with automated mortgage applications.
With the high-tech help of mortgage automation software from LoanPro, forward-thinking lenders can guarantee quick turnaround times on the application process, help build more accurate annual revenue forecasts, and continually meet the market’s changing demands.
Innovative tools help foster a seamless experience
Modern technology allows mortgage lenders to work more efficiently and get the best rates for their customers. Calculator tools and online scenario analysis help banks to utilize customer information without all the clunky red tape. Points of contact are much easier to get a hold of, banishing many customer service woes for mortgage lenders.
Efficiently reduces high operating costs
Document management tools can ease the overhead by eliminating much of the old paperwork involved with mortgage applications. Mistakes and errors can be costly, and digital innovation helps to reduce these by quite a bit.
By trimming down operating costs, employees can shift their focus to borrowers and the banks rather than draining precious mental energy over towering stacks of paperwork, thus increasing pay efficiency. The less busywork the mortgage lenders and banks have to endure, the more time they can spend on customer satisfaction.
It simplifies a complicated process
Artificial intelligence and data analytics are just two of the many digital tools that mortgage lenders and others in the housing market can use to streamline the complicated lending process. The sheer amount of data available naturally makes gathering the needed information and applying it to the lending process much less convoluted.
It helps the underdog succeed
Access to the internet empowers the every-man lender. With this technology at their disposal, no longer are the days of wealthy and successful mortgage lenders monopolizing the market. Today, even the Average Joe can compete and capture the attention of borrowers.
Up and coming lenders can offer their services to borrowers and network with banks with ease. In days past, the leaps and hurdles one needed to cross were quite steep. Now the entry threshold is reachable.
Living in the digital (mortgage) era
In the wake of the COVID-19 Pandemic, mortgage lenders were faced with many challenges.
During quarantine, the ability of digital technology to connect buyers with mortgage brokers changed the way many in the industry looked at the mortgage application process.
Even after life returns to normal, the effects of the pandemic are sure to be felt for years to come.
Currently, 91% of mortgage lenders offer traditional means of applying for mortgages alongside digital tools that ensure transparency, convenience, and speedy results.
Given all this information, it is easy to imagine a future where the old ways of mortgaging your home are long forgotten. With traditional strategies stepping aside, new future-forward methods proudly dominate the mortgage market.
Apple between US China Wars
By Dr. Dan Steinbock
America’s most valuable $2 trillion company is no longer immune to US geopolitics. Apple’s global success is an anomaly to the protectionist Trump-Biden administrations – for all the wrong reasons.
Recently, Apple announced a set of additional privacy protections. The “private relay” feature will not be available to users in China. After the announcement, New York Times reported that Apple had given in to Beijing.
In fact, in addition to China, the privacy feature will not be available to users in many countries, including Belarus, Colombia, Egypt, Kazakhstan, the Philippines, Saudi Arabia, South Africa, Turkmenistan, and Uganda.
Yet, Times only targeted China.
No multinational can ignore local responsiveness
Since the 1980s, the leading multinationals have sought to reconcile global efficiencies with responsiveness to local markets. Nonetheless, many American technology giants still earn the bulk of their revenues in the high-income US and Western European markets.
In contrast, Apple has proved more innovative in global markets. In China, the company is trying to adjust to local market practices, just as all foreign and especially Chinese companies face great adjustment pressures in the US.
There’s a difference, though. Apple and other foreign ICT giants remain welcome in the Chinese mainland.
Yet, the reverse no longer applies, as evidenced by a decade of increasing persecution of Chinese technology companies in America from Huawei to Tik Tok, and the consequent plunge of Chinese FDI in America.
Where’s the money
Still another protectionist assumption is the idea that “the Chinese are taking away American jobs.” The assumption is flawed.
In August 2018, Apple became the first publicly-traded US company valued at over $1 trillion; today its market capitalization amounts to $2.2 trillion. Its products are said to have some 1.7 billion users worldwide. Let’s illustrate the point with the value captured as a percent of the retail price of a smartphone (iPhone 7).
Apple captures a whopping 42% of the retail price of each iPhone sold. The rest goes to the cost of materials (22%), distribution (15%), IP licenses (5%), and countries like South Korea (1%), Japan (1%) and Taiwan (1%). Labor costs in China account for only1 percent of the total (Figure 1)
Figure 1: Value capture for iPhone 7
Usually, multinationals’ revenues contribute to consumer welfare via progressive taxation. However, US companies tend to minimize taxes via creative accounting and tax havens, so there’s a gap between what’s paid officially and effectively.
Since the 1980s, these disruptive changes have dramatically contributed to erosion in progressive taxation, consumer welfare and thus to income polarization in America. That’s America’s challenge, however; not China’s.
Apple, offshoring and Taiwan
If the value capture isn’t the issue, what about offshoring to China? That’s the third misguided assumption.
Apple’s “Greater China” market includes not just China, but Hong Kong and Taiwan. It has assembled most of its products in China for a quarter of a century, thanks to Foxconn (Hon Hai), the huge Taiwanese multinational electronics contract manufacturer founded by Taiwanese billionaire Terry Gou.
Moreover, work conditions at Foxconn factories have been a matter of public debate since the early 2010s. The basic salary for a worker at a Foxconn facility is about $315 per month; less than 10% of the median American salary.
In June 2017, Foxconn said it would build a $10 billion TV manufacturing plant in southeastern Wisconsin that would initially employ 3,000 workers set to increase to 13,000, in return for the highest subsidies in US history. A few months later, a plant was launched in Mount Pleasant, Wisconsin (Figure 2).
Figure 2: The Rise and Fall of Foxconn’s US venture
Source: Wikimedia Commons
However, Foxconn began soon reconsidering its initial plant plans and the high labor costs in the US. After Biden’s election triumph, Foxconn announced it would reduce its planned investment to $672 million with 1,454 new jobs.
As long as per capita incomes will differ significantly among countries, opportunities for offshoring will abound.
US geopolitics vs Chinese market potential
And the final misguided protectionist assumption. What if Apple would refocus its operations into the US, as it is being pressured to do?
In the past decade, Apple’s quarterly revenues from Greater China have increased to $21.3 billion (1Q 2021). Its revenues from China remain around 15% of the total. That’s still significantly less relative to highly exposed US companies in China.
Last year, Apple had a great year in China, where full year shipments returned to the 2018 level, driven by both iPhone 11 and iPhone 12 models. It has recently added a dozen new Chinese suppliers. Chinese market is vital to Apple’s global future.
The developer community of Apple’s iOS app ecosystem has surged to over 4.4 million third-party developers in China. Moreover, China’s shipment of wearable devices notched robust year-on-year expansion in the first quarter of 2021.
To position for the lucrative electric car future, Apple is in early-stage talks with BYD and CATL, and possible other companies over battery supplies for the “Apple Car,”. Chinese car market is critical to Apple since rapid growth remains in the mainland.
Over time, Apple’s revenues from China have potential to increase significantly, thanks to its innovative ecosystem which is hard to replicate by the competitors. Yet, the White House could derail Apple’s plans, which rely on economics, not on geopolitics.
Who’s undermining US competitiveness
To sustain its global position, Apple is trying to navigate amid the US Cold War against China. If it ignores US views, it will face pressures in the US; its largest current market. If it neglects Chinese views, it risks failure in China; its pivotal future market. What is certain is that
Apple’s greatest challenge is not China, but the underlying conflict between its ecosystem and Trump-Biden protectionism.
About the Author
Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (USA), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net
A longer version of the commentary was published by China-US Focus on June 25, 2021. It is based on Dr Steinbock’s fully-referenced global briefing https://www.differencegroup.net/apple-between-us-china