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Alliance of Mortgage Packagers and Distributors: Distributors must get a life online if they want to survive

Prophesies that regulation was going to destroy packagers and that lenders would stop doing business with them have proved false. Now technology is being seen as the threat but this would only pose a danger if packagers refuse to tap into the the vast advantages it can bring

Much has been written about the survival of packagers or distributors. Not that long ago regulation was going to wipe us out, then we heard lenders would cut us out of the loop and could get their volumes without the packager industry. Now, its the turn of technology and specifically online trading. Once again, some industry experts are forecasting the rapid demise of the packager industry.

I have seen articles that suggest packagers could be dead within 18 months because of the advances in technology. But this is rubbish. I admit the technological advances that have been made by lenders, particularly the new entrants, have changed the shape of play. I accept that the rapid development of lender technology such as automated valuations and almost instant offers has undoubtedly bridged the gap, allowing lenders the chance to get a lot closer to their aspirations for direct business from brokers.

For the time being, these lenders are playing it safe and have their feet in both camps. Why? Because lenders are still mindful, and rightly so, that packagers control huge volumes of distribution, so a foot in both camps is an understandable stance.

Many established lenders, which have in the past steered clear of packaged business, are now courting the packager groups. Alliance & Leicester and UCB are two recent examples. So, again, this is a strong indicator that the distribution we control is still important to the lenders.

That said, have no doubt that packagers are at a critical crossroads in terms of how they react to the technological revolution. At this juncture of our evolution how we react or not, as the case may be will be crucial to how the packager industry evolves and moves forward in 2007 and beyond.

What are the real threats posed by technology and how will the packager industry respond? Lets start by getting rid of the packager tag. Its old fashioned, misleading and only helps to concentrate the mind on the paper-shuffling role of the original packager firms.

I am firmly in the camp that believes 100% online trading is unstoppable and those who fail to embrace technology, as part and parcel of their business plan will not survive. Those who think differently and prefer sticking to their knitting are in the same league as their yesteryear contemporaries who preferred to work by candle light. These are the ones that will be snuffed out.

On the other hand, just like any business in any industry, those that survive will need to have in place a robust business plan, a firm understanding of the threats to and the opportunities for their business and a determination to be part of the new future.

This has to mean fully embracing online trading and, make no mistake, the next 18 months will see further and rapid, online developments. The technology at the cutting edge level we are talking about doesnt come cheap. Clearly smaller firms will not have the financial resources to go it alone, so their survival may involve joining the larger distribution associations.

AMPD has always been very conscious that our survival as an association means being able to trade electronically with our broker introducers and lenders. This means all of our members being able to trade via an AMPD central hub. We are now working with our IT contractor and hope to be able to launch the AMPD hub in the first half of 2007.

I have no doubt our market will see considerable changes. We are also conscious our future is very much aligned to the business we receive from brokers. One of our many challenges is to ensure we continue to provide the vital interface between product providers and the mortgage marketplace. We believe that embracing technology, as we intend to do, and working closely with our lender partners provides a firm basis to meet the challenges facing our industry.

At the end of the day, brokers will decide the future for distributors. I certainly dont take survival as a given but, at the same time, I feel confident we are taking positive steps to ensure we continue to add real value to all our customers.


Eddie Smith, Operations Director, Alliance of Mortgage Packagers and Distributors

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