This point of view article was originally published on WSTA, authored by Ravi Vasantraj, Global Head – Business Process Services & Digital Risk, Mphasis.

The new abnormal created by the pandemic is not going away anytime soon. In this scenario, all industries are forging new ways to read the signs, beat the odds, and thrive.

The mortgage industry is no exception. Widely viewed as a benchmark for U.S. economic health, it is often the subject of scrutiny. This is because the prevailing consensus around economic stability is that if the U.S. mortgage industry is doing well, then retail and its customers are also doing well, and the U.S. economy is in a good place.

So how is the mortgage industry faring? In general, the industry is holding up. Although the home equity component has tapered off, the overall volumes have held steady. However, banks and other institutions are planning for default servicing. This is because, as the pandemic shows signs of extending further, they expect defaults as consumers see an opportunity to reset loans and restructure contract terms with banks.

The focus for financial institutions is therefore increasingly shifting to creating capacities for forbearance—an unprecedented situation. This has led to a sense of urgency across players in the financial services space to think about how to generate new capacity.

As a direct outcome, these financial organizations are preparing to pivot to create surges in a short span of time by partnering with IT service providers and system integrators. They realize that it is no longer good enough to rely on skills or legacy processes and systems to manage mortgages in the way they have done. Instead, what they need are solid, collaborative partnerships, with specialists, which can enable them to bridge the uncertainty of an overseas arm serving as a backup.

What mortgage companies are also looking for are partners with a long-standing base across the U.S., with all the relevant licenses as debt collectors under the Safe Act, along with the know-how to comply with prescribed regulations. These are specialties that cannot be purchased overnight but are the defining mark of veteran system players who have been in the game for years.

Further, the pandemic with its constraints on in-person interactions and requirements for social distancing has made it clear to mortgage lenders that they will have to expedite their mastery of all things digital. This is because COVID-19 has caused the move from digital serving as a channel of communication to becoming THE channel for communication.

That is why players in the industry will focus on improving digital capabilities by undergoing digital transformation on both the Ops and IT sides. To do this well, they will actively look to partner with systems integrators who are near-shore, state-side with the ability to offer holistic services underscored by contextual intelligence. Such capacities will become game changers in the mortgage industry as these will give individual players the competitive advantage to play to their strengths.

As the impact of the pandemic is expected to linger on in most industries in the coming years, lenders in the mortgage space will see value in collaborating with systems integrators with proven expertise in understanding the nuances of the industry to help them leverage their capacities in compliance with local regulations. Currently, there are local regulations that need to be considered across the 50 states in the U.S. The challenge mortgage companies will face is creating surge capacities while adhering to these varying regulations.

Mortgage lenders likely will increasingly see value in creating these capacities not only by focusing internally, but also through partnerships with external experts to ride out an uncertain time by sharing or making the expenses variable. Such partnerships will make it easier for lenders in the mortgage industry to ramp up and down according to changing scenarios, pare down costs and further consolidate with the support of an able partner, iterative digitalization—the need of the hour during and after the pandemic.