# MUFG Bank Announces Restructuring of the Mortgage Business


MUFG just announced its reorganisation in the [MUFB mortgages](https://www.needingadvice.co.uk/multi-unit-freehold-mortgages-mufb/) business. This will increase its profits and customer satisfaction. MUFG's pretax profits will increase by Y=300billion due to cost savings and higher revenues. The reorganisation will also add seven basis points to its profitability, as measured by net income/tangible assets. It is a move which will likely boost its share price, too.

## Profit margins increase

Fannie Mae's recent survey shows that a growing number of [mortgage lenders](https://www.fool.com/the-ascent/mortgages/best-mortgage-lenders/) expect to see their profit margins shrink over the next year. Sixty-nine per cent of lenders expect their profit margins will fall. This is a sign that the mortgage industry is not in a bottomless pit, as the mortgage market is still very much a viable business. Nevertheless, many mortgage lenders are still skeptical that their profit margins will increase after restructuring their mortgage businesses.

## Customer experiences can be improved


The [Mitsubishi UFJ Financial Group](https://en.m.wikipedia.org/wiki/Mitsubishi_UFJ_Financial_Group) has announced the implementation of the "MUFG Group Code of Conduct" and the "MUFG Basic Policy to Fiduciary Duties". The company's goal is to improve the knowledge and customer experience of its mortgage business. This policy was formulated following feedback from customers. The bank also intends to expand its service range by offering low-risk and fee products, and it will focus on improving customer satisfaction in the process.

According to the survey, the most important factors that consumers value in a mortgage transaction are the customer experience and the lowest rate. However, first-time homebuyers pay special attention to customer service and seek out feedback about their mortgage lenders online, through word-of-mouth, and from online reviews. In other words, customer service is a competitive advantage that banks can leverage to differentiate themselves from their competitors.

The company is also implementing its Speak Up campaign. The new policy aims to foster everyday conversations between employees and customers about the company's operations. The Speak Up campaign - which culminated in October 2020 - has inspired other conversations in the bank, including in the form of Town Halls, Inclusion & Diversity campaigns, and ongoing communications. The new policy also introduces a new mortgage product, the Mitsubishi UFJ net home loan.

To make the customer experience even more convenient, MUFG is working to implement the latest technologies both at home and abroad. To improve customer experience, the bank collaborates with research institutes and other organizations. These innovations will simplify the process and improve the quality of mortgage proposals. Additionally, MUFG is improving the security of its Internet banking system. [MUFG Bank](https://en.m.wikipedia.org/wiki/MUFG_Bank) is aiming to keep its position as a leader in digital banking by focusing on new technologies.

## Support for multiple channels

Through its Deal Closing Agents, MUFG Bank supports multiple channels for the restructuring of the [Multi Unit Freehold Mortgages](https://www.needingadvice.co.uk/multi-unit-freehold-mortgages-mufb/) industry. These individuals coordinate complex loan or letter of credit transactions. These professionals work closely alongside Relationship Managers, reviewing critical information and collaborating with various external and internal parties. Deal Closing Administrators have contacts in other geographical locations and legal entities, as well. This helps ensure smooth loan processing.


[MUFG Financial Group](https://en.m.wikipedia.org/wiki/Mitsubishi%20UFJ%20Financial_Group) is exiting U.S. retail banking. The Japanese conglomerate sold its [MUFG Union Bank](https://en.m.wikipedia.org/wiki/MUFG_Union_Bank) to U.S. Bancorp for $3.5 billion in cash and shares. The deal will result in $900 million in savings, and combine the real estate footprints of both companies. This is part of MUFG’s international expansion strategy. Earnings in Japan are difficult because of ultra-low interest rates and a shrinking population. Instead, MUFG has turned its focus to other parts of Asia.

The new MTBP outlines 11 Transformation Initiatives. These are specific plans to weather the current business environment and get back on track for sustainable growth. They all have high growth potential and demonstrate capabilities. Each of the eleven Transformation Initiatives could become the main business of MUFG. Together, they aim to achieve a 30% net operating profit growth. MUFG plans to flexibly repurchase shares and increase capital efficiency in order to achieve this goal.

Empower, Black Knight’s enterprise loan origination system, supports the operations at MUFG Union Bank. This Web-based enterprise loan origination software allows lenders to electronically capture and process loans. MUFG Union Bank has implemented both retail and wholesale lending capabilities of Empower. MUFG Bank supports multiple channels in restructuring the mortgage business through Empower and MSP. Although Empower supports multiple channels, not all loan programs are available in all states. These services are offered by MUFG Union Bank (NMLS ID 539249), to residential and commercial customers.

## System development in-house


The new MTBP outlines 11 specific initiatives for overcoming a challenging business environment and returning to a sustainable growth path. These initiatives have a lot of potential for growth and are proven to be able to succeed. Together, they promise to become the MUFG Bank's core business, as well as a support function of it. Each legal entity promotes these initiatives jointly with the ultimate goal to increase net operating profit by 250 Billion yen.

MUFG Bank has decided to perform "functional realignment" as part its strategy to respond and improve the performance of its customers and respond to global and domestic structural changes. The original plan was to transfer corporate loan-related businesses of Trust Bank to its Commercial Bank. The corporate split was meant to realize this "functional realignment."

MUFG Bank is closing its physical branches to streamline operations. Some of these branches will be converted into advisory boutiques. The bank's restructuring plan also calls for the removal of 160 locations, from its current 300. The remaining locations will be stripped down and converted into smaller, limited-service branches. Despite the imminent restructuring of the mortgage industry, the in-house system development project is still going ahead.

In addition to its strategic and technological initiatives, MUFG Bank has invested in its in-house development of mortgage software and applications. In 2008, the bank acquired a mortgage software developer and implemented it for its customers. This is a win/win situation for MUFG Bank as well as its stakeholders. The company is committed to achieving a successful in-house system development program that will benefit both its mortgage and retail customer base.