My wife and I took the kids to London for their winter break. As the English would say, the trip was “just lovely,” filled with trips to Christmas night markets, the Warner Brothers Harry Potter studio tour, the usual suspect tourist spots, and some fun shopping all around. While the food was great too with the various cuisines, I honestly don’t know if I can eat another English breakfast, meat pie, or fish and chips for at least a year.
One of the things I immediately noticed while shopping was that some stores listed items on the sales tag in both GBP and USD. Anyone with a cell phone can quickly look up the exchange rate and figure out which price is the better one. My daughters love shopping at Zara, and there was a 4-story Zara with, I’m sure, thousands of items, each with a tag listing GBP and USD prices.
Coming from the capital markets world, I was intrigued. I have a friend who works in treasury for a large global pharmaceutical company, and one of her main functions is to manage currency risk. Similar to mortgages, the process involves projected sales, projected cash flows, and then managing FX risk with futures, forwards, and options.
Back to Zara. These prices were printed on the original tag and attached to each item they were selling, which I’m sure numbers in the thousands. There is no way they’re adjusting the USD price relative to the GBP exchange rate on a daily basis. It gets even more complicated as Zara is a Spanish-owned company probably operating in the Euro.
Zara’s parent company probably manages this through currency hedging, building in a dynamic pricing buffer for potential fluctuations in exchange rates, regular (although I’m sure painstaking) price adjustments, banking in multiple currencies, and balancing their operations across various countries. As sales happen at Zara, I’m sure the data feeds into a massive machine that tracks inventory, cash, currency, and makes projections based on the data.
That brings me to mortgages. Thankfully, we only operate in the US residential mortgage market and deal with just one currency. But we still have to worry about market movement, rate sheet
timing, data accuracy, and reporting.
The very first mortgage company I ever worked for used paper rate sheets, fax machines, and highlighters. I still have PTSD from data errors, price changes, and especially the day I threw a football across the office to my old boss, Bill, and knocked our fax machine off the table. Everyone was super pissed at me and stressed about whether we’d be able to lock that day or not.
It’s a new year and a tech-heavy world, and if you’re thinking about upgrading your tech stack or exploring a PPE, AI and BI Data Analytics for the first time, we’d love to hear from you. The speed at which we can get data into the LOS is critical for those that hedge, especially during volatile market days, and the accuracy of our system ensures that loans are priced and manufactured correctly. Drop us a line at sales@polly.io!
2025 is a year of political change and perhaps a meaningful turnaround in our industry. I hope everyone had a lovely Christmas and New Year. Here’s to connecting in 2025—whether at panels, presentations, conferences, or the inevitable post-conference bar hopping. Let’s make it a great year together!
Marcus Lam is Director of Account Management at Polly, operator of the mortgage industry’s first vertically integrated, data-driven capital markets software platform. For more information, follow Polly on LinkedIn or visit www.polly.io.