Life-Cycle Lending:Technology Advances

*Technology Advances*
**By Harvey Foster**

***There is no question that technology advances such as multi-vertical origination software have enabled financial institutions to implement customer-centric business models. Lenders certainly need to be nimble when it comes to product and process. But it does not stop there. Financial institutions need to add a new word to their lexicon: transparency. This term is becoming foundational to how the loan operation relates to regulators, borrowers and other departments within the institution. Transparency is not only being able to provide insight into origination processes and practices, but it also means being able to pass along transactional data to those who request it, when they request it and in the format they request it.

****Looking back as far as a decade, some astute financial institutions began to realize that their loan origination systems were becoming outdated and were based on technology that was increasingly more difficult to maintain. But the influx of new loans suppressed system upgrade projects. As a result, the current technology landscape is rife with redundant, inefficient, and incompatible systems that are increasingly costly to maintain. The long-term result of this uncoordinated growth was a focus on vertically segregated products and a business-line approach to managing customers.

****Many institutions have grown accustomed to having one system for first-lien mortgages, another system for second liens, a third for lines of credit secured by real estate, and possibly even a fourth system to accommodate other consumer installment products. In such a stratified operating environment you may also find deployment of separate systems to help manage collections and investor accounting in an attempt to bring cohesion to disparate servicing systems. Aging components and a mixed bag of interfaces jeopardize the entire lending infrastructure. The risk of failure increases and the cost to maintain status quo escalates rapidly. Cost and risk pressures prevent some institutions from installing upgrades that are critical to their business.

****The future of origination technology resides with multifunction, multi-vertical solutions. New systems, such as Common Origination Platform from Fiserv, will be used to support multiple loan products, both secured and unsecured. To keep operations nimble, these solutions will have embedded rules and other controls to empower lenders. They will also be real time to ensure immediate awareness of transactions across the enterprise.

****Common Origination Platform and other systems like it combine intelligent processing automation with next-generation, sophisticated technology architecture. With customer data housed in one database, lenders can effectively reduce risk, gain processing efficiencies, take advantage of cross-sell opportunities and use information more effectively across the enterprise.

****Process Automation

****Offering process improvements and greater levels of automation, single platform environments such as Common Origination Platform enable financial institutions to originate all consumer, business and mortgage loans utilizing the same tools (including all processes, workflows and business rules management performed) and skill sets. Defining or modifying actions, behaviors and workflows within this environment is easily accomplished by manipulating the built-in business rules, giving an organization much greater control over its own specific processes. Streamlining in this fashion can open up new avenues for cost management strategies and greater profitability.

****Single System IT Support

****Operational efficiency is built into an integrated platform. Having just one system means that any updates, changes or modifications are applied enterprise-wide, saving resources and money. Systems such as Common Origination Platform that can handle multiple loan types across multiple channels enable the organization to devote IT resources to maintaining and supporting just that system. A common platform also eliminates the need to train separate technical staff or users to handle different technology applications.