*The Cost Of Change*
**By Joe Dombrowski**
***Organizations looking to improve their lending operations essentially have three options:
****1. Do nothing – continue to maintain existing technology with limited ability to add functionality.
****2. Attempt to build an in-house solution with possible staff additions and increased technology costs.
****3. Invest in a platform that provides an efficient, consolidated technology solution for all loan products.
****Many institutions have grown accustomed to supporting outdated technology or a stratified operating environment. But cost and risk pressures prevent others from updating technology, even though the risk of failure increases and the cost to maintain the status quo escalates rapidly. This situation may jeopardize the entire lending infrastructure.
****For example, having to apply regulatory changes to multiple technology systems is laden with risk. Applying regulatory changes to a consolidated platform provides consistent compliance across product lines, with just one source of data to maintain. Financial institutions opting to retain multiple software systems may regret that decision down the road. Policy, process and procedure costs will continue to stress budgets, regulatory compliance initiatives and personnel. On the other hand, proprietary systems developed and supported in-house can be equally expensive and pose the same staff and compliance challenges.
****Regardless of the option, it is important to understand that there is more to consider than the hard costs. One full-service, regional bank with 60 branch offices and loan centers, replaced multiple servicing systems with LoanServ to manage both its mortgage and consumer loans. Prior to the conversion, the bank was handling first-mortgage servicing and secondary market securitization on one system and HELOCs and consumer loans on in-house platforms. Using this combination of software limited which products the bank could offer. For instance, prior to using LoanServ, the bank could not offer rate locks and credit card access on HELOCs. The consumer lending systems just could not provide those capabilities.
****By consolidating its consumer and mortgage loans, the bank was able to redeploy FTEs to other areas of the bank and is laying the groundwork for future growth.
Comments are closed.