*A Case Study: Breaking Bottlenecks*
**By William DiPaolo**
***“It’s easily two hours per file, maybe longer”, the processor said, looking around the room with her head nodded rapidly up and down to let anyone who didn’t agree know they’d better think again. Other heads began nodding in unison. The president of the fast growing California lender looked over at me, expressionless. “Two hours. Every file. There’s got to be a better way.”
****The rapid deterioration of the mortgage broker model had propelled his company to a seven fold increase in originations over the past fifteen months. Scores of talented brokers, many with good numbers of employees, shuttered their businesses and flocked to the security of the well capitalized lender. Yet as originations increased, so did the problems. And this particularly thorny “two-hour-per-file” problem threatened his ability to continue growing. Could enterprise software eliminate the bottleneck?
****To answer the question we should review an important characteristic of enterprise software; the software should do actual work for you. This means, that in order to eliminate the bottleneck, the software must fully automate the task and remove the human work involved. Would that be possible?
****The bottleneck developed as originations increased from his newly acquired branches. In the past all loans originated internally, from loan officers trained in the lender’s fee structure and processes. This all changed the moment originations started flowing in from the new branches. It seemed each branch (each loan officer, even) had their own way of entering fees. Consequently every externally originated loan had to be manually reviewed to ensure correct fees.
****Processors spent more and more time poring over submitted files. What fees were being disclosed? How were the fees labeled? Where did the fees appear on the GFE? Before a loan could be disclosed, all these questions had to be answered. Errors and omissions needed to be communicated back to the loan officer. More than occasionally this “review and reject” process occurred more than once per file. To ensure compliance, every file had to be evaluated – even those which ultimately contained no errors. The processor wasn’t kidding; a two hour bottleneck occurred on every file. And more originations meant more processors had to be hired. In order to scale his business, the president needed software to automate the work.
****Turns out, this is exactly the type of thing enterprise software does exceptionally well. To understand, think of enterprise software as a network of digital pipes moving loan data through your operation. At strategic locations the software monitors the data flowing through it and determines proper routing. Keeping with the analogy, the software uses intelligent valves and filters to ensure loan data moves through the output end of your pipeline free of defects. With this in mind, we can see just how software eliminates the bottleneck, and fully automates what used to be a two hour manual task.
****First, the software eliminated the need for brokers to e-mail loan files or GFEs directly to processors for review. Instead, branches submitted files directly into the network (the pipeline) so the software could examine every fee. If all was correct and fell within the lender’s tolerances, the software moved the loan data into the lender’s workflow and notified the loan officer that origination was underway. On the other hand, any errors were immediately presented back to the loan officer. Almost immediately, the loan officer knew exactly what was wrong, and how to fix it. Within minutes the loan officer was able to resubmit the file and try again. The solution provided faster loan submissions and better response times – all without any human intervention.
****As you consider enterprise software for your organization, remember the analogy of your loan data flowing through a network of pipes. Think of different places in your organization where software, rather than people, can analyze loan data and perform an appropriate action. This is true enterprise resource planning. Yes, you will gain faster, more accurate processes with enterprise software. But more importantly, you will gain an ability to scale what you do today into what you dream of becoming tomorrow.