JUL 18, 2012

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Don’t be a Jack

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Skilled tradesmen strive to be the best at their core competencies. The wise ones contract out the work that does not fit their expertise. Others take on this work and accept less than perfect results. As a homeowner, if you hire an electrician to rewire your home, you do so with the understanding that he will do the job right. If you then ask the electrician to fix your plumbing, an unsuspecting homeowner unknowingly accepts the risks associated with having someone ill equipped completing the work.

Assuming that being skilled at one trade constitutes being skilled at all trades can turn out to be disastrous. There are many tradesmen who refer to themselves as a “Jack of all trades.” They accept work that does not fit their skill set, since they are being offered a nice rate by a naïve homeowner. They often fumble through the work and in some cases, learn as they go. The customer will suffer from the outcome, not the tradesmen because his check has already been cashed.

When a lender selects a loan origination system from a vendor who represents being a “Jack of all trades,” the lender is accepting the same risks that the homeowner above is accepting. Most LOS providers are very good at creating and maintaining data-centric products. Capturing data, managing data and using data to create work flows and build business rules is the “skill” that LOS’s bring to the table.

If demand for greater functionality exists, many LOS’s, similar to the ill-equipped tradesman, will provide a solution, if their customer base is willing to pay for it. Superficially, this will look like a win-win for all involved, however how good will these added features be if they do not fit the skill set of the LOS?

Electronic document management platforms are one example. There are a number of LOS vendors on the market that have developed, or are in the process of developing, their own EDM offering. Chances are, these products are marketed and sold as groundbreaking technology to their loyal and trusting customers, but they’re built by tradesmen not skilled in EDM technologies.

Unfortunately, many lenders who have been complacent since selecting their current LOS have never seen an EDM software that’s built on a platform developed by a company that is “skilled” in document management technologies. They accepted that what the LOS provided is the best they can get.

In recent months, we have seen a record number of lenders shopping for a new LOS. These lenders, once loyal to their legacy LOS are now seeing outside the blinders placed on them by their current provider. They are being exposed to better products than what they have been loyally accepting from their “Jack of all trades” LOS. LOS providers that are focusing on perfecting their core competencies, while effectively imbedding proven, best in class platforms built by skilled craftsmen have been able to attract this attention.

In the end, LOS providers who offer, and lenders who select, an EDM product that’s crafted and maintained by a team of skilled craftsmen, not a “Jack of all trades” won’t be disappointed; even after the check is cashed.

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