OCT 4, 2013

Related White Papers

Part 3: Technological Considerations for Leading in the New Mortgage Marketplace
Read Part 2: Changing Lender Process in the name of Consumer Protection
Part 1: Leading in a Changing Mortgage Marketplace
Servicing Lens

Choosing Between Batch File and Real Time Integration

Print
Reprints
Email

A mortgage servicer's decision to use batch file or real time integration for their systems is not cut and dry with one method having definitive benefits over the other.

Each has its advantages and disadvantages. There are times when it makes sense for a company to use one over another or both.

Taking into account the needs and preferences of a business as well as the goals for the end user sheds light onto which system better fits a company’s internal operations.  Whether the systems are both internal to the company or if one of the systems is managed and housed at an outside vendor also play into the decision.

Batch file integration is named as such because data is gathered into a “batch” and is sent over to a system all at once.

This type of processing has been used in organizations since the 1950s, so it provides a certain comfort level and is generally well understood. Using batch files can improve efficiency by gathering high volumes of data for processing at one time instead of doing so for each individual file or transaction. Batch processing is also great in an unattended environment where a large batch of data can be loaded from one system into the other and afterwards an exception report can be produced showing any failures.

The disadvantages of batch file integration are based on an individual company’s needs.

While connecting systems once a day suits how some companies operate, other organizations would find the time delay before data is returned to be ineffective. Banks with ATMs, for example, require transactions to be instantaneously processed to provide updates to individual accounts in real time. Integrating systems with batch files means that records are not always up to date.

Real time integration connects systems on-demand, usually driven by some user action, such as data input. The name “real time integration” is actually something of a misnomer; these transactions are not technically performed in real time, however it is close enough for most businesses.

There is a continual integration of transactions of data run between the systems in a short period of time. Any errors are caught immediately. This appeals to organizations whose procedures depend on the ability to act immediately. Processing data in real time can increase customer satisfaction by improving internal processes like the time it takes to update an account or outstanding balance.

Integrating systems in real time does not fit all companies, of course. The system interfaces are often complex, reflecting continually changing technology. As data is processed immediately, the transactions often must occur thousands of times a day from start to finish.

Currently, about 20% of companies integrate their systems, whether they are internal or with an outside vendor, using real-time transactions, a number expected to continue to rise as batch file processing is phased out over time.

In fact, all organizations today have some real time processing files to conduct operations that cannot be delayed.

Batch processing will continue to decline in popularity, and it is important that servicers conduct annual technology audits to make sure they are fully aware of their changing needs and the best technology mix to meet them.

Steve Wiser is CEO of Cleveland-based Specialized Business Software, a provider of custom software solutions for insurance, mortgage and financial services companies.

Comments (1)
Batch systems will always be around for years to come due to their reliability in processing thousands/millions of transactions with little to no downtime. Stability, reliability and scalability are the key words. Large, mid and small business have come to rely on those key words. Even a batch system still allows users to store, update balances and provide real-time information for key functions in utility files for updating during the nightly batch.

The same cannot be said for real-time transactions. Most real-time systems allow only one user viewing an account at a time, thereby limiting the service capability to the customer should the account be "locked out". Further complicating issues are business reporting and database structures which tend to limit scalability.

Finally, cost is a major factor in all decisions both in real-time and batch. You're correct in saying that there should be a technology evaluation but expanded from once a year. The cost of transitioning would need to be a factor.

I'm sure I'm missing some points but I felt that there should be a balance in this reporting not just "batch file processing is phased out over time." I feel that your article lacks an objective point of view with no statistics proving that batched processing is truly being phased out.

Posted by Kevin D. | Tuesday, October 08 2013 at 1:44PM ET
Add Your Comments:


Twitter
Facebook
LinkedIn
Already a subscriber? Log in here
Please note you must now log in with your email address and password.