Freddie Mac Serious about Out-of-the-Box Technology
Freddie Mac is moving ahead vigorously with its new buy-instead-of-build strategy for new technology, said Joseph Smialowski, Freddie's EVP of operations and technology. "Banks look at the marketplace before they decide to build internally," he said. "That is a mindset shift I have tried to instill here."
Mr. Smialowski oversees all of Freddie Mac's mortgage origination and servicing, investment and capital markets operations, and information systems divisions. When he came over from Fleet Boston Financial, Freddie Mac's philosophy was to build systems from scratch, he told MSN in an exclusive interview. "We have shifted in a number of areas so that we can be more competitive."
Examples of recent Freddie technology purchases that Mr. Smialowski cited were the PegaSystem rules-based workflow, Siebel's OnDemand CRM and call center technology, the CheckFree Frontier auto-reconciliation suite, the SBO 2000 servicing system for ARMs, Mellon Financial's Eagle system for retained and liquidity/contingency portfolio accounting and Summit Systems' product for debt/derivatives accounting. All these systems were ones that Freddie had previously considered building internally, he said, and not all of them have yet been fully implemented.
He noted that all the technology Freddie Mac is purchasing is standards based. "That allows us to better support our customers."
When Freddie looks at a product, he explained, a major consideration is whether it is MISMO compliant or compliant with corresponding standards in the securities world.
On another front, Mr. Smialowski said Freddie Mac has succeed over the past year in increasing adoption of its new Web-based selling system from 10% to approximately 80% of its customers, and expects to achieve 95% adoption by the end of the year. "This is better than we anticipated in terms of the adoption rate by our customers," he said. "Part of that is because it is rules-based. We can respond to customer needs faster."
Freddie Mac's goal, he said, is to integrate all the rules management between the company's various platforms "to improve our day-to-day accounting" and to enable having a single platform for coming to market with new loan programs.
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