Origination Tech Uses Modular Approach to Integrating BPO
Among the biggest difficulties in deploying mortgage fulfillment outsourcing is aligning the lender's existing systems with the technology capabilities of the business process outsourcing provider. Genpact Mortgage Services is addressing this challenge by applying an approach used with servicing technology to the origination sector.
When lenders want to outsource part or all of their origination fulfillment operations, they generally have two options when it comes to technology: have the BPO provider learn how to use the lender's existing loan origination system; or replace its legacy infrastructure with systems provided by the BPO vendor. Both options are time-consuming and cost-prohibitive. With more than 20 LOS vendors on the market, it's a struggle for BPO vendors to maintain a staff that's well-trained on multiple systems. And most lenders don't have the appetite for swapping out their LOS just to take advantage of outsourced manpower.
But Genpact seeks to bridge that divide with its LOS offering, which can be deployed as a complete system, or by implementing individual components into a lender's legacy technology.
"There's a ton of people using legacy platforms or off-the-shelf systems and they're not going to replace them because it's such a pain," said Matt Woods, president of Genpact Mortgage Services. "Rather, we are able to surgically install whatever component the client is going after and augment the existing technology so that it's a nonthreatening solution."
The strategy is similar to the way servicing technology is developed. The market for systems of record vendors is far more consolidated than LOS vendors. Black Knight Financial Services' Mortgage Servicing Package is the dominant leader, boasting a market share of more than 50% of all outstanding U.S. mortgages, while the rest of the industry relies on similar systems provided by a handful of vendors or custom, in-house platforms.
Rather than provide a standalone platform or try to convince servicers they need a new system of record, vendors that provide default, compliance, reporting and other servicing technologies have their software interface with the servicing system and update its data files when various activities are performed. Even Black Knight takes this approach with its Desktop and Fusion applications.
But creating an environment where interfaced systems perform parallel and related tasks is a far more complicated undertaking for LOS technology than servicing systems. The sheer number of legacy LOS platforms, as well as third-party underwriting technologies like document preparation, compliance and other services make for a fragmented marketplace.
"The difference is that we're not bolting on to a common platform. It's much more complicated when you don't have a dominate LOS out there like MSP is to the servicing industry," said Woods. "In servicing, it's easier because anyone can build a technology that bolts on to MSP and they've got access to 60% of the market."
Genpact's Quantum platform consists of eight modules for tasks including sales, processing, underwriting, secondary marketing and closing. The complete system can work as an end-to-end LOS. Alternatively, any individual module can interface with another LOS, where it reroutes a particular task in the origination process so that it's performed with the Quantum technology — either internally by the lender's employees or by Genpact's BPO workforce. The interface between the Quantum module and the other LOS allows for Genpact to update the legacy system when the task is completed.
In order for Genpact's approach to work, a single system of record for loan data has to be established (which is typically the legacy LOS) and exchanges have to be seamless, observed Jordan Brown, a mortgage technology consultant and CEO of Marketwise Advisors.
"It's an interesting concept, but practical implementation is nontrivial because depending on which legacy LOS you have, it would take a fair amount of data mapping and architecture to integrate the Genpact solution set," Brown said.
Still, the benefits of the approach are great for both the outsourcer and lender, said Woods.
Since Genpact's approach doesn't require lenders to remove their existing LOS, it's easier to both begin a BPO relationship, as well as end it. And if lenders choose to only outsource a piece of their operation, they can continue to use their existing legacy systems. For Genpact, the approach makes it easier to allocate its personnel across clients.
"The associates using our platform can jump from one team to the next as volume dictates and there's not a tremendous amount of retraining to do that, it's just minor tweaks," Woods said. "There's less lead time to get someone working for a client than it would take to train them on the clients' technology, which allows us to react much more nimbly."