It never ceases to amaze me to hear, as I did today at lunch with a prominent vendor, that there are several large, top 20 lenders that they know of in the market for one end-to-end loan origination system to go across all their channels of business. I equate this to the search for world peace in that everyone wants to get there and has their own beliefs about the best path, but there's no one method that'll get you there if it's even possible to achieve world peace at all.
Sure, it would be great for one vendor to solve all the lender's mortgage technology needs, make that lender more competitive, more efficient and increase customer service levels at the same time, but there is no industry utility present in the mortgage world today that can make that happen. Further, I'd assert that it doesn't even make good business sense to try and move in this direction.
Let's take a simple example that everyone can relate to. Like many people out there I was drawn in by my cable TV provider's promise to deliver cable, DSL Internet service and phone all from one provider at a significant savings. I fell for it and I'm suffering for that decision. What happens when my cable goes out due to local construction or a bad storm? I'll tell you, now instead of just being without cable, I have no phone or Internet service as well.
I should have just stuck with the best cable, phone and Internet providers instead of getting everything from one vendor that doesn't do any one of the services I use through that one vendor particularly well. I don't want a Jack of all trades and a master of none, especially when it's easy for me to contract, in this case, with three masters who are experts at what they do.
Further, with the mainstream adoption of Web services, the increasing comprehensiveness of MISMO and the realization of the long-term benefits of service-oriented architecture it doesn't make sense to put all your eggs in one basket, to use another cliché, when you can get the right basket for each egg. As the industry adopts these three concepts together, it becomes easy to contract with the best Web frontend provider, the best decisioning vendor, the best imaging vendor, the best workflow/e-collaboration vendor, etc. and hook them all up using a central integration hub, Web services and a standard data language, a.k.a., MISMO.
In a conversation with Brian Fitzpatrick, president of due diligence and risk mitigation vendor Lydian Technology Group, that we had over a year ago, I think he summed up the business benefits of this holistic technology approach best. "Five years ago the entire industry was building point-to-point connections to everything," Mr. Fitzpatrick pointed out.
"Compounding the problem, the point-of-sale system spoke one language and the loan origination system spoke another language. We would have to map everything field by field and translate the language into a DU 3.0 data structure. We also had to edit data because the POS has a product code for a 30-year fixed mortgage, for example, but the LOS has a completely different code for that same product. Now, if I have different channels using different POS systems I have to repeat all the point-to-point interfaces all over again. Over the years this became a mess because if you change your LOS, for example, all those point-to-point interfaces break and I have to start all over again.
"However, if you output to a MISMO file at least now everyone is talking the same language," Mr. Fitzpatrick said. "Now, with service-oriented architecture we're able to take Web services and MISMO standards. Given that we're talking the same language, exposing our services via Web services that employ the service-based interfaces, it won't break the system if you switch out your LOS.
"SOA is all about taking a repeatable business task and using repeatable Web service components," he continued. "Also, when you utilize data standards like MISMO you can get 80% of the data transfer done for you because we're talking the same language. So, you're no longer starting from scratch, which eliminates development costs by 60% and the cost of maintaining the best-of-breed interfaces is reduced as well."
What's the ROI? "In a point-to-point world switching an LOS would take eight to 10 months in planning and another 14 months to two years to swap it out and rewrite all the interfaces," answered Mr. Fitzpatrick. "Now it can be done using SOA, Web services and MISMO in less then a year, probably around six to eight months to get most of the way there. Further, new interfaces to best-of-breed providers can be up in under 30 days."
Don't you just love it when technology empowers you to make better business decisions so you, the lender, can do business with the best instead of having to settle for a larger system that will take much longer to implement that isn't the best at any one thing, but rather just touts that it covers more ground?
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