Banc One Corp. is getting more than it bargained for from its mortgage origination system.
The technology, which the Ohio banking company developed in-house late last year, has proved so promising that other lenders, including mortgage giant First Union Corp., are adopting it for their own programs.
"We found that other lenders like the idea of a system created by mortgage bankers," said Joe McCartin, chief information officer at Banc One Mortgage Corp.
Banc One's development of its own system underscores the often dramatic restructurings that are taking place to make mortgage operations more profitable. Many banks, after years of acquisitions, are saddled with unwieldy pastiches of origination and servicing programs.
"Like many other lenders, we had cobbled together several systems to support our business," Mr. McCartin said. "We reached the point where we flat out couldn't support any more volume."
Banc One spent 21 months and $5 million on the system, which is designed to smoothly pass loans between loan officers, processing staff, and servicers.
Right now, Banc One ranks among midsize lenders. In the first half of this year, the company produced $1.8 billion of loans and was servicing $20.9 billion.
To boost that volume, the new system uses various software programs, data bases, and back office support to let loan officers spend more time selling.
The officers, using laptop computers, gather information and forward it to production centers for verification and processing. In the past, loan officers handled most processing themselves, leaving much less time to call on customers, Mr. McCartin said.
The new process - dubbed the Origination Management System - builds in ways for Banc One to make its sales force even more productive, Mr. McCartin said.
Unlike other systems that track overall loan volume, Banc One's technology closely follows individual sales people, he said. "This way, we can see who is working better and go to them to see what they're doing."
Banc One recently assessed loan officers in the Midwest and found that some were surpassing their peers by a significant degree. It turned out that the most productive lenders were letting processing centers handle much of the workload, Mr. McCartin said.
Although Banc One designed the system for its own operations, the process has caught the eye of other lenders, like First Union.
The Charlotte, N.C., company, which originated $2.3 billion of mortgages in the first half of this year, sees the system as a way of boosting volume. "We have very high hopes" for the program, said Robert Dingle, chief information officer with the mortgage unit.
First Union installed the system in September and will roll it out to all 400 loan officers next year, Mr. Dingle said.
Mr. Dingle said First Union could have gone with another vendor's product but chose Banc One's system because it puts a lot of current information - like loan rates - in front of loan officers and lets them easily work with the home office.
He declined to say how much First Union was paying to license the program, but he did indicate the amount was "substantial."
An integrated system like Banc One's can make its mark by delivering services more quickly than older processes, said Matthew Dixon, senior consultant with Ernst & Young in Dallas.
"A lot of the older systems are less flexible," Mr. Dixon said. Banc One's approach, which includes Windows software, "is the way the industry is heading."