Boatmen's Bancshares has beefed up its mortgage operations through strategic acquisitions while reengineering its back office.
Last February the St. Louis-based bank vaulted into the mortgage big leagues by acquiring Memphis-based National Mortgage, instantly quadrupling its servicing business to over $16 billion.
And last March Boatmen's added another $1.7 billion in mortgage assets through acquisition of Worthen Banking Corp. The deal put Boatmen's among the top 30 mortgage servicers in the United States.
Boatmen's kept most of National Mortgage's executives on board. National's president and chief executive, Joel Katz, remained, along with chief operating officer Mark Wender.
And though Boatmen's mortgage chief, William Carson, was made chairman of the new unit, Boatmen's National Mortgage Inc., he moved to Memphis - a clear signal to former National employees that the bank intended to centralize its mortgage operations there.
Once the organizational issues were settled, Mr. Carson and his team went looking for ways to use technology for streamlining the back office and improving service in a business where "we'll get back to you" has been a standard reply to client inquiries.
"National Mortgage has been recognized as one of the leaders in using technology in the servicing area," said Mr. Wender. "Now we are working to become equally good in the origination field, an area where we lagged when the merger took place."
The consolidation of the Boatmen's mortgage business in Memphis gave executives the opportunity to reengineer its loan origination functions, said James Kallner, senior vice president.
"In this business, there are so many handoffs - from the loan officer to an underwriter to a closer, then back down the chain," he explained. "This can create big gaps in communication."
After the merger "we elected to do some job compression, so our underwriting people are not just doing processing, they're also preparing the file for closing," Mr. Kallner said. "We've eliminated a couple of handoffs."
He added that the mortgage company is also testing Freddie Mac's automated underwriting system, called Loan Prospector. The system uses artificial-intelligence software to help assess loans for purchase in the secondary market.
Boatmen's is also giving its mortgage lenders laptop computers, to further automate the origination process. The new system is already being used in St. Louis and Albuquerque; plans are to expand that use to all of the bank's markets by the end of this year, Mr. Kallner said.
"Loan officers armed with a laptop can pick up our pricing each day electronically, take the loan application, and print all the information at the point of sale," he said.
"They can also gather information such as a credit report and an appraisal, then send it all to us here in Memphis to get it queued up for a decision."
Mr. Kallner boasted that over half of the home loans Boatmen's originates in St. Louis and Albuquerque are turned around in less than two days.
Boatmen's had been investing heavily in technology to help improve the origination process, the acquisition of National provided a quick injection of leading-edge technology in servicing.
National was one the first mortgage companies to use imaging technology in its servicing operations, installing a system from Filenet Corp. in 1992.
Document imaging has been longed for in the mortgage business. A typical mortgage file can be stuffed with dozens of documents.
"Compared to other areas of financial services, use of imaging in mortgage companies has been low, but that is beginning to change," said David Medeiros, an imaging systems analyst at Tower Group, a technology consulting firm based in Wellesley, Mass. "The business is highly disaggregated in terms of processing, and it is very paper-intensive, in order to satisfy secondary investors."
Boatmen's National's Filenet system now contains over 20 million scanned documents. They are accessible to over 200 PC users in the company's customer service, hazard insurance, and canceled document departments, said John Goodwin, imaging systems manager. The bank plans to give staffers in its foreclosure department access to the Filenet system later this year.
Mr. Medeiros noted that the some mortgage companies are scanning only some of their documents. Mr. Goodwin said that makes the technology less useful.
Getting rid of paper documents improves employee productivity, he said, because workflow software can track a file as it moves through an organization. "If part of a mortgage file is in the imaging system and part is in the file room .. that pretty much negates the benefits of the technology."
Boatmen's is also improving its foreclosure department, with a computerized telephone system from Davox Corp. The "predictive dialing" system makes phone calls on behalf of collection agents. If a call is answered, it is automatically switched to an available agent, who simultaneously receives a computer file containing information on the customer's account.
Boatmen's quick ascent in the mortgage world is a textbook example of how economies of scale and efficient exploitation of technology go hand in hand, Mr. Wender said.
"Once you get to a certain size, it becomes virtually impossible remain competitive unless you continually reevaluate how you use technology to stay efficient," he concluded. "Just growing your servicing portfolio every year isn't enough anymore."