Fleet Mortgage Group, Columbia, S.C., one of the top originators and servicers in the mortgage business, has had a reputation as a laggard when it came to technology. But the mortgage unit of Boston-based Fleet Financial Group is working hard to change that.
A new management team, led by chief executive officer William Schenck, is working to upgrade and streamline its computer systems to remain competitive in a field where technological prowess is critical to survival.
Most recently, the company announced that it had an agreement with Cybertek Corp., a unit of Policy Management Systems Corp., to revamp its originations system.
Fleet had been using its own proprietary system, known as Compass, which it had developed with help from Andersen Consulting in 1994.
Compass was created to handle all aspects of the origination process, from prequalification to just before closing the loan. Fleet invested some $40 million in what it believed would be a state-of-the-art system.
But Compass proved to be very slow, and despite the time and money it spent, Fleet is still searching for the perfect originations system.
In January, Fleet took a stopgap measure: it began using vendor LoanSoft's Works software for the initial steps of the origination process, such as prequalification and underwriting.
The venture will merge Compass with LoanXchange, Cybertek's originations system. This means that some of the proprietary technology that Fleet developed through trial and error will now be available for anyone who buys Cybertek's basic software package.
"By leveraging their industry knowledge and expertise, we get a better system," said Chuck Shields, executive vice president at Cybertek.
That doesn't bother Fleet, which says it wants to focus on its strength- mortgages-and leave the business of software maintenance and development to Policy Management Systems.
"I strongly believe that you don't differentiate yourself with a proprietary software system," Mr. Schenck said. "It's how well you execute using whatever system you have."
Cybertek had contributed to the creation of Compass; Decisionwise, a Cybertek program, is embedded in Fleet's present originations system.
Fleet said it would discontinue using LoanSoft's Works once Compass and LoanXchange are fully integrated. The company aims to eventually have a seamless system, from the point of sale through the secondary marketing of the loan and up to servicing.
Right now, it is burdened with "a mishmash of systems," said Joseph T. McCartin, Fleet Mortgage's current chief information officer.
"Our goal is to have one system for all lines of business," Mr. McCartin said. "Pipeline management is easier if you don't have interfaces running all over the place."
Mr. Schenck said the company would be able to accomplish this much faster through its deal with Cybertek than it could on its own.
The move mirrors actions Fleet took earlier in the year on the servicing side. It is a longtime user of Fiserv's Data Link software, but had made certain proprietary changes. In January, it allowed Fiserv to incorporate those changes into its standard package.
"Our intention is to have vendors maintain and further develop software we've been maintaining and developing," Mr. Schenck said. "Everyone do what they do best."
Although Fleet will now be using an off-the-shelf system, it will enjoy customized service. As part of the deal with Fiserv, the software vendor has 12 on-site consultants working at Fleet's servicing centers in Milwaukee and Florence, S.C., helping the mortgage company to fine-tune its systems.
While Fleet still has some staff coordinating with the Fiserv consultants, eventually Fiserv will handle all the maintenance and support functions for Fleet, said Sadu Thinakal, president of Fiserv's mortgage products division.
Like Cybertek, Fiserv gains knowledge and wisdom that Fleet has learned through experience, which the software maker can now share with its general customer base.
"The advantages a large-scale servicer has can be provided to a small- scale servicer," Mr. Thinakal said.
For example, he said, Fleet's software has "a very competitive customer billing capability." The monthly statement Fleet sends to its servicing customers, he said, is "marketing-oriented"-in other words geared toward cross-selling other Fleet Financial Group products.
By contrast, Fiserv's generic system has a monthly statement that is "matter-of-fact," Mr. Thinakal said. Fiserv intends to adopt Fleet's monthly statement, which is designed to be flexible, targeting specific customers for specific nonmortgage products.
Fleet itself is not content with its current cross-selling capability, and is developing an "information-based management" data base, which will analyze the 1.5 million households the company services, pinpointing which ones are ripe for refinancing, or might be interested in a home equity line or credit card.
The data warehouse will also help Fleet analyze the profitability of its relationships with its correspondent lenders and brokers, Mr. Schenck said.
Fleet had initially put David Sheppard, the mortgage unit's former chief information officer, in charge of modernizing the systems.
Before joining Fleet Mortgage, Mr. Sheppard was known as one of Fleet Financial's resident technology experts, having worked for the bank for nearly a dozen years.
He had headed Fleet Services Corp., the bank's data processing arm, and presided over the technological consolidation of two big acquisitions: Shawmut National Corp. and National Westminster Bancorp.
It was under Mr. Sheppard that Fleet Mortgage began using LoanSoft Works at the front end of the origination process, and adopted Quantitative Risk Management Inc.'s system for managing interest rate risk.
Mr. Sheppard returned to the parent bank in June and was replaced by Mr. McCartin, who came over from GE Capital Mortgage Services, where he was also the chief information officer.
Mr. McCartin has also held the CIO post at Banc One Mortgage. He chairs the Mortgage Bankers Association of America's committee on the year-2000 problem.
Mr. McCartin still has a lot of work to do to get Fleet Mortgage caught up to its competitors. "Some areas are largely unautomated today," he says, which is "a little exceptional."
But being behind the curve has its advantages as well. "In some areas we can move quickly because we're not displacing much," he said.