The mortgage industry changes fast, with volume going from peak to valley with each interest rate cycle-business tides that come complete with their own waves of new products, customer acquisition strategies and technology plays.
Keeping old applications, systems and platforms fresh means being able to give a demanding customer base efficient and effective service as well as targeted product rollouts.
For First Franklin Financial Corp, a non-prime mortgage lender that originated $20.1 billion in 2003, keeping technology up to date-and accessible for the thousands of non-techies who work and do business with the lender-is being done through an integrated Web Services-driven origination network, or ION. "ION encompasses all of the technology that we use, it's a total technology environment," says Kelly Williams, evp of technology and CIO for the San Jose-based lender and subsidiary of National City Corporation. ION gives users access to First Franklin's primary applications, the automated underwriting, loan origination and CRM systems. These systems, in turn, feed the company's data warehouse, where all corporate and consumer information resides. First Franklin's thinking is that in an industry as volatile as mortgage lending, being able to deploy new technology quickly is equally important to responding to the marketplace changes themselves.
First Franklin recently built and implemented the first major operating components of ION, which is designed to not only centralize all mortgage data, but to standardize the way in which the lender's systems retrieve, manage, filter and secure data across the institution's integrated applications.
"Our job is to make mortgage technology as seamless as possible for our employees, brokers and borrowers," Williams says. "They don't care how the data moves, they just want to get what they need. We worry about things such as data availability and integrity so they don't have to."
There's a number of possible uses for ION, ranging from the account executive who needs access to First Franklin's CRM system from a remote location, to brokers wishing to do business at 3 a.m., to borrowers who need instant prequalification to put a bid in on a home.
Like a lot of lenders, the mortgage boom has been good to First Franklin, which has nearly doubled its production volume each of the past two years and tripled its employee headcount while expanding into new markets. ION gives all of these new employees access to secure data, whether to access a pipeline report, run an instant pricing scenario or lock in a loan rate.
ION is also designed to easily adapt to new technology, in part by being built as a service oriented architecture platform that leverages Web services and XML technology; and by conforming to standards developed by the Mortgage Industry Standards Maintenance Organization (MISMO), an organization established by the Mortgage Bankers Association to coordinate and develop an Internet-based XML for mortgage financing. "First Franklin is already using ION as the launch pad for developing and implementing the next, best technologies that will help our business run better, faster and smarter," Williams says. Officials from MISMO did not return calls seeking comment by press time.
Mortgage consultant Richard Beidl says that for mortgage lenders, Web services is an effective way to upgrade to new technology, particularly for those major lenders who have substantially sized platforms or "anything that's mainframe or Unix."
Beidl says many mortgage lenders reside in an inertia-laden environment, where the pace of new technology adoption is sluggish to say the least. "Companies are slow to upgrade to new versions unless they get a substantial lift from them," he says.
One of the largest benefits of using Web services, which allows different systems to communicate and interact with each other in a common environment, is the ability to "override" the large amounts of code that IT professionals at lenders often write themselves to handle small or more mundane operations. This code is written on the fly as needs arise. The problem is this code sometimes is incompatible with other technology, particularly in a siloed environment.
"There's a ripple effect when you put in a piece of new technology," Beidl says. "If you've written stuff on your own, for this or that purpose, it tends to break when you put in a piece of new software." Web services in effect becomes the new "piece" since it's the conduit between the new technology, the old and the various patchwork codes that were written internally.
Beyond the service and scalability enhancements, First Franklin also hopes ION can be an alternative to the single-vendor solution that some financial institutions are utilizing to integrate and rapidly upgrade their legacy systems.
But First Franklin's strategy suggests another side to the single-vendor argument. "If someone is in a single vendor environment, it now becomes dependent on that vendor for modifying its system," Williams says. "Or if you move away from the environment, how do you move way from a system that does everything for you?"
Financial institutions that make the move to a single vendor cite flexibility to rapidly change technology and a reduction in overall expense, though there are arguments to be made on both sides. The argument for a single vendor solution is it can simplify upgrades because the tech company simply installs a new system. The vendor community is undergoing a wave of mergers and acquisitions in anticipation of being that single technology source for financial firms. But that strategy may not be for everyone.
Beidl says that firms are at times reluctant to be beholden to a single technology provider, no matter who it is. "There is a feeling out there that anytime you go with a one-stop solution, you give up the best of a certain type of service. You aren't getting the least common denominator, but you are getting a jack of all trades, master of none. And it's not as customizable and high end as a best-of-breed solution."
The consultant says that can be a problem for institutions that like to tout a specific area of expertise to their customers, such as on-line applications in mortgage lending. Web services can provide more flexibility to accomplish that.
