Fiserv Inc., the financial-services software and data-processing giant, has become a major force in mortgage technology through a combination of internal growth, acquisitions, and good timing.
The Brookfield, Wis., company's share of the servicing software market, in terms of installations, was 21.4% last year, up from 11.3% in 1994, according to SSP Associates, a Silver Spring, Md., research company. Fiserv now ranks No. 1 in servicing systems installations, and No. 2 behind Alltel Information Services in volume of loans serviced.
In origination system installations, Fiserv's market share increased to 8.2% in 1998, from less than 2% in 1994.
The company has gotten there in part by acquiring other vendors, but also by coming up with a plethora of creative and flexible products designed to help lenders improve customer service and operate more efficiently. "Fiserv has the broadest product line of all vendors,'' said Jeff Lebowitz, principal of SSP.
Fiserv is a very fragmented company, with 50 units spread throughout the country in 40 states. Three divisions serve the mortgage market.
On the originations side of the business, Fiserv offers EasyLender, which it markets to banks and thrifts with assets under $2 billion, and Unifi, targeted at larger lenders.
Fiserv's Orlando-based unit runs EasyLender. In September 1997, Fiserv bought Florida Information Service, a data processor for thrifts, which had been around since 1968 and resisted the larger company's overtures for years. The acquired company was renamed Fiserv Orlando.
Aside from the Orlando company's data-processing experience, Fiserv was attracted by EasyLender, a loan origination system that could complement Unifi, said Michael Jackman, senior vice president of Fiserv Orlando.
EasyLender appeals to smaller servicers, for whom "the economy of scale isn't there" to make major technological investments, Mr. Jackman said. The software offers turnkey installation that takes only 60 days. The system is designed to be easy to learn and use; users are sometimes trained over the phone. By contrast, Mr. Jackman said, high-end software from some vendors can take as long as nine months, as personnel have to be pulled out of their daily jobs for training and planning.
"Larger lenders have significant investments in technology, large MIS staffs" Mr. Jackman said. "Their internal competence enables them to support the needs of a more sophisticated, flexible product."
His customers, on the other hand, are not interested in customization or spending a lot of their time on their systems.
"They want the product to come in and work for them. The small originator is lucky to have even one full-time network engineer working for it," Mr. Jackman said.
In recent years, EasyLender has had a less crowded market, Mr. Jackman said. Some of its former competitors used the DOS operating system, which became outdated once Windows became widespread, he said. "To deliver a Windows package with the kind of functions EasyLender provides, they found they had to invest more money than they originally expected,'' Mr. Jackman said. To recoup that investment, they had to raise the prices of their software -- pricing themselves out of EasyLender's market niche.
"You can't go into a regional bank or a smaller lender and expect it to shell out half a million dollars for software alone,'' Mr. Jackman said. EasyLender, which had been a DOS system since 1988, became available in Windows in 1997.
One of EasyLender's selling points is that it can interface with 23 different servicing systems -- not just Fiserv's. Interfaces between origination and servicing systems are important because they allow the lender to load data on newly minted loans seamlessly, without having to manually type in data again.
Fiserv acquired Unifi, the maker of its high-end originations system, in 1996. Run out of Fort Lauderdale, Unifi has been a key part of Fiserv's success in gaining market share, Mr. Lebowitz of SSP Associates said, "by virtue of good timing.
"Fifty-five percent of lenders over $1 billion were looking for a new system in 1996," Mr. Lebowitz said. "The market was ripe, and Unifi was up and running and in production sooner than the others."
But Unifi has more than luck to distinguish it, contends Ed McWilliams, president of the unit.
Unifi is designed so it can be tailored and customized to lenders' individual preferences. It has advanced work flow features, giving the user a bird's eye view of employees' work queues; if need be, the user can use the software to reassign loans to different employees.
A lender can also use Unifi to monitor its brokers and correspondents, to see what kind of pricing those wholesale loan sources are giving it and what kind of loans they have been delivering to the lender.
Last month, Fiserv unveiled the latest version of Unifi, which features risk-based pricing and credit-scoring capabilities. Delta Financial Corp. of Woodbury, N.Y., beta-tested the new software, which, Mr. McWilliams said, enables the lender to give borrowers instant, automated loan approvals.
Unifi has big plans for the Internet, both in the business-to-business and consumer arenas. In the former, it recently came out with Netspeed, which enables a lender to recompile the code from the Unifi application it uses into HTML and put it on the Internet.
If a lender wants to open a new branch, for example, it now can do so without making a major hardware investment -- it just needs a computer with a browser and Internet service. The loan officers in a new branch -- or a broker or correspondent that sends loans to the Unifi client -- can access the system with nothing more than a laptop.
Unifi is also making a name for itself in the world of multilender Web sites, which act essentially as online brokers, taking applications from borrowers and matching them up with lenders who want to make the loans. The Fiserv unit has licensed its technology to operators of such sites, and it plans to run its own direct consumer portal on the Web site.
Lenders that use Unifi as their origination system can get leads and borrower data from these multilender sites and import the data directly into their Unifi applications. Unifi also has a customer support team for its multilender Internet sites that monitors the progress of loan applications, to prevent potential borrowers from falling through the cracks. "We're hearing that on some multilender sites, some applications can sit there for 30 days," Mr. McWilliams explained.
Unifi has not been without its drawbacks. One former user said he was often frustrated because the system's architecture used Progress, a relatively obscure database application, rather than a widely used application like Oracle.
This executive, speaking on condition of anonymity, said his company had a hard time customizing Unifi because it had difficulty finding programmers who knew how to work with Progress. "To get people who knew anything about it, we were flying them in from out of state," he recalled. "When you have that in-house, it's hard to get your own systems people to want to work in it."
The Progress problem, the executive said, has impeded Fiserv's efforts to market Unifi to the top lenders. "It's a good system for those who don't want to change it much. It's not for a megashop by any means."
Unifi has addressed the database problem: as of this writing, Fiserv was about to unveil a new version of Unifi that uses Oracle instead of Progress, a project it had been working on for a year. "We found some customers had already had Oracle as their established database,'' Mr. McWilliams said. "It's easier to sell them software they're already familiar with."
Mr. McWilliams said Unifi works to make its systems "future-proof." In other words, the vendor is committed to keep the system state-of-the-art, so users are not forced to buy a brand new system when technology changes rapidly.
For example, he said, Unifi is moving to an "n-tier'' architecture, which lets the user configure the system an infinite number of ways, as opposed to the simple two-tier (client/database) or three-tier (client/database/server) architectures.
The final leg of the tripod is DataLink, Fiserv's servicing system. One of its key advantages, the company says, is that entry of information into its database is real-time. When the user punches in some piece of data -- for example, that Joe Borrower's September payment has been received -- the database is updated immediately.
That contrasts to most servicing systems, which still use batch processing, in which the database is updated overnight with all the new information that was entered the previous day.
Real-time processing makes a big difference. "If someone's calling and they want to know whether their payment has been posted, you want minimal delay," said Joseph T. McCartin, chief information officer of Fleet Mortgage Group, Columbia, S.C., Datalink's biggest client.
Real-time data will become especially important as servicers develop customer-service Web sites, Mr. McCartin said.
Sometimes borrowers will call with questions that require research and cannot be answered immediately. Again, real-time data processing benefits customer service: the rep can key in the research request, and the item will be in the work queue of the responsible employee "within milliseconds," said Tom Matthews, a senior vice president at Datalink. "In a batch processing environment, you have to wait until the next business day to know you have anything to do."
Datalink's work flow program is "exception-based,'' said Mr. Matthews. As information is entered into the system, it is subjected to tests and edits. If something appears odd -- for example, a payment is late or less than the minimum -- the system flags the item and puts it into a special work queue.
It helps servicers to have a system that can pinpoint such irregularities for them, Mr. Matthews said, so they do not waste their time looking at information that has passed the tests and edits. "You want to focus on things that drive up servicing costs."
To aid servicers in their efforts to retain customers who refinance, Datalink offers an add-on product called Mortgage Call, which can manage outbound telemarketing and cross-selling campaigns and the handling of inbound customer inquiries by telephone and through the Web. Mortgage Call provides telemarketers and customer-service reps with scripts and directions.
Another major initiative at Datalink is InformEnt, a data warehouse program that can gather information about a borrower from various sources and analyze it to predict the borrower's propensity to buy other financial goods or services.
InformEnt's built-in artificial intelligence can tell the servicer that a certain borrower might be apt to take out a home equity line of credit if the borrower's children are about to reach college age. Such information can be fed from InformEnt to Mortgage Call.
Fleet uses InformEnt, finding it easily compatible with other Fiserv products such as Datalink.
Indeed, integration of its different business units is a key strategy for the entire company's future, said Mr. Lebowitz at SSP.
"In the past, the mortgage company was managed in isolation to the rest of the company," the consultant said. But now "the manager of the mortgage business in encouraged to cross-sell other capabilities throughout Fiserv. When they get good at it, it will allow them to increase revenue per account, and make the mortgage business more profitable and get more attention from the parent than it has in the past."
James W. Milligan, president of Alltel Information Services, Jacksonville, Fla., said, "I have high regard for them as a competitor. I expect to see them in any market situation we get involved in."
