Work-flow software has suddenly become a hot topic in the mortgage business. Many lenders are acquiring such systems, studying them, or beginning to learn about them.
The software allows lenders to tie together all the steps in the lending process from originations through secondary marketing, or all the steps in the servicing process, to distribute work throughout the company, and to monitor all the work in progress. But why the flurry of interest in work flow now?
American Banker talked to Jiri Nechleba, chairman of Interlinq Software Corp., Bellevue, Wash., which is offering work flow after acquiring Logical Software Solutions Corp.
Everybody is talking about work flow these days. Why?
NECHLEBA: I think what people are trying to do is bring more intelligence to the lending process. People have not one process but many, and that makes it hard to build support systems.
Additionally, it's hard to define a business process if you're forced to stay inside one software application -- most processes cross several applications that don't typically interact.
Work-flow tools that are not application-specific are the key to building realistic business processes.
You don't have to retrain everybody each time you refine the process. Routing of each function will be automatic. The challenge is bringing standardization without losing the flexibility that enables businesses to change dynamically.
Some of the forces driving the demand are mergers and acquisitions and new Internet applications that must be appropriately routed. Work flow can answer the question: now that I have these extra loan applications coming from different channels, how do I work the flow of new applications smoothly into my back-office operations?
Another motivation is the desire by management to properly leverage technology investments.
How does this apply to mortgage lending?
NECHLEBA: What's of interest to the mortgage lender is that you can create more efficiencies and more expertise. It has economic benefits and it also improves customer service. If you have many people doing things differently, you can't promise a consistent service level. You can't even audit the process and tell customers, "We've done this and have these steps to go."
If you step back and observe from a distance, the larger reason why people are interested is, there is a knowledge about how to do business. Part is industry knowledge and part resides with the company. What management is looking for is the ability to encapsulate business knowledge and savvy in the work-flow system, including when to emphasize consistency and when to build in flexibility. They want to have the business processes reflect all that knowledge more fully.
If the knowledge is built into the system, what impact does this have on training?
NECHLEBA: The trouble with training is that, when you train 1,000 people, you end up with 1,000 ideas of what the process is. And when you improve the process, it's hard to go back and retrain. With work flow, the training can be focused on using the program. And the embedded process can be changed without retraining. Trying to execute strategies where you switch gears is hard, but if you can change the process, it's easier. The whole organization shifts together.
What's the bottom line on cost savings?
NECHLEBA: You can eliminate dead time between steps. One of the new rules is, eliminate "nothing," namely, dead space. Look for the dead space between work activities. It's easier to weed out dead space than to go through the screens faster. When the cycle time comes down, costs come down. Also, there's better customer service because answers come more quickly.
For example, the system automatically lets the loan officer or customer know by e-mail what steps have been completed. When you interrupt the processor with questions, you're slowing down the completion of the mortgage.
How closely can management control the design of the process?
NECHLEBA: We provide technology that allows the business people to design the process graphically. They can draw boxes, identify what happens, include a decision tree. You do it all with pictures. The idea is to bring technology close to the people with the knowledge rather than bringing the knowledge to the technologists. Most importantly, we are giving business managers control of processes -- within minutes, they can change the process or priorities.
Does work flow have any Internet applications?
NECHLEBA: People are struggling with separating the wheat from chaff on internet. While everyone thinks it's a great vehicle, a lot of the loans are not fully qualified. The quality of channel is not what lenders are used to.
Work flow can help. The consumer can get e-mail back automatically about some information that is still needed, items they haven't completed on their application.
The back-end systems have to be matched with the expectations at the point of sale. Once you as a consumer get some intelligent response, you think you're dealing with the right kind of company. Stocking the shelves is not just having the products but meeting expectations of a higher level of service.
The application can be routed through different work rules, and you can design a path that will automatically ask for missing information. People have the idea that intelligence is behind the system. The beauty of it is that the request doesn't need to be routed to a loan officer and doesn't cost anything to do.
How does this all fit in with your basic business?
NECHLEBA: We offer both originations and servicing software in the Microsoft Windows environment. In the originations area, we're the market leader, with more than one in five lenders using our software to originate and process mortgage loans. Adding sophisticated work-flow technology is consistent with our history of innovation in the originations area. We were the first to implement automated underwriting and we've been at the forefront of adding new functions in that area.
Over the next year, we'll be introducing a new, messaging-based architecture that will intelligently synchronize information, allowing multiple people to work simultaneously on an application and see changes immediately.
In mortgage servicing, we've introduced a client-server servicing platform that's easier to train on, opens up access to information, and provides better economics. ?