Editor's Note: This feature originally appeared in the August issue of DS News.
Since the beginning of this year, I’ve had the opportunity to attend several industry conferences—something that has allowed me to discover the latest news and industry developments, as well as attend networking events and meet other industry experts.
Typically, these events are great opportunities to connect with other financial service professionals and discuss the challenges they are facing and potential solutions. Through a number of discussions with industry professionals, one of my biggest takeaways was that while many financial organizations are discussing technology modernization plans and digitization strategies, not many have yet taken steps to implement those strategies. Additionally, there seems to be some confusion around what digital transformation actually means.
In my discussions, I found that transforming through technology means very different things for different individuals. Early on, it meant incorporating digital touchpoints for customers and the outside world. Today, servicing experts have realized that you can’t be fully digital to the outside world until you embrace digital processes internally within your organization.
Many financial institutions are determined to replace legacy technology systems to remain competitive and keep up with consumer expectations. They realize the potential threat that new entrants pose but before they can be fully digital in their processes and interactions with customers, they need to embrace digitization within their own four walls. To achieve this—and the ultimate goal of digital transformation—I believe the lenders are going to need to invest in and embrace technologies that do the following.
CAPTURE AND EXTRACT DATA
As the cost of loan production and acquisition continues to rise, one of the biggest potential cost savings lies in the reduction of human touchpoints in the lending process. Capture technology has continued to advance by leaps and bounds, and it should be considered one of the foundational elements in transforming the lending process. Borrowers’ expectations have changed dramatically in recent years, and more and more often, they expect faster response times and an overall end-to-end digital loan experience.
With this higher demand to interact digitally, more lenders are seeking ways to reduce manual processes and implement solutions that improve accuracy, efficiency, and security. With intelligent-capture solutions, lending processes are digital from the very start, because these applications accurately extract data and classify documents for them to be used downstream. This promotes a more-efficient way to process all incoming information—regardless of the format, it comes in. Intelligent capture and optical character recognition (OCR) tools drastically reduce the need to manually classify documents and hand-key data from even the most complex, diverse document types, including bank statements, tax returns, closing disclosure forms, HUD-1 documents, and more. This template-free extraction solution accurately captures borrower data from both structured and unstructured documents.
With greater accuracy, lenders have more confidence that the information being captured is consistent throughout the process. Organizations also gain greater transparency and accountability in their processes to ensure tasks are completed on time. Exceptions and missing information are addressed almost immediately because the solution catches those errors and notifies the right people to address the issue before it moves into the next step of the process.
Once information is accurately captured, lenders want better ways to move documents, data, and information to the appropriate people and keep the process moving. Workflow management/business-process automation technology automates processes and allows employees to share work more efficiently. By matching work tasks with the appropriate employees, organizations can ensure work goes to the right person, thus minimizing the reliance on paper shift throughout the lending cycle.
These solutions can be set up to route work based on business rules, workload, specialization, or a number of other factors to keep processes moving consistently. Additionally, any supporting documents needed to make a decision are linked and quickly accessible, eliminating the need to search for information and take time away from the task at hand.
Some of the benefits servicers are seeing with an automated workflow toolset include higher efficiency, faster speed to resolution, greater consistency in processes, and cost reduction. This is extremely relevant for the industry because the cost to produce a single loan is higher than ever before due to increases in regulations and the fees associated with loan processes. The best way to counter these added costs is to invest in technology that streamlines back-end processes and reduces human touchpoints.
Additionally, many process automation applications include reporting dashboards that allow lenders to gain greater insight into processes, determine if they are completed in a timely manner, and if they’re not, hone in on any bottlenecks holding things back. These real-time insights into the status of processes, completeness of records, and health of your systems allow managers and executives to take action when and where needed. In addition to increased visibility, these systems have auditing capabilities that let you easily view information, missing documents, or aging/expiring information, thereby supporting compliance initiatives and identifying the existence and accuracy of information.
IMPROVE THE CUSTOMER EXPERIENCE
A majority of the technology investment for the servicing industry is in applications that provide better methods of customer interaction. Because of customers’ preferences to keep processes as digital as possible, the industry has seen an increase in applications and originations initiated through online and mobile channels. This same mindset extends to the servicing side as well. Customers demand real-time information and want this information available through a number of different channels.
Digitizing the lending process is more important than ever to connect line-of-business applications to ensure they can pass information back and forth, as well as bring greater visibility and accuracy to data. Solutions like content services platforms can act as an information hub or as a point of integration to connect disjointed systems and share data easily. This allows systems—and employees—to access or share information without searching multiple applications, thus reducing overall servicing costs, increasing margins, and providing the customer service necessary to keep loans performing at a high rate.
BETTER INTEGRATE WITH OTHER TOOLS AND APPS
Today’s loan-servicing platforms are big, powerful applications that are the core of a servicer’s business. Although key to an organization’s success, the size and power of these applications come at a cost. Typically, that cost is their ability (or lack thereof) to rapidly change and update their platforms to better accommodate technologies like those listed above. As a result, core vendors, as well as their customers are looking for ways to integrate these technologies that aren’t native to the core application. And those integrations need to happen faster and easier than they have in the past.
One of the major issues many financial institutions face is siloed information, which makes it difficult for employees to locate, interact, or report on data when they cannot find information quickly. By integrating line-of-business applications—like origination systems— with a content-services platform, lenders are better able to connect people, processes, and data and eliminate the need to switch between multiple software applications. While digital transformation and technology modernization goals have pushed many lenders to update loanservicing systems, many aren’t ready to take the full leap yet. Content-services platforms can act as a bridge to modernization until lenders are fully prepared and can continue to deliver enhanced value after core replacement projects are completed.
Origination, as well as servicing platforms, are also moving toward better integration models, utilizing restful APIs and other modern technologies that will be more commonplace from one application to the next. This will allow things like content-services applications to act as information hubs, sharing between the core systems and those third-party technologies that will be required to recognize the full breadth of digital transformation.
WHERE MORTGAGE TECH IS HEADED
The increasingly strict regulatory environment for loan servicing has many servicers looking for
technology that will provide greater transparency and automation. Although the technology space is evolving and changing quickly, I see capture, workflow, and content services platforms as some of the key functionality currently shaping and transforming the financial services industry. These help lessen the burden of regulatory compliance, reduce the growing origination and servicing costs, and enable greater customer experience on the whole.
To achieve the fully digital vision that many organizations desire and to meet the expectations of their customers, today’s servicers need to embrace core technology tools that will propel them on this journey of transformation. It’s important to select tools that will not only make information digital from the beginning but also keep it digital throughout the process. There’s nothing more annoying for borrowers than a hybrid digital-and-paper process that only gives them visibility to part of the process. The solutions above–intelligent capture, business process automation, more channels to improve customer experience, and better integration tools—will help servicers become faster and more consistent and will improve the overall experience for their customers along the way.
Be part of continuing the tech discussion at the upcoming Five Star Conference and Expo, September 16-18 in Dallas, Texas. To learn more, visit FiveStarConference.com.