TheMReport

32 | TH E M R EP O RT FEATURE reputation that's at stake. The mortgage industry can no longer ignore the threat. In the first mortgage data breach discovered in January, the exposed server contained mortgage documents that were converted into digital files through optical character recogni - tion. These files, though accessible for some weeks, weren't easily read- able. However, in a second server that was left exposed, there were 23,000 pages of PDF documents of borrower applications, W-9 forms, and other highly sensitive personal information. Anyone could take this information and use it to apply for loans in another person's name, potentially destroying their credit. According to the 2017 Cost of Data Breach Study: Global Overview (Ponemon Institute, June 2017, Benchmark research spon - sored by IBM Security), the aver- age total cost of a data breach is $3.62 million, and financial services were ranked the second-highest industry when it comes to costly data breaches. The average loss for a financial services breach was $245 for each stolen record, which was significantly higher than the average cost of $141 per record for data breaches globally. Additionally, hackers and crimi - nal insiders cause the most data breaches globally, representing 47% of all attacks and creating an aver- age cost of $156 per record to re- solve such an attack. Meanwhile, 52% of data breaches in the U.S. were due to hackers and criminal insiders. The U.S. also paid the highest price for losing customers to data breaches. The Right Options W hat must lenders do? Technology is a neces- sity, but data breach numbers are skyrocketing. As it stands, lenders have three options when it comes to cyber - security technology: build, buy, or outsource. Building technol- ogy involves your company, your resources, your servers, and your control. But in the current mort- gage market, where rising costs are the biggest challenge, most lenders cannot afford to invest in this option. Buying technology can also be a tricky but an available option for larger lenders who are able to acquire a company that has the technology they need. A recent example was Fiserv's $22 bil - lion deal to acquire First Data, a leading provider of cloud-based services. First Data is a master in technology and controls a third of the U.S. core banking market. The third option is outsourcing. However, this option only works if one outsources to mature, robust, and experienced providers. Typically, this is the most practi - cal option for the majority of lenders. From big to small, every lender can outsource to leverage readily available technology. However, the more important question is, who are we partnering with? There are several players in the market with mind-boggling innovations. While most of them are mature tech companies, some are mom-and-pop shops or small startups. They try their hand at selling, and if unsuccessful, they wind up quickly moving on to the next venture. These providers may be less concerned or even aware of your information security needs, and more prone to careless manual errors or even cybercrime. There are many trusted compa - nies in the market who have de- cades of experience in developing solutions specifically for lenders. They know your processes well enough to suggest where there might be a need for technology and where process reengineering can help you. These companies do not exist just to sign up any new account but are committed to truly helping their customers optimize their working capital. The ideal outsourcer should have years of experience in working with U.S.-based lenders of all sizes, including the top 25 banks. This sort of partnership can guarantee that consumer data is treated with care while also ensuring optimum security with zero tolerance for noncompliance. Mortgage lenders should not have to live under the constant fear of exposing borrower data in their quest for faster processes. However, by combining high-tech and high-touch, leveraging the latest in data intelligence, automa - tion, and services, lenders can close loans faster and reduce costs significantly. The key, for most, is choosing the right partner to get them to the finish line safely. ALOK DATTA is the President of SLK Global America, a business process transformation enterprise catering to the financial services industry. A former VP of Genpact, Datta has more than 20 years of mortgage industry experience. The average total cost of a data breach is $3.62 million, and financial services were ranked the second-highest industry when it comes to costly data breaches.

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