MReport April 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

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16 | TH E M R EP O RT COVER STORY Top Financial Services Issues Technology factors into nearly every part of the mortgage in- dustry. PwC listed the following tech topics in its forecast of the top 10 financial services issues of the year: ARTIFICIAL INTELLIGENCE: Last year, AI startups raised more than $2 billion in venture capital funding for innovations such as chatbots, which banks use to improve customer experi- ence. BLOCKCHAIN: The technol- ogy has moved beyond bitcoin, now banks can "move beyond seemingly endless debates about how to untangle complex, legacy infrastructure"? THE RISE OF FINTECH: New players use technology and mo- bile platforms to slash costs and bypass intermediaries, per PwC. Will banks view this trend as a threat or opportunity? Either way, they're right. CYBERSECURITY: Financial institutions are besieged by ex- ternal threats and must prepare for new ones with the advent of cloud services, AI, and block- chain platforms. ROBOTIC PROCESS AUTOMATION: On the ef- ficiency scale, this "digitl labor" helps banks move from the labor paradigm (cheaper) past the process paradigm (faster) to the automation one (better) with standardization, predict- ability and scalability, according to Gartner, Inc. build systems that are more process-specific instead of the one-size-fits-all mentality. Each process is unique and has its own requirements, so why are we try- ing to modify our process to fit the system?" In the same vein, many lenders are worried about systems integrat- ing with other platforms, mobile devices, and other existing tech, according to Ari Mendelson, a Nexsys Technology Team Leader. "When anyone in the industry chooses a particular software like their loan origination system, they have to wonder if it will play well with future software they purchase," he said. "There is also the question of whether it will work on mobile devices or cer- tain web browsers. Onboarding software can sometimes feel like a guessing game." Aadhithya Sridhar, also a Technology Team Leader with Nexsys, said mortgage software needs to achieve the same "adapt- ability" as smartphone technology. While cloud computing, big data, and analytics receive a lot of attention, Mohler at Clarocity said he preaches the importance of design-focused solutions, which lead to products that users love. From gateway technologies such as RPA to more cognitive plat- forms, the art of design thinking never loses sight of the human interface, which when properly served and supported, boosts not only efficiency but also morale and effective resource allocation, including IT. New & Improved T he increased focus on secu- rity and the consumer after the economic downturn has fueled the financial tech sector, according to Gerardo Caceres, SVP of Product Management and Data Operations for San Diego- based ClosingCorp. "The rise of FinTech has opened up a world of possibilities, many of which are focused on the overall borrower experience, such as point-of-sale solutions, mortgage coaching, and education," he said. "We see a lot of opportunity to make the borrower experience more robust and convenient." New FinTech players in the mortgage marketplace are driving a re-examination of long-held best practices, which is exactly what vendors want lenders to do. Industry forerunners used to create a product and become "the only game in town," according to Rothfus. Having lenders adapt to vendors instead of the other way around meant user experience suffered—but not anymore. "There is always an improve - ment to be made," Nexsys' Lines said. "The best part is when a solution we create for one lender solves an issue for another lender we had not met yet." Hovey at Arch MI said, "There is an age-old debate between mort- gage underwriters and technolo- gists: Is the underwriting process a science or an art? While most underwriters I know disagree, I believe the process of underwrit- ing is a science that can be broken down and automated with more precision and less cost." One innovation example can be found in the development of industry data standards. While MISMO created a common lan- guage among vendors, Arch MI also encountered a support burden as unfamiliar industry partners struggled to understand the format and structure, which extended project timelines and increased development costs. Its introduction of a different integration stan- dard, the JSON-based RESTful Webservice tool, cut system inte- grations down from two to three weeks to as little as two days. "Now that a lot of road has been paved [with regard to data standards], it's time to innovate," Mohler said. According to Mohler, bridging the gap between lender needs and ven- dor requirements is how a service provider revolutionizes the mortgage industry. Industry challenges and platforms can seem complicated, but simple still works. Citing the last refinance cycle when demand for traditional appraisals outstripped supply of appraisers leading to month-long delays and increased fees, Mohler said the industry's current real es - tate valuation approach is "clearly unsustainable … and will change greatly over the next few years." He said the closed proprietary asset management systems at banks will be replaced by open ones providing greater efficiency "Lenders know that eClosing technology is a great way to get an edge over their competition. An elevated customer experience fuels their competitive advantage." — Dominic Iannitti, President and CEO, DocMagic

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