Such is the interest in business process management (BPM) that it (along with the loftier goal of straight through processing), was one of the key topics of discussion at the recent IQPC Mortgage Processing Conference held in Sydney recently.

 

Speakers representing banks, non-banks, mortgage managers and technology companies all shared ideas on how to innovate the various steps in the lending chain.

 

Among the most sophisticated BPM solutions available to lenders are those tailored at managing the massive amounts of information involved in the various mortgage processes (commonly known as information management software or enterprise content management).

 

According to Manoj Puthenveetil, manager for BPM product management at IBM, the benefits of such as system are threefold: they create efficiencies in core business processes, they reduce overall risk exposure and they allow a lender to grow its top line by being able to deploy new products without having to make drastic changes.

 

Puthenveetil says the mortgage industry is an interesting marketplace from a software perspective, as solutions need to take into account individual characteristics.

 

"There are a significant number of parties involved in the loan process and the customer focus can be undervalued. Any solution should take that into account, plus the fact there’s more regulation still to come," he says.

 

Savings to be made can be significant, if you believe the IBM statistics. According to Puthenveetil, information management software will (on a global basis) cut the costs of loan origination and the loan application stage by more than 70% by 2015.

 

But it is not just about having the software; when it comes to using technology, Puthenveetil says you need the expertise to deliver it.

 

"It should be part of the top-level business strategy. The software must translate into the business blueprint, which is activated by lower levels of the organisation using IT. The actual applications should materialise the strategy."

 

Once this is achieved, the next step is to be able to monitor and measure performance using the software which then influences the strategy going forward so you can "optimise and innovate".

 

When this circle is in place, Puthenveetil says you have what he calls "BPM nirvana".

 

Sometimes though, it is not just a question of whether you as a lender can do certain processes better yourself, it may be that outsourcing that activity is the most cost-effective solution.

 

In making this decision, Jenny Williams, managing director of strategic investments at Suncorp, says the bank asks the question whether or not the process is a core activity that differentiates the bank from its competitors. If it is identified as such, the bank looks to retain it in-house.

 

"If it's not [a core activity] then we look at exploring an IT solution or outsourcing to external partners, with the key question being 'can they do it better?' If they can't, we keep it in-house."

 

If an outsourcing solution is the best way forward, the next step is to ask whether it can be handled by a business partner in Australia or if the solution must be sought globally.

 

Williams says when it comes to sourcing quality partners, there are a number of key areas to look at, including compliance, the culture of the organisation, its ability to gather and share information, its pricing and the metrics it has in place to monitor service level agreements.

 

However, it should be remembered that technology for technology’s sake, when it comes to BPM, is generally not a good idea.

 

According to Ian St Vincent, senior manager of mortgages at Experien, a specialist mortgage manager servicing the medical profession, it is just as important to do away with unnecessary technology as it is to implement new solutions.

 

St Vincent says that when putting together its offering for doctors, the lender chose to go with a "real person on a switchboard" rather than instant voice recognition (IVR).

 

"We wanted to deliver a 'private client experience' and save the cost of redundant technology," he says.

 

St Vincent says many players have gone with IVR technology, and found out later that customers prefer speaking to someone in person. However, they now can no longer get rid of the technology, because too many people within the organisation use it.

 

"When it comes to service delivery, we listened to customers and asked them for feedback. We wanted to be a lender that offered a very different experience than what the others are doing," he says.

 

One process Experien did seek a technology solution for was tracking back-channel messaging and speed to settlement.

 

The mortgage manager was looking for a solution that tracked the average loan size, each product's 'share of wallet', collateral business and the referral of other products (Experien also provides insurance and financial planning services), as well as the hand-off to its customer service team.

 

In the end, the company decided to import the technology using LoanWorks, as its platform was highly compatible with Adelaide Bank, a key funder of Experien.

 

By importing the LoanWorks solution, St Vincent says Experien was able to provide superior back-channel messaging for its referrer and introducer platform, as well as for its customers and suppliers.

 

Furthermore, this system allows for online access anywhere in the world, keeps internal referral sources up to date with progress, and enables data transfer to its key mortgage manager platforms.

 

In bringing in LoanWorks, St Vincent says Experien also looked at future needs such as a commission payment system, automated 'decision tools', a credit checking interface and the ability to enquire online at any time about progress in the loan process.

 

Jenny Williams says Suncorp is only now emerging from the side effects of dramatic cuts to its back office and systems in 2001.

 

In recent times, Suncorp has adopted a ‘Keep it simple and communicate’ (KISC) approach to its mortgage processes, and Williams says the lesson learned is that organisations need to build innovation into their overall strategy.

 

"It needs to be relevant, consistent and able to change quickly. Imbedding process innovation isn’t an easy task, but the cost of complexity will be more than double the operation cost."

The best laid plans of lenders can be virtually ineffective if they do not involve key IT partners and decision makers in developing the overall business strategy.

According to Williams, BPM innovation needs the support of IT partners.

 

In the case of a bank hamstrung by old legacy systems that were hard to run, she says it was decided to give IT partners a seat at the table at the beginning of the process, effectively making "bank priorities the priorities for IT as well".

 

Williams says IT and management need to communicate around a number of key areas, including vision and strategy, the need for simplicity and standardisation, ensuring maximum flexibility and agility, and how much the implementation will cost.

 

"The key is developing an effective engagement model," she says. "In July last year, we held our first strategic meeting with IT to see where we can work together on agreed outcomes.”

 

What they discovered was that their business models were not in alignment. To remedy this, the bank's IT leader joined the banking team so that initiatives were priorities for both sides of the business.

 

"If the initiative wasn’t a priority on both lists, then IT wouldn’t start doing the work on that initiative," Williams explains.