Technology and Other Challenges
Another vital element to industrywide automation is integration. "Integration is a huge step," according to Compass' Weinman. "It's a complicated effort to bring software into any institution and get it to talk to the legacy systems."
Further, "You have to link these [lending tools] to various distribution channels, vendor systems, credit bureaus and databases," explains Andrew Dresner, a director with Mercer Oliver Wyman. "All that data has to be brought together more or less in real time. Banks are starting to get rid of their clumsy legacy systems and are building these links."
Complicating the task of building links is the lack of an all-encompassing industry solution. Lenders need to realize there is no one solution out there that will solve their technology problems, according to Jeffrey Tintle, SVP, Baker Hill Client & Advisory Services (Carmel, Ind.).
"No one vendor has everything from soup to nuts that is effective," Tintle states. "Banks would prefer to deal with one vendor. So it comes down to who comes closest to an end-to-end solution. The lender might not always be getting best-of-breed technology for all things, but if there are workflow efficiencies gained, then they would tend to stay with a single vendor anyway."
Of course, in order to pick which vendors with which to work, banks first need to decide which parts of their lending systems they wish to upgrade. This is something banks sometimes fail to do well, according to Fidelity's Gordon. "You might have the infrastructure in place, but to get STP, you need to define the pieces in the process to be automated, orchestrate them together and tie them to a consistent enterprise view of the customer," he explains.
And beyond the technology, there are other factors that contribute to the success of an STP initiative. As with any technology implementation, it is vital to get staff on board, according to Baker Hill's Tintle. "If you're just talking about automation, STP in lending won't happen," he opines. "Technology is an enabler of behavior. In STP, behavior change is 75 percent of its being successful. If you just deploy software and it sits there on an employee's computer, what good is it? To me, the No. 1 obstacle to an STP implementation is changing people's behavior."
"Some lenders think one piece of technology will solve all their problems," adds Benchmark's O'Connor. "When you lead with technology, you haven't answered all the questions. What you need to do is create a policy that drives the process, then line up your people. Then you're ready for the technology. Organizations that use this approach are generally more successful."
"Banks spend millions on technology with no real value," states Fidelity's Gordon. "Policy is the way to start. Most banks are not organized to deal with STP."
Perhaps one of the most significant areas around STP lending efforts that requires people/policy changes is cross-selling. The volume of information banks gain from lending customers is a veritable gold mine -- if used correctly.