To further simplify things, the lender consolidated its mortgage and home equity products onto one platform -- Fiserv's (Brookfield, Wis.) MortgageServ system. "This has allowed us more flexibility in offering new products, and we can service these loans on the same platform," Klatt says. "This makes it easier to train staff and leads to a better experience for the customer."
However, the key to efficiency, Klatt continues, is giving customers ready access to their information, which is why the online channel is so important to the lending process. "More people are going online to obtain information, so privacy becomes a huge issue here," Klatt says. "But if your security is good, using the Internet [for lending applications] can be safer than using U.S. mail." Klatt notes that Central Mortgage uses dual authentication and extensively trains its personnel on security issues, in addition to educating customers.
Cleveland-based National City ($138.6 billion in assets) also is on the road to loan automation. According to Lakhbir Lamba, EVP of consumer and business lending, last year the bank implemented a central fulfillment system in which all fulfillment of consumer loans is done without paper. "We integrated with valuation, flood and title companies," he explains. "We use a simple GUI [graphical user interface], imaging technology and workflow engines to achieve this. The workflow and imaging pieces helped us move a lot of the paper out of the process." The solutions are mostly vendor-based, Lamba indicates, though he declines to name the specific technology providers.
The next step will be beefing up National City's decisioning process. "This involves a lot of business intelligence and automation enterprisewide," Lamba says. "The current engine we use just doesn't have the flexibility we need going forward, so this will be our focus over the next two years."
Imaging technology also has proven useful to Brown Deer, Wis.-based Guaranty Bank's ($2 billion in assets) automation efforts, according to Steve Petersen, the bank's VP of loan servicing. However, like Central Mortgage, Guaranty also sought to consolidate its consumer lending platforms on Fiserv's MortgageServ. "The bank wanted to leverage multiple business units to meet consumers' needs," Petersen comments. "We saw that we could provide them with a more diverse product line by consolidating some systems. MortgageServ helped us do this. We want to consolidate our back-office functions and build economies of scale with efficiencies."
The bank won't go live with the consolidated system until the fall, Petersen notes. But it already has conducted a successful trial migration of consumers to the platform for lending support and services, he adds.
But Is STP Truly Attainable?
"The industry has really made some significant moves in the right direction [on STP] over the last 10 years," Petersen continues. "But I think due to specialized lending products that we'll see a variation on the old 80/20 rule: 80 percent of the lending industry will become automated, but there will always be that 20 percent of loans with special needs where you can't quite automate everything."
"There really isn't a fully automated STP lending process available," asserts MOW's Dresner. "Only parts of the process can be automated. There's collateral involved, and you need documents like title information for automobile loans. Add to that all the compliance and truth-in-lending disclosures that need to be defined and there will always be dropout points where you need a physical document or signature."
Clark Abrahams, director of fair banking compliance with Cary, N.C.-based SAS, agrees that true lending STP is just out of the industry's reach. "The core elements are there, but I'm not aware of anyone having everything integrated," he says. "It's more like you're going from one gate to another." Besides, Abrahams contends, "I don't think pounding the STP nail will lead to significant improvements. There's so much money on the ground in the data that lenders already have. But you can only reduce so many full-time employees and reduce pieces of the process here and there."
Still, some bank executives, including National City's Lamba, are not so quick to dismiss STP in lending. "The challenge is integrating all the systems," he says. "There's no clarity around the integration of the various systems. A lot of the lending products created over time used different origination front ends and servicing back ends and different collections shops. They're not tied together. But as the industry moves toward a customer-driven approach to lending, integrating all these systems becomes an issue. You have to think about this end to end."
As banks begin to do so, they are changing their investment focus in lending systems. Previously, most lending technology investments were made on the front end, according to Accenture's Landis.