Sometimes, too much of a good thing can be a problem. When First National Bank of Arizona (Scottsdale; $1.2 billion in assets) began originating mortgages in 1999, it could not have been prepared for the explosive growth it would experience: The bank's mortgage origination business grew to $5 billion annually in 2003. Suddenly, First National Bank of Arizona needed to streamline its application processing and automate its fund wiring to support its mortgage business as well as its retail and corporate banking operations, according to John Paulick, the bank's senior vice president.
To cope with the unanticipated growth, First National Bank of Arizona initially installed a centralized wire transfer area using Fedline, a dial-up terminal that requires mortgage originators to manually process payment information and fax the forms to the Federal Reserve Bank. Unwilling to hire more staff to handle the increase in application volume over the long term, however, the bank decided to invest in a straight-through processing system that would automate the transfer initiation to the Fed.
"We have grown over 80 percent year over year for five years," Paulick relates. "We started as a retail bank and mortgage company - we were funding loans and wire transfers to retail customers. Over the course of five years, we tried to go to an automated solution," he says.
A legislation change in 2002 that required funding for mortgage loans to be completed with collected funds further emphasised the use of wire transfers and increased the urgency with which First National Bank of Arizona needed to track wire transfers, according to Paulick. "We had requirements to confirm that wire transfer functions have an audit trail, and authority control of who can originate wires and for how much," he says. "We were looking for technology that would meet the requirements of the organization. Those are the things that stood out in our mind."
After a search in late 2002, the bank selected Fundtech's (Jersey City, N.J.) PAYplus USA solution, a browser-based, straight-through processing tool that allows payment transfer initiators to wire funds and data to the Fed, in March 2003. Installation of the solution was completed that July. Since the solution is browser-based, only one central Web server is required. Remote locations access the payment system through the Web server rather than the bank's local server.
According to Paulick, the PAYplus USA system has shortened the time it takes to wire funds and send information to the Fed. "It improves our ability to work with the Fed and facilitates research - all in the system," he says. "When a mortgage originator closes a loan, the funds are wired."
Because PAYplus USA is browser-based, the bank does not have to reload clients' information into each application within the system, Paulick says. PAYplus USA has a centralized component to keep track of client information and a centralized funds transfer tool, he explains.
First National Bank of Arizona currently processes about 3,000 loans per month, which generate an estimated 300 wires, Paulick says. Prior to installing PAYplus USA, the bank needed to temporarily increase staff to keep up with the growth of mortgage applications. With Fundtech's solution in place, however, the bank can now process loans more quickly - without the need for more employees, he adds.
"We were in a very manual world," Paulick notes. "Previously, we were hiring people to do these functions, and now we have been able to reduce the number of staff and process more volume. That's where the ROI came in. We can continue to do the same functions without adding staff."
Institution: First National Bank of Arizona (Scottsdale)
Assets: $1.2 billion.
Business Challenge: Support mortgage origination business by streamlining application processing and automating the wiring of funds to the Fed.
Solution: Fundtech's (Jersey City, N.J.) PAYplus automated funds transfers browser-based solution.