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I read a recent poll that showed 1 in 5 banks are currently considering   switching out their Loan Origination and/or Servicing Systems.  This is welcome news as I have seen a majority of banks  still using antiquated systems, including COBOL based systems, making it very challenging and  extremely time consuming to make any changes, not to mention major integration challenges in accessing the data.   My plea to all banks who are currently considering a change — may I suggest 5 critical considerations when choosing  your next lending technology partner.

1) Solid Business Case.  First and foremost, you need to determine, will the proposed solution actually meet your objectives (reduce costs, improve revenue, cross sell, gain market share)?  What are the compelling reasons for your bank to want to switch out your technology?  There are good reasons banks only choose to do this every few decades, because historically, it hasn’t been very easy to replatform, until now.  When you look at the potential benefits from the business case, there are many compelling reasons to make the move.

Take a look at the following metrics that came within the first 6 months of implementing an SAP retail mortgage origination at a $180 BB bank (please send me an email for the full customer success story).

  • 50% Reduction in Mortgage Origination Costs
  • 50% Improvement in automating the credit decision process (from 50% to 75%)
  • 7 points increase in customer satisfaction after 6 months
  • 30% Lower lending process costs
  • 173% improvement in cross-sell rate for lines of credit (from 11% to 30%)
  • 65% improvement in cross-sell rate for credit cards (from 23% to 38%)

So when creating your business case, determine what are your goals and what tool on the market is best suited to help you achieve those goals. Your partner should be eager to build the business case with you and share real actual verifiable results from past experiences with you.

2) Pick a True State-of- the-Art-End-To-End-Digital PlatformWhether you choose an on-premise or a fully hosted managed service in the cloud, you must ask whether your partner’s solution is indeed,  a state of the art E2E platform and ready for the digital world.   Most solutions out there today are not real platforms, but rather hard coded, not easily adaptable or configurable, and a mess of a solution.  This makes it a nightmare to integrate with, to wrap services around, or  to build on top of.  And you can forget about support after you implement your changes. At SAP, our E2E platform can include multiple components from Marketing, Lead and Contact Management, Social Media Tools, Origination, Collateral Management, Customer Relationship Management (CRM), Real-time Offer management (RTOM), Omni-Channel, Risk and Compliance, Mobility, Payment Engine, and Loan Servicing.  Each of these components can also be implemented as stand-alone software.  Our components can also be configured to add additional origination products (deposits, auto loans, credit cards, commercial, in addition to residential real estate loans).Also, another game changer is that the SAP platform is powered by HANA, our proprietary in-memory database, which is important to speed and simplifying the processes, innovating new products and processes, and providing personalized advice and information throughout the process.

3) Strength and Stability.   I read a very scary statistic the other day, that over half of all mortgage technology vendors are gone since 2005.  Are you one of those banks who are now stuck with no to  limited support, because your vendor no longer exists or they are sunsetting their systems?  It is critically important to be partnered with a strong and stable company as you want to be able to perform future upgrades and receive continued support.  SAP has 44 years as a software company (yes, that’s a greater longevity than both Apple and Microsoft!).  In banking, SAP services more than 12,200 banking customers, 125 million bank accounts, in 120 countries.  97% of the major banks in the Forbes Global 2000 are SAP customers!  Our global banking customers manage more than €51 trillion in assets.

4) Performance.  In today’s age of consumer demand for real-time, it is important that the solution is fast, can scale, and stays up and running.  You don’t have to search very far for horror stories of popular web-based origination solutions with long periods of downtime (some being down for days).  There’s nothing worse than not being up and running 24×7 for your customers when they choose to engage with you.  Imagine the damage to your reputation, not to mention to your bottom line.

5) Full transparency/Robust Reporting capabilities.   One of the biggest challenges for banks is to get access to the data (both at the macro level and down to the field level), especially if the multiple systems that are involved are not on the same platform.  This leads to defects. And defects can lead to poor customer experience, not to mention hefty fines from regulators.SAP has strong BI and reporting capabilities.  But , what also is very exciting in this area, are the predictive analytics that are now available.  From fraud reduction to improving customer insight, to anticipating products and offerings that your customers will like, to predicting your borrower’s propensity to  refinance, you can put algorithms in place to not only retain your customers, but to delight them (more blogs to come on this topic).In summary, if you are a bank that is still trying to use antiquated software in this new digital age, please take these 5 critical considerations very seriously before you pick your next partner, who you will want to be there for decades to come.

Dennis Dalling has over 24 years of lending experience, spanning across various careers as an mortgage originator, mortgage broker, lending systems integrator, consultant to the top 10 banks in North America, and now as an Expert Innovator for SAP’s Innovative Solutions Group for Financial Services, North America.   He can be reached at Twitter: ddalling.  LinkedIn:

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