PERSON OF THE WEEK: Narayan Bharadwaj is business head at Wipro Gallagher Solutions, a provider of end-to-end technology solutions to mortgage lenders.
MortgageOrb interviewed Bharadwaj to learn more about how lenders are incorporating technology into their business strategies in order to survive and prosper in today's mortgage market.
Q: Market volatility is creating challenges involving volume fluctuation, resource management and costs. What are the technology and infrastructure choices that can help lenders gain control over rapid increases and decreases in loan volume?
Bharadwaj: The volatile economic and regulatory conditions present in the lending industry are creating a gap between short-term operations management and long-term growth strategies. How lenders manage that gap today determines how well positioned they are to capitalize on future market opportunities.
Striking that balance is incredibly difficult, but the availability of a software-as-a-service (SaaS) infrastructure can help lenders minimize business impact as a result of volume expansion and contraction. SaaS-based loan origination systems (LOSs) are typically paired with a pay-per-use pricing strategy, which paints an accurate, real-time operational picture and minimizes the hire-and-fire approach to loan fulfillment.
Other lending solutions that are gaining traction in today's complex lending environment include pre-configured lending systems that offer built-in industry workflow and functionality. A ready-to-go system takes the pressure off lenders during the implementation phase and also enables users to easily update and maintain system functionality with minimal IT intervention.
Q: It appears as though more lenders are seeking out origination systems that consolidate lending activity across multiple channels and products. What are the implications of this approach?
Bharadwaj: In an industry where change is constant, more lenders are pursuing products and channel diversification that can expand customer reach, generate more steady returns and minimize risks across the board. In order to effectively execute on a diversification strategy, lenders require sophisticated LOS systems that align lending activity across multiple channels and products. By unifying origination under one LOS "umbrella," lenders achieve a single customer view that allows them to cross-sell, upsell and communicate with the borrower in a consistent and informed manner.
Consolidating origination efforts into a universal lending system can also result in greater operational alignment and process standardization. Among the many benefits of greater internal continuity is the ability to more accurately measure risk and performance, while also reducing IT administration overhead to maintain multiple platforms.Â
Q: Given the current regulatory challenges, what role does technology play in risk management?
Bharadwaj: The two go hand-in-hand; lenders cannot function properly without an LOS that incorporates risk management features. However, it is important keep in mind that regulation is not stagnant. People often talk about how regulation reaches a peak and then descends, but history shows that there is often another mountain to climb on the horizon. A strategic technology decision considers the long-term capabilities of both the technology provider and its system.
When choosing a technology provider, questions to ask include the following:
- Does the technology provider have a strategic commitment toward the mortgage market or is the provider merely an investment vehicle? Is the technology provider financially stable? Will it weather severe market change now and in the future?
- Does the vendor have a compliance road map and dedicated compliance resources in place?
- Is the technology solution's framework flexible and able to adapt to business, industry and technology change?
- How does the technology provider view compliance? Is it a burden or an opportunity?
Q: What technology integrations will advance a lender in today's market?
Bharadwaj: Integrating technology into your LOS and lending operation should be done as if using bifocals. One view should be the close-up, current situation, and the other view should be on the future of your lending operation.
That said, the most valuable integrations are those that mitigate risks, whether that risk exists in the area of compliance, credit, fraud or documents. Strategic technology integrations should also consider the consumer's needs and preferences, as well as the impact on productivity. This might include mobile applications that boost loan production and online self-service portals that allow customers to remain active throughout the origination process while alleviating some of the heavy workload from their processors.
Regardless of the integration, we encourage lenders to work with their LOS providers to test the integrated partner for the six C's: compliance, capacity, compatibility, constancy, capability and collaboration.
Q: It seems that a lot of lenders are switching LOS providers. What are some of the reasons lenders are making the move, and what recommendations do you have for lenders considering such a big change?
Bharadwaj: Whether a lender is concerned with meeting Dodd-Frank or Consumer Financial Protection Bureau deadlines, or they are looking for a hosted model to minimize the impact regulatory activity is having on their operation, the ultimate driver for switching loan origination systems is compliance. Many lenders are also looking to expand their footprint and have simply outgrown their LOS.
When switching origination systems, the lender might be tempted to pursue a ‘lift and shift’ approach, which moves existing processes over to the new system without first considering whether process adjustments would improve business outcomes. When clients transition to our NetOxygen LOS, we recommend that they approach the transition holistically to ensure they are optimizing the features and functionalities available in the system. Ask your LOS provider for best-practice recommendations to ensure you get the most from your new LOS.