Growing consumer demand for “digital mortgages” and the speed and simplicity brought by Day 1 Certainty™ are driving lenders to pick up the pace in automating back-office origination and servicing processes. Yet the mortgage business trails behind other industries, such as healthcare, insurance and even other financial services industry segments, in using robotic process automation (RPA) to perform simple to sophisticated operations.
One key reason is that, as a continuum, automation achieves its full potential when it has point-to-point integration across the processes it supports. The mortgage industry is far from that state, which would obviate the need for RPA. In fact, the majority of core loan origination software (LOS) and servicing systems still do not have across-the-board, “lights-out” integration with third-party service providers that automatically trigger event-based processing. Mortgage operations processes are filled with instances of repeated “stare and compare” of the same data over multiple touchpoints.
While a few large mortgage banks have had some success using RPA to bridge the resulting gaps in automation, other lenders have faced significant challenges, including:
- RPA expertise and talent: Selecting an RPA platform is complex, with choices ranging from simple point-and-click desktop solutions to advanced cognitive automation. The required knowledge and expertise is often not available within many mortgage banks, whether in their IT departments or operations function. Compounding matters, the market for RPA skills is hot. Attracting and retaining the needed RPA developers, testers and implementers is an ongoing challenge for in-house IT departments, which also must share such talent among the various enterprise functions that want to adopt RPA.
- The need for an automation center of excellence: Another major challenge is institutionalizing RPA across the enterprise. A highly effective way to do this is through an RPA center of excellence (CoE). In a recent survey of 67 enterprises that had adopted RPA, RPA CoEs were named as a critical success factor. Nearly 70% of respondents who were satisfied with their RPA implementations had built an RPA CoE, while only half of those that expressed dissatisfaction had done so. Because many mortgage banks don’t have the scale or resources to invest in and build an RPA CoE, institutionalizing RPA across the enterprise is likely to continue to be a challenge for traditional RPA implementations.
- Velocity of changes to underlying LOS/servicing systems. LOS, servicing and peripheral systems undergo change at a far faster rate than other core processing systems, particularly due to compliance-driven requirements (ATR, HOEPA, TRID, etc.), additional or modified data capture requirements, and UI changes. In addition, interface file formats are ever evolving, with service providers continually wiring into and out of core systems. With any change to core systems affecting workflow, UIs or processes, the robots running atop those systems require rebuilding. As a result, mortgage bank IT departments that already have difficulty prioritizing changes to core systems now need to factor in change management for robotics systems as well.
- Seasonality of the mortgage business. Seasonality is a critical consideration for mortgage banks implementing IT-driven RPA platforms. The ability to ramp robots up and down is severely limited because current RPA platforms are not designed to deal with uncertainty in volume fluctuations. As a result, mortgage banks must invest in overcapacity or risk under-capacity, either of which can seriously test RPA return on investment.
The Solution: True Digital Labor
These challenges will always be difficult for mortgage lenders to address with traditional IT-led, in-house RPA solutions. What’s needed instead is an as-a-service digital labor solution that operations personnel can draw on as needed. This means taking a different approach to automation – namely, viewing it as an operations program rather than an IT project.
One example is Robots-as-a-Service (RaaS) from HPA, a Cognizant company. Production-proven in the healthcare and insurance industries, RaaS solutions have processed billions of dollars of financial transactions. With RaaS, lenders can use digital labor to improve origination and servicing performance without the hassles, surprises and cost uncertainties of deploying an in-house RPA platform through the regular software project lifecycle.
RaaS brings digital labor into a mortgage bank’s operations workforce, with these benefits:
- Up to 30 times faster than human operations.
- Audited average first-year labor savings of over 50%.
- Consistent operating results.
- Ability to incorporate changes to underlying processes and systems rapidly, without additional investments in change management.
- Ability to add capacity (more robots) at no cost.
- 97% audited first-pass accuracy: Magnitudes more accurate than humans with payment only for successfully processed work.
- A decentralized CoE approach that can be standalone or add agility to a centralized CoE and its implementation and change control frameworks.
Making the Most of Digital Labor
A holistic digital mortgage journey doesn’t just mean changing the front office with portals and tablet apps. It’s about streamlining back-office processes and delivering a true digital experience to the borrower. RaaS is a key component in that automation continuum to deliver an improved borrower experience, increased profitability, reduction in turn-times, and improvement in quality and accuracy.
Avery Fisher, Director of Product Development at HPA, a Cognizant company, contributed to this blog.