Enabling Lending Business Emperatives with Office

AgendaAutomating the Lending Business Process

Measuring your Business

React and Adapt to Lending Trends

Reducing the Cost of Ownership

Building a Regulatory Compliant LOS

Empower Business Users

Lending Challenges in BankingStrong Regulatory factors such as:

HMDA, CRA and Customer Privacy

Lending is process heavy with many un-needed manual processes

Lenders must deal with 40 unique documents that span up to 300 pages

Highly competitive landscape where products and the rates of those products give them the edge

Technology efficiencies can help:A 30 year fixed mortgage rate offered online is an average 50 basis points lower than that available offline*

* US Market Forecast - JupiterResearch 2005

Why Automate?Lending is process heavy with many un-needed manual processes

Lenders must deal with 40 unique documents that span up to 300 pages

Data re-entry leads to data duplication, increased error rates, and compliance issues

People-Ready ProcessesDevelopment of Business Processes

Develop new composite processes from reuse of existing systems

Deployment of Highly Distributed Processes

Intuitive end-user task interaction thru Office

Interaction with Collaborative Processes

Effective Management and Control of Distributed Processes

Business Process Modeling and Documentation

Visual Design of Electronic Forms

Visual Design of Collaborative Applications

Real-time Tracking of End-to-end Business Process Performance

Management Visibility into Business Process Performance

Real-time Process Optimization

Activity Complexity/RigidityActivity Complexity/Rigidity

Example: Email, instant messaging, personal task list

Example: Document approval, vacation approval

Example: Expense reporting, management dashboard

Example: Extending LOB applications, supply-chain

IndividualAd hoc

Human Semi Structured

System Highly Structured

FixedProcess

Collaborative ProcessesCollaborative Processes Transactional ProcessesTransactional Processes

Breadth of Processes

IndividualAd hoc

Human Semi Structured

System Highly Structured

FixedProcess

Collaborative Processes Transactional Processes

Breadth of Processes

Common Design Tools

Common Monitoring Tools

Common Runtime

Collaboration ServerProcess Server

Four Core Business Process Areas

Origination Mortgage Application

Lock / Float

Underwriting

Closing

3rd Party ServicesTitle

Flood

Credit

Mortgage Insurance

SecondaryProducts & Pricing

Securitization

Bulk Pool

Funding

ServicingLoan Setup

Investor Reporting

Default Reporting

Loan Transfer

Approvals

Legacy Systems

Loan Process BeforeManualSemi-

Automated

Customer Care

Data Entry

Fax Mgmt

Paper Mail

Support

Calls

&

Inquires

Fax

Document

Filing

Copy Services

Many LOB Apps

Paper Reviews

Third Party

Services

Approvals

Legacy Systems

The GoalManualSemi-

Automated

Customer Care

Data Entry

Fax Mgmt

Paper Mail

Support

Calls

&

Inquires

Fax

Document

Filing

Copy Services

Many LOB Apps

Paper Reviews

Third Party

Services

Loan Process Automated

Automated Approvals

Automated Process

Customer Care

DocumentArchival

LOB Apps

Underwriters

Third Party

Services Legacy Systems

Loan Origination

Portal

Brokers

Enterprise Loan

Orchestrations

Healthy BPM Spending

Measure the Business ProcessBusiness Process Management (BPM)

Provide KPI around Business Process

Surface KPIs through Portal Dashboards

Add Workflow Triggers and Alerts

Reacting and Adapting to Lending Trends

Industry ConsolidationRegions Bank acquired AMSouth which resulted in a reshuffle of the top 10 US Banks

Impacts of Natural Disasters Result in lending Automation

Market Forces (Interest Rates on the Rise)

As interest rates rise so will refinances

Customer Trends20 – 50 million US residents do not have a credit historyPure Lending Competition (E-Loan)

* Consumer Lending’s Top 10 in 2007– TowerGroup 2006

Capture Leads

Research online

Request quote online

Influenced by Internet

Apply

Influence

Percentage of Online

Consumers16% 12% 8% 3%

US Market Forecast - JupiterResearch 2005

Customers Shop Around

2%

10%

13%

16%

20%

20%

27%

29%

35%

48%

0% 20% 40% 60% 80% 100%

Other

Increase chances of approval

Track status of application

Lower closing costs

Calculators

Apply in evenings/on weekends

Better access to information

Faster loan approval

Get better rate

Save time

Percentage of Online Mortgage Applicants

US Market Forecast - JupiterResearch 2005

Can offer better rates based on abilities to Cross-Sell and Up-Sell

Architecture capable of reaching out to LOB systems for customer profile data such as if a high wealth customer

OR-LOS provides a way for lenders to collaborate better with brokers on deals

Reacting to FraudAdaptive business activity monitoring for capturing suspicious activitiesExtensible solution for adding Anti-Predatory lending solutionsBuilt in alerting mechanisms in the workflowRich collaboration features for Loan Officer and Underwriter Education on lending practicesAuditing and Versioning of information stored centrally 29%

11%

5%

6%

6%

13%

20%

20%

21%

30%

0% 20% 40% 60% 80% 100%

Did not apply for a mortgage at all

Other

Process was not entirely automated

Insufficient information provided

Application was too time consuming

Didn't find the right mortgage

Would not trust the Internet

Had security concerns

Didn't want to enter information online

Needed to talk to agent

Percentage of Online Mortgage Researchers Who

Did Not Apply Online

Mortgage Fraud has more than doubled from 436 (‘02) to 1,036 (‘07)

FBI Financial Crimes and MBA

Fraudulent Loans cost Lenders 1 Billion a year FBI Financial Crimes

Customer Confidence Impacted

US Market Forecast - JupiterResearch 2005

Keys to Reducing the Cost of Ownership

Reduce the amount of PaperPrinting paper is expensive

Mailing paper is expensive

Filing paper is expensive

Automate the WorkflowReduces the amount of re-data entry

Less Human Touch Points

Loan Decisions

Process More LoansLess errors & process bottlenecks equals increased volume!

Areas OR-LOS Automates

Automated Underwriting

Automated Pricing of Products

Streamlined Workflow

Reduction of Fax Machines and Copiers

Digital Signatures

Automated Approvals

Approvals

Legacy Systems

ManualSemi-Automated

Customer Care

Data Entry

Fax Mgmt

Paper Mail

Support Calls

& Inquires

Fax

DocumentFiling

Copy Services

Many LOB Apps

Paper Reviews

Third Party Services

OR-LOS Addresses ComplianceIdentity & Access Management (IdM)Data Privacy Document Retention Policies Separation of DutiesIT GovernanceApplication DeploymentPatch Management ProceduresDisaster Recovery and BCP

Auditing Throughout

Building for Compliance

Master Loan Flow (MLF)

Activate Loan Active Loan SaveLock ServicesUnderwriting Close

Registration Pricing LockRegistration Pricing Lock Approval ProcessApproval Process

IntegrationServices

UnderwritingRules

Decision Engine

Enterprise Loan Orchestrations (ELO)

Products and Pricing Flow(PPF)

RateEntry

ApprovalProcesses

RatesPublished

BlackoutOver

Loan DocumentLibrary

Loan Data Warehouse

Automated Approvals

Automated Approvals

Secure Authentication

Data Stored on the Server

Data Retention Policies Simplified

Views into the Process

Data Sent Securely

Empowering Business Users

Ability to add ad-hoc human process on to structured processes

Self Serve Dashboards with KPI’s and Reporting

Individual Team and Individual Sites for Information Sharing and Collaboration

Example: Current Rate Generation and Approval Process

Poor utilization of resources due to the manual steps required

Majority of the processes are paper based

Automation is difficult

Duplication of efforts all through the processDuplicate data entryMultiple importsLose control of formulas and validation

Document Retention Issues

Integration is a challenge

Leverage Existing Business Processes and Tools

Business Processes Enabled

Business Processes Enabled

Rates Document Library

Rates Document Library

WorkflowTable

Rate AlertsRate Alerts

LOB IntegrationLOB Integration

Persist to databasePersist to database

Process can be automated

Business Users can augment the process Add Approval

Process Send data to other

users securely Centralized Calculations

Store Calculations can be

modified by business users