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   ARTICLE   |   From Scotsman Guide Residential Edition   |   November 2016

Big Data Is a Game Changer

The tools to develop an integrated mortgage-information system are now available

Big data is all hype. At least that’s what it’s about when you’re only trying to sell technology.

Big data as a paradigm, however, can be valuable to mortgage originators, especially when it comes to finding ways to merge client data to accomplish the dream of getting a single view of your entire mortgage business — whether the source data is internal or external to the organization.

Trying to define big data can be a challenge, but technology-research company Gartner Inc.’s three V’s of big data offer a starting point. They are volume, velocity and variety. Volume and velocity refer to the amount of data and the impact of transaction speed on data, respectively, and are mainly about technology.

Variety, however, deals with bringing together a diversity of information from different sources in such a way that it becomes fundamentally and incrementally valuable to the business. This value derives not only from the new insights it brings, but from the way it facilitates easier access to related information from different sources, even sources external to the organization.

Advancing technology

A case example can help to illustrate the progress that has been made on the big-data front. A large global bank in the 1990s undertook a major project that involved developing an end-to-end mortgage-information strategy. This strategy sought to include aspects of architecture, infrastructure, processes, software, databases and reporting environments in an effort to offer the mortgage originator a full end-to-end view of the mortgage-approval process, down to the client level.

As part of the project, the bank also sought to integrate information on the processes used by external agents, attorneys and deeds offices. In a way, the strategy was ahead of its time and was all about big data — specifically data variety.

The bank’s project was only partially successful, however, mainly because of the quite considerable challenges involved in integrating external process-driven data with the lender’s internal data. Another challenge was ensuring the security of data transmitted from third parties over a then-fledgling internet backbone.

Some 20 years down the road from that project, the idea of developing an integrated mortgage-information system is far more feasible. Some of the technological developments that enable this include increasing formalization of data governance; improvements in visualization technology, business-intelligence systems, and secure information exchange and authentication; the greater flexibility of technology tools and databases; the advancement of integrated analytics; and the greater availability of data-quality tools. Let’s briefly consider the impact of some of these technology developments.

Tools of the trade

Today, data encryption is much easier to apply effectively, and the technological challenge of securely transmitting data between parties has pretty much been resolved. What remains are challenges involving the differences in architecture between the parties to a transaction, such as a lender, attorney and a deeds office.

These challenges, however, can be less a technology issue than a stakeholder-management issue that must be worked out among the participating parties. Even the best technology approach in the world will go nowhere if you don’t have buy-in from key executives and, in some cases, boards of directors, allowing the parties to successfully structure a shared strategy and budget to proceed.

Technology improvements also have led to the development of data-quality tools that can make data fusion easier, even among disparate datasets across different organizations. In particular, the ability of these tools to automatically accomplish this data integration is nothing short of phenomenal, with huge benefits for the time-to-deploy and time-to-value equations.

Furthermore, extract, transform and load (ETL) tools and databases can now better handle nonstructured data, which is a significant advantage that facilitates much better data handling and storage compared to two decades ago. The vastly improved ability to analyze nonstructured data, like text and voice, is a real plus, especially when it comes to scanning contracts or recorded conversations for keywords of interest. In particular, this function is useful when responding to inquiries from regulators.

Moreover, the increasing formalization of data governance means that the responsibilities and oversight roles related to data are better defined in today’s business world, making it far easier to identify the parties responsible for safeguarding the integrity of mortgage-related data.

Regulatory assistance

It is exciting that technological advances over the past few decades have made the dream of developing an integrated mortgage-information system more feasible. Beyond the benefits of such a system for industry, there also are significant benefits to an integrated approach to mortgage-information management from a regulatory perspective.

Those benefits include being able to develop better measures of compliance-reporting accuracy. An integrated mortgage-information system also could provide clarity with respect to data lineage and foster improved responses to regulatory matters.

Potentially, an integrated system also could facilitate more accurate assessments of an organization’s asset- and risk-management processes.

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Ultimately, big data as a paradigm holds great promise for the better management and leveraging of enterprise data, and consequently for the better management of your business. Successfully managing big data requires a detailed, integrated understanding of the diversity of skills and technology needed to make it all work. Failing this, your company’s mortgage-information strategy could remain little more than that document in a drawer, or worse, a project that fails to meet business expectations.


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