IBS Journal June 2015


cle FSS, but also to some of the smaller and regional players, including Path Solutions in the Shari’ah-compliant banking sec- tor. Even Misys’ enigmatic Bankfusion (aka


lending implementation, at UK govern- ment entity, the Student Loans Company.


Oracle FSS rewrote the lending portion of Flexcube a couple of years ago, creating a new module and separating this function- ality from the previously combined lend- ing and deposits component. As such, the lending functionality is now one of the stronger portions of this broad system and often the main focus for Oracle FSS demos in sales situations where the supplier has a choice. Jayafar Moidu, CEO at JMR Infotech,


believes that digitalisation is a focus for all players, so too end-to-end automation and risk and compliance. There is the perfect storm of increasing competition, declining margins, increasing volumes and height- ened customer experiences, he believes,


macro-economic indicators. With regards reducing bad loans, he feels the key will be to convert data into meaningful credit insights. Fiserv’s Dombrowski cites the Mort-


gage Bankers Association’s annual perfor- mance study which showed that it costs on average $150 to service a performing loan but nearly 14 times that to service a non-performing loan. ‘This disparity in costs is a result of the expanded require- ments imposed by consent orders, feder- al and state government regulations, and investor requirements. Servicers have been


‘Today’s consumers, when they become tomorrow’s online purchasers of loans, will demand approval in seconds – and if you can’t provide it your competitor will.’


Daragh O’Byrne, Nucleus Software


They realise this is a near-term resolution and that it cannot be sustained long-term. To continue to meet these requirements and adapt to future mandates, servicers need high levels of automation.’ In terms of peer-to-peer and crowd-


funding, O’Byrne says, ‘while we have not yet seen much interest from mainstream


picking up some early indications that banks see it as both a threat and an oppor- tunity. Some banks are partnering in this space, some are investing in their own plat- forms and others are investing in the peer- to-peer players themselves.’ He says Nucle- us is also seeing upcoming non-banking


peer-to-peer. ‘Interestingly, these are not new concepts in lending,’ he points out. ‘Aames Home Loans did a type of crowd- funding back in the 1970s. However, new


the traditional secondary market struc-


more powerful when you factor in the ease with which a consumer can obtain a loan. The contrast to the current process is rath- er stark. ‘ Some mainstream banks are teaming


- its commitment to help low and moder-


to support low level income groups. ‘These are new ventures that are setting up shops in developing economies and looking for a cloud based solution to handle their oper- ations.’ Dombrowski is seeing quite a bit of


interest in the broader concept of ‘market- place lending’, including crowdfunding and


says Dombrowski. ‘Other banks have par- ticipated in marketplace lending by being the investor on the loan. This has changed crowd-sourced to institution-sourced, as some banks have signed up to be funding investors for these loans. This phenome- non started a few years back and continues to grow.’ Dombrowski sees some interesting


synergies as a result. ‘Marketplace lenders can reduce the friction of getting a loan with an all-digital process and speedi- er decisions, while traditional banks can expand their customer base to consumers


‘Servicers are no longer interested in using standalone default software products, they want that technology deeply embedded and readily available in the servicing


solution they are also using for performing loans.’ Joe Dombrowski, Fiserv


confusing, paper-intensive, unfriendly pro-


institutions.’ So while the tally for new-name deals -


tem suppliers remain relatively few, this is far from the full extent of the market, with much more going on around banks’ exist- ing infrastructures, particularly at the front- end, and with niche suppliers prospering as a result.


28 © IBS Intelligence 2015 www.ibsintelligence.com


overview: lending


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