Cloud Computing for Mortgage Lenders

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Cloud Computing for Mortgage Lenders

• New Options for System Deployment

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Session Description

• Cloud computing is a relatively new term for the
  use of virtualization technologies to reduce
  complexity by creating homogenized environments.
  Users of the cloud are focused on the services it
  can perform versus the underlying technologies
  used. What could this mean for the mortgage
  industry? Might we say goodbye to our origination
  and servicing systems? Could we stop spending
  hundreds of millions of dollars writing rewriting
  and enhancing these core applications?
• This session defines cloud computing, discusses
  some of the common themes and business goals that
  cloud computing is particularly well-suited for,
  and identifies some common misconceptions. The
  panelists explore leading-edge implementations of
  cloud computing solutions addressing different
  problems across the mortgage lending lifecycle.

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Panelists

• Moderator
• David Hamermesh, Research Director, TowerGroup
• Speakers
• Lowell Alcorn
• Managing Director, BearingPoint
• Jason Marx
• Vice President and General Manager, Wolters
  Kluwer Financial Services
• Dain Ehring
• Founder CEO, Dorado Corporation

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"Cloud Computing" is the next step in deploying
technology resources
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What Is Cloud Computing?
network of networks
I dont care whats up there.
If you need software OR hardware, its not cloud
computing.
on-demand computing
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Case Study Step 1

• Lowell Alcorn
• Managing Director, BearingPoint

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Why Implement Cloud Computing?

• Transparent /Reduced pricing structure aligned to
  business goals
• Blended chargeback based on allocation
  utilization
• Reduce Costs by paying for peak usage during peak
  only
• Reduced investment better tracking of computing
  assets
• Reduced overall investment through tighter
  discovery management techniques
• Streamlined manual processes and reduced error
  rates
• React more quickly through datacenter automation
  technology
• Goal is to have on-demand computing (servers,
  storage, network, etc)
• Simplified service-levels provided in web-based
  catalog
• Allow customer direct access through self-service
  mechanism
• Better predictability through SLA contracts and
  customer centric operations management

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Implementation Challenges

• Customer concerns about sharing resources
• Visibility into a virtual service model
• Lack of functionality cohesion in datacenter
  tools
• Time-to-market for new infrastructure requests
• Overlap in roles / responsibilities for support
  teams
• Demand based funding model

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Technology / Tools / Process Frameworks

• Lots of hardware / software process frameworks
  to consider
• Need a coherent strategy, aligning all parts of
  organization
• If offering customer end-to-end service, need to
  publish real-time service-level metrics

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Infrastructure Framework
Large variety of hardware and software products
that make up the Application Hosting solution
Concepts like Clustering, Grid and Virtualization
are not mutually exclusive, but rather pieces of
the jigsaw puzzle
Goal of higher server utilization will have
impact on Network and Facilities
To make it all work together requires 9 key
domains of Instrumentation (or Tool Functionality)
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Case Study (1 of 2)

• Background Situation
• The client today operates approximately 35,000
  midrange servers and 9 PetaBytes of storage
  across over 100 major computing centers
  representing about 500 million in operating
  expenses annually and supporting over 4,000
  business applications
• Objectives
• Objectives for cost savings of 100 million, with
  24 million from the midrange optimization
• The objectives of the midrange optimization
  program are
• Reduce the midrange cost structure by 45 within
  the next 3-4 years
• Drive the utilization of the midrange servers up
  in a controlled risk managed environment
• Transform how the shared technology group
  operates to balance significant cost reductions
  while delivering high quality technology service
• Provide an environment where usage of resources
  in a shared computing environment that demand /
  supply availability and costs can be tied to the
  consumer of those resources
• The bank also expected its partners to propose
  innovative solutions and investment models to
  share risk and reward with its own IT organization

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Case Study (2 of 2)

• Approach
• Conduct an IT Cost Saving / Financial Impact
  Quick Scan incorporating the review of in-flight
  projects, capital expense requests, etc. and the
  proposition of numerous cost saving
  recommendations based on industry experience
• Develop an IT Cost Saving Initiative Database and
  Scorecard to prioritize all recommendations
  (Just Do It initiatives)
• Implemented the Program Data Repository to
  inventory all relevant technology components,
  contracts, people data, etc. to monitor during
  Program Execution
• Developed a 30/60/90 Day Plans to implement these
  initiatives and set the overall Transformation
  Program
• Analyze/Select vendors implementation
• Results
• The objectives of 100 million savings was
  achieved and over 24 million savings was
  directly attributed to the midrange optimization
  program
• Additional recommendations was incorporated into
  next years saving plan with similar objectives
• A major overall Transformation Program was
  successfully launched and is being executed to
  achieve further savings

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• Jason Marx
• Vice President General ManagerWolters Kluwer
  Financial Services

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Agenda
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• Why Cloud Computing?
• Challenges and Vision
• Business Impact of Innovation

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Lender have strong reasons to outsource more of
their IT infrastructure and software
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SaaS provides clear operational and financial
benefits in how lenders deploy, manage, and pay
for software
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Many Wolters Kluwer solutions exploit cloud
computing by delivering software as a service
(SaaS), giving our customers the functionality of
installed software, but through a shared, hosted
service over the Internet
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• Traditional Software Model

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AppOne A Case Study in Software as a Service
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AppOne provides credit options to the U.S. used
auto market

• A platform that helps independent used auto
  dealerships obtain loans for their customers

• Connects independent dealerships with lenders to
  provide finance and aftermarket products
  otherwise not readily available to them

• Gives lenders ready access to a fragmented
  independent dealer market

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AppOne enables used auto dealers to facilitate
loans for consumers and for lenders to reliably
access an under-served market
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AppOne
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AppOne is re-shaping how lenders and used car
dealers conduct business
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Before AppOne
With AppOne
National, broadened credit relationships
Local, limited credit relationships
Lenders
Lenders
AppOne
?
Dealers
Dealers
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Mortgage Document Prep A Case Study in Software
as a Service

• Advantages To Lenders in Todays Mortgage
  Environment
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  Outsourcing Can Boost The Bottom Line
• Reduction in operational and compliance resource
  requirements
• Accurate compliant document packages reduces
  operational post audit expenses
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  The Quick And The Correct Win
• Lenders can serve their originators (Retail,
  Correspondent, Wholesale) faster
• Lenders must rapidly deploy loan products and
  product changes to remain competitive
• Compliance with complex and rapidly evolving
  regulatory framework (RESPA, Home Affordability
  Plan)
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  Warranted document packages
• Meets standard conforming and investor specific
  package requirements
• Capital Markets want standardized loan products
  less risk

Cost Reduction
Speed to Market
Risk Reduction
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Leveraging technology to deliver mortgage
compliance

• Hosted Solution designed to serve lenders looking
  to outsource management of the document
  compliance
• Automates auditing, selecting, assembling,
  packaging and delivery of mortgage document
  packages
• Content driven to provide fast and consistent
  updates to Channels and Loan Programs.

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Thank You
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Up and Running Why the SaaS Model WorksHow
Banks are Using Software as a Service for
Competitive Advantage

• Dain Ehring
• Founder CEODorado Corporation

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Dorado Corporate Snapshot

• Founded in 1998 HQ in CA with offices in FL and
  India
• Top and mid-tier customers and leading partners
• Four of top 20 U.S. originators, top three
  Canadian bank
• First American, Wolters Kluwer
• Recurring revenues and sustained growth
• INC. Fastest Growing Companies (2006)
• 82 million contracted revenue backlog (2008)
• 40 revenue CAGR (growth rate)
• International and product line expansion (2009)
• SaaS solutions for end-to-end mortgage
  origination
• Experienced in core system technology SUN,
  Oracle, Unisys

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Whos Using SaaS Lending Systems?

• Dorados 2008 client base includes top 25,
  mid-tier, and non-traditional lenders

Based on Dorado-confidential customer data.
Dorado is a private company.
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Why Banks Choose SaaS

• Standard SaaS benefits
• System is flexible, scalable, already built and
  ready-to-launch
• No capital expenditures interoperable with
  legacy systems
• True digitization of data -- faster, more
  accurate tracking
• Choice of modules or comprehensive origination
  system
• Dorados SaaS solutions also uniquely provide
• Real-time, multi-party collaboration
• Transaction transparency
• Higher loan file accuracy
• Highly usable and stable broker/POS interface
  using FLEX
• Best practices methodology and proven software
  code

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Why Lenders Are Using SaaS Solutions

• Enhance performance by replacing portions of, or
  their entire aging origination systems
• Centralize monitoring and control of lending
  activities
• Strengthen broker (and customer) relations
• Build compliance into the system
• Maximize IT capacity/support downsized IT
  resources
• Develop related services quickly (fraud
  detection, other)
• Implement SOA as a business strategy creating a
  more agile, collaborative, and responsive
  organization for ongoing competitive advantage

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An Enterprise Lending System Built and Running
in the Cloud
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Conclusion The Business Case for SaaS

• SaaS has clear short and long-term business
  benefits
• Fast ROI Increased efficiency without the
  capital spend
• System that is constantly updated remaining
  relevant forever
• Transparency in lending activities no hidden
  surprises
• Built-in accuracy, efficiency and compliance
• And its gaining adoption in the US, Canada,
  and Europe
• SOA widely adopted by ING, Credit Suisse,
  Deutsche Bank
• SOA beginning adoption at Bank of America, other
  lenders in the US and Canada
• Mid tier players turning to SaaS in order to do
  more with less
• New market entrants using SaaS to leap-frog the
  establishment
• not current Dorado customers

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Dorado Contact Information

• Product Team CompetitiveAdvantage_at_Dorado.com
• LinkedIn Dain Ehring
• Senior members of product management, engineering
  and finance team onsite
• Thank you