Why we work with LIXI (pt. 2)
March 22, 2010 by Paul M.. Filed under Interoperation, Lending industry, Process, Standards.
In the previous post I described how the Australian lending industry was a great example of friction-loaded business ecosystem and how LIXI standards are aimed at reducing some of that friction.
In conversations with LIXI ‘veterans’ over the years, I’ve learnt a lot about the history of the Australian lending industry and how things have changed. Converting participants to the LIXI way required a change in thinking for many – by taking them from the belief that their loan application systems and business processes gave them a unique competitive advantage, to the realisation that their competitors all do basically the same thing. Hence these activities offer no competitive advantage at all and were obvious targets for standardising and streamlining. Real competitive advantage in this part of the process comes from the ability to launch and execute new products and features and to respond to changes in customer behaviour and expectations quickly.
[Anecdotally I still hear of resistance to business standards adoption (in related industries, not lending!), on the grounds that incumbents believe that their way of processing forms provides them with a competitive advantage! Any organisations that believe this must also realise that such an advantage cannot be sustainable and really should have a good hard think about where they are going!]
But back to the adoption of LIXI standards and the general movement to automated processing is also giving rise to some fairly dramatic transformations in the industry. For example:
- A marked shift from paper forms to electronic loan application submisssions – up to 80% of all loan originations are now lodged electronically based on LIXI standards. Further, according to the CBA’s Michael Harte, with their new online platform they have cut approval time for home-loan top-ups from around 20 days to 15 minutes (this comes from Australia’s Digital Economy: Future Directions (c) Commonwealth Bank of Australia and the Commonwealth of Australia, 2009).
- Consolidation of valuer and broker channels into aggregators and/or via electronic gateways, movements that don’t sit comfortably with everyone!
- The appearance of AVMs, or automated valuation models, yet another threat to the traditional business of certified property valuations.
Our team started working with LIXI in 2005. We produced the first reference model for the formal approval process – building on LIXI’s vocabulary work to try to address standard conversations of lending. In 2007 we developed and published the first reference implementation for the LIXI valuations process, and in 2008 we provided the architecture and samples for the ‘Visible Loans’ concept – a mechanism to package loan information (including product features) into RSS news feeds, to provide up-to-date information to brokers and loan customers.
In 2010 we continue to support LIXI’s efforts in integrating the settlements process with the newly-emerging National Electronic Conveyancing System (NECS).
LIXI, and the lending industry as a whole, continues to be a great source of use-inspiration for us. It builds our domain expertise, embedding our team within real business problems, and it informs the directions of our R&D. We look forward to further engagement with LIXI and its members, and we also look forward to working in other types of business ecosystems, in which we can apply some of the lessons we’ve learned from the lending industry.
Tags: Interoperation, Lending industry, NICTA, Standards
Follow @gofrictionless:
Add a comment