November 9, 2015
by Adam Hansen
COO and CIO
USFN Associate Member
In our transitioning industry, a rapidly evolving regulatory environment is exerting intense pressure on mortgage servicing companies to satisfy existing and emerging compliance requirements. Some organizations have been reluctant to implement much-needed technology solutions, for fear that such a move will increase exposure to data breach. The reality, however, is that technology is an asset, not a liability, and leveraging technology solutions can efficiently and effectively maintain provable compliance, while enhancing information security and increasing productivity and efficiency.
Still, integrating new technologies into an existing operation should be a strategic and deliberate process. Decision makers should be familiar with the basic principles of vetting a third party technology provider, and should have a basic understanding of the ways in which technology solutions can enhance efficiency, flexibility, and accessibility. They should also have a working knowledge of the accepted best practices and policies to keep data secure, including data storage requirements and change management processes.
While cloud-based technology solutions can provide a significant boost in terms of workflow, efficiency, and compliance, not all clouds are the same. Default servicing decision makers should recognize the differences between public, private, and hybrid cloud solutions. Although public cloud providers (such as Amazon, Microsoft, or Google) are generally more affordable, they tend to lack the customization options, greater flexibility, and enhanced security profile of private cloud options. And while private cloud platforms are almost always going to come in at a higher price point than public options, the overall cost will still be significantly less than funding a full in-house IT department.
Nuts and Bolts
When evaluating comprehensive technology solutions, default servicing firms need to carefully weigh their need for systems and software that are sufficiently flexible, adaptive, and responsive to keep up with regulatory changes — alongside their need for tools that provide appropriately robust security and compliance functionality. Details matter here. Operational and structural dynamics such as file change protocols and procedures; documentation and dating requirements; built-in access limitations; step-dependent processing; and other security measures, as well as data management and reporting functionality, should all be thoughtfully reviewed.
Costs and Consequences
Even the most powerful technologies have to make sense from a budgetary standpoint. One factor that should play a key role in that analysis is the flexibility of the system/tool under consideration. Because of the ambiguity, uncertainty, and differing interpretations of new regulatory mandates (an unfortunate part of today’s professional landscape), default servicers should be wary of adopting new technologies that do not provide sufficient customization options. With customization, meeting the differing requirements of clients and professional partners with respect to auditing and reporting can be less costly and time consuming, as compared to adopting multiple separate systems to accommodate individual clients.
Secure and Transparent
In a compliance-minded industry, technology solutions that deliver strong reporting functionality, optimum transparency, and provable compliance are preferred. Tech tools should minimize downtime and drastically reduce the resources dedicated to audits and other compliance functions. Customized reporting is a big part of that: automated reports that can be generated based on a wide range of parameters — all at the push of a button. Step-driven processes that make a system more secure are also important, as they can reduce or eliminate avoidable errors and minimize delays. The best technology solutions also excel at change management. In an evolving regulatory landscape, the ability to test and evaluate potential process and workflow changes in a secure environment is vital.
Risk management is always a priority when it comes to managing technology tools, and that priority looms especially large during periods of transition. While integrating new technology platforms and case management systems may lead to some short-term challenges, the long-term security and compliance benefits will almost always reduce exposure relative to a traditional IT infrastructure.
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