Winner of the Best Business Enabler 2005 Category MFAA supports LIXI

Media releases

AUSTRALIAN ECOMMERCE STANDARDS FOR ONLINE MORTGAGES RECOGNISED WITH MIS INNOVATION AWARD

13 September 2005

LIXI, the Lending Industry Xml Initiative, has won an MIS Innovation Award for creating ecommerce standards to allow mortgage brokers and banks to process loan applications online.

Formed in 2000, LIXI created Credit Application Language (CAL) to standardise home loan information for electronic transfer. Prior to this all lenders and brokers had separate, non-compatible systems that relied on ‘manual interfaces’ with information passed on paper via fax and re-entered at every stage.

MIS Innovation Awards was granted in recognition of LIXI’s success developing a solution for Australian companies and the needs of the local market. As a not-for-profit, LIXI makes CAL available for free to full members.

“CAL was designed by Australian businesses to specifically meet the demands of the Australian mortgage finance industry. It is now recognised as one of the world’s best e-commerce banking standards,” says Socrates Vasiliadis, Executive Officer, LIXI.

MIS Innovation Awards judge and Dairy Farmers information services and solutions manager, Tony Talbot, says: "The LIXI standards are a major step forward for the lending industry.”

Martin Gilliland, Gartner analyst and fellow judge, agrees: "The fact that CAL is being adopted as a language of choice shows that it is a good fit."

According to Vasiliadis, LIXI used the relatively small size of the Australian mortgage industry to its advantage. He estimates approximately 50,000 home loans are approved each month. Home ownership accounts for approximately 9.4 percent of Australia’s total value added GDP*.

“Initially banks and brokers weren’t even using a common set of terms. The only thing everyone agreed upon was that the existing systems were archaic, prone to error, slow and costly,” says Vasiliadis.

“LIXI was able to pull the industry together to define how we could communicate online.”

Aussie, Australian Finance Group and Mortgage Choice have already rolled out a CAL based platform written by NextGen.Net. It was the first CAL compliant system to be adopted on such a scale.
Since its formation, LIXI has extended CAL to allow all parties in the lending chain to communicate electronically.

“Every loan transaction involves up to nine parties including brokers, lenders, valuers, insurers and settlement agents. Much of the data is still exchanged via fax and phone creating bottlenecks,” says Vasiliadis.

“Automating the loan process isn’t simply a case of getting consensus from the lenders. It is vital to bring third parties into development of the standards if ecommerce is to be truly effective.”

One company to embrace LIXI is WBP Property Valuers Melbourne which used CAL to develop XpressVal software that uses state-of-the-art wireless Tablet technology to deliver ‘real-time’ property valuation assessments. The company now delivers valuations to brokers and lenders in as little as 24 hours, cutting turnaround by as much as 50 percent.
While automation offers initial business benefits, it is consumers who will ultimately reap the rewards of faster approvals and, possibly, cheaper loans.

“In Canada, automation of the mortgage industry led to reduced interest rates. With all brokers able to quickly access a range of loans, the industry became transparent.  Lenders couldn’t compete on price any more and had to focus on service,” says Vasiliadis.

Already the benefits are being seen in Australia. A research study commissioned by LIXI found that brokers and lenders using CAL compliant systems halved approval times (from 13.4 to seven days) and processing costs (from an average of $734 per application to just $213).

With electronic transactions accounting for 21 percent of loan applications, LIXI’s research indicates that electronic transaction will grow to 35 percent this year,
55 percent in 2006 and 70 percent in 2007.

“In Australia, LIXI estimates automation will reduce industry costs by more than $10 million per year,” says Vasiliadis.

CAL has already been adopted by more than 55 LIXI members and is supported by a further 60 associates including Commonwealth Bank of Australia, ING Bank, Westpac, ANZ, Adelaide Bank, Perpetual, Allette Systems, Lending Technology Services, Mortgage Choice, Pioneer Mortgage Services, PMI Mortgage Insurance, GE, Smartline, Loanmart, Gadens and the Australian Finance Group.

*The Balancing Act Report, CSIRO & University of Sydney