In August 2006, I embarked on a journey to investigate opportunities
for improvement via the use of technology within the Australian
mortgage industry. The journey began as part of a thesis undertaking
for my studies in Business IT. Previous experience dealing
with systems implementations within the Australian mortgage
industry had left me frustrated with the lack of efficiency,
and adoption of the LIXI standard in my view a key enabler
in obtaining business efficiency.
As such, one of the key areas of focus for my investigation
was a comparison of the success of our US contemporary, the
Mortgage Industry Standards Maintenance Organization (MISMO).
MISMO has been extremely successful in delivering measurable
business benefits. Most recently, the Time and Motion survey
conducted by MISMO reported that the adoption of standards
can save USD $240 per application.
It is interesting to note that although there are parallels
that can be drawn by comparing the structure and organisation
of MISMO with LIXI, the implementation of MISMO standards is
far more advanced than LIXI in Australia. Not only are organisations
implementing MISMO standards, they are measuring the improvement
in business efficiency that has been gained as a result.
It is argued that MISMO has several advantages over LIXI
in that MISMO was created by the MBA (Mortgage Bankers Association)
and that the monetary funding available to MISMO is far greater
than that available to LIXI. Unlike Australia, the American
mortgage industry also had an established standards network
in the form of Electronic Data Interchange (EDI) and other
tools such as a generic loan application form, accepted industry
wide. Essentially, MISMO is seen to have stronger foundations
on which to build their standard. Although the findings of
my research support this argument, there are several differentiators
that contribute to the success of MISMO from which we can learn.
Measuring success
MISMO members measure success. Then they talk about it. One
of the significant differences between the US market and that
of ours, is that in Australia, we often don’t measure
our success. In many organisations, we are not aware of how
much, in monetary terms, deficient systems and processes are
costing the industry. If we are, we are not talking about it.
In the United States, MISMO participants can tell you off the
top of their head what their cost to originate a loan is. If
they can’t, they know where to locate the data. The benefit
of this being obvious — it is easier to write a business
case based on what we know than what we don’t. It is
difficult to ask for $1million to implement a new system when
there are no case studies or industry benchmarking data on
which to base our estimates.
Business ‘buy in’
Another key driver for MISMO success is the high rate of business ‘buy
in’. Lack of business ‘buy in’ is constantly
listed in the top ten reasons for project failure in project
management and business journals.
Similar to LIXI, MISMO operates on the premise that standards
are developed by transaction-based working groups. The difference
between MISMO and LIXI in this regard however, is the level
of business contribution to the development of the standard.
Unlike many LIXI working groups that I have attended, there
is a balance between business and technical people driving
the development of the ‘business requirements’.
Furthermore, business decision makers understand the value
that the development and adoption of standards can contribute
and as such are willing to volunteer more time and resources
to the group.
Knowledge sharing
In an organisation such as LIXI, the need for knowledge sharing
is very prevalent. This means that in order to share our knowledge,
we must share our success. In comparison to LIXI, MISMO members
contribute to knowledge sharing more freely. The response rate
to surveys and meeting of user groups is greater than that
of LIXI and members see meetings as an opportunity to share
ideas on what works when incorporating standards.
Collaboration and policy development
MISMO members collaborate with government and industry bodies
to work towards greater efficiency. By identifying opportunities
for improvement, members work with government to bring about
change in legislation and greater acceptance of technologies
such as e-mortgages, digital signatures, etc.
These efforts result in the timely development of policies
that serve to improve industry efficiency as well as address
any legal issues that may limit the participation of members.
In particular, MISMO has developed several policies including
antitrust and intellectual property. MISMO also provides members
with guidance on legal matters and the implementation of standards.
This culture of collaboration means that the industry addresses
their concerns as a whole, ensuring that any blockages or legal
issues are raised and dealt with swiftly.
In summary, there are many opportunities for improvement
in the delivery and adoption of standards in the Australian
mortgage industry. As a group, members of LIXI should consider
the value proposition of the implementation of standards here.
By developing greater understanding of the use and benefits
of standards in the mortgage supply chain, we can begin measuring
success and the way in which we contribute to the lending industry
overall. In particular, it is important to consider the lessons
learned from MISMO and whether it is appropriate for LIXI to
follow a similar path in some areas. Examples of such opportunities
might include further research in areas such as the adoption
of digital signatures and concerns regarding privacy and non-repudiation
of data.
