New reference tool provides up-to-date loan information

The Lending Industry XML Initiative (LIXI), in partnership with NICTA has developed Visible Loans, a new 'publish and subscribe' reference tool that lets lenders and brokers share accurate, instant information on loan products.

Visible Loans is a first for Australia, which has relied on manual processes (faxes and e-mails) to update critical loan information.

LIXI, a not-for-profit initiative, will make Visible Loans available to members so that banks can be confident that any changes to their interest rates or fees will be immediately, accurately and automatically communicated to brokers.

In an environment of rising interest rates, LIXI CEO, Socrates Vasiliadis, said loan products are changing daily.

He said accuracy in distributing loans is critical to lenders, aggregators and brokers but in the past it has been arduous, costly and slow.

"Visible Loans will reduce the burden of cost placed on brokers and financial advisers and make a substantial difference to the bottom line of small to medium businesses. That's welcome news during a credit crunch," Vasiliadis said.

Visible Loans has already been adopted by Solution 4, a UK company that produces management software. Solution 4 plans to include Visible Loan data in its products locally and in the United Kingdom.

Solution 4 will implement Visible Loans in its fully integrated CRM system. It will act as gateway to allow brokers to receive updated loan information quickly and easily.

Aggregators will be able to customise the CRM software to allow brokers to receive updated loan information from those banks and non-banks on their lender panel. Solution 4 anticipates offering a 'pay for click' version of the software.

Solution 4 managing director, Michelle King, said it will use Visible Loans to create more efficient lending processes that do not require lenders to update their legacy systems or invest in middleware.

King believes that the true value of Visible Loans will be evident when the upcoming broker regulation is introduced.

"When regulation was introduced in the United Kingdom, it had an enormous effect on the amount of documentation for which brokers were responsible," she said.

"Under the new Australian regulations, brokers will be held legally accountable for how they explain and represent loan products.

"Visible Loans will offset their risk as it will ensure brokers are accurately selling loans, rather than relying on outdated information."

According to Paul Mackie, NICTA's business development manager, Visible Loans is innovative as it reduces infrastructure cost without the need for lenders to adopt heavyweight Web services or middleware.

As a 'publish and subscribe' model, Mackie said Visible Loans allows lenders to easily update and publish loan products, while allowing brokers to receive those updates using simple newsreader or feed technologies.

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"Visible Loans uses the basic principles that made the Web a success - it's scalable, adaptable and low cost. This makes Visible Loans attractive across the board - from large lenders, through to aggregators and to sole-trading brokers," he said.

Since 2002, not-for-profit group LIXI has worked to develop e-commerce standards for electronically processing and administrating home loan information using a Credit Application Language (CAL).

LIXI's technical focus is to describe the loan process in terms of the data created and manipulated. Its collaboration with NICTA is about improving interoperability through e-commerce standards for business processes by incorporating CAL and Web service technologies.

The collaboration, called the Business Process Working Group, includes representatives of NICTA and LIXI, which incorporates all the major participants in the Australian lending industry.

According to Mackie, with so many participants in the industry, having just a standard vocabulary is not enough to guarantee e-business interoperability..

"The goal is for all parties to be able to communicate easily with each other, and have the means to evolve without re-engineering interfaces for each new participant with whom they do business," he said.

"To get to that point, the industry needs reference architectures, implementations, and standard guidelines on how to deploy the technology."

According to Solution 4, Australia is actually ahead of the United Kingdom in terms of the development of standards for electronically exchanging loan data.

In the UK, loan information is manually keyed at each point of the loan process. Australia is further ahead to reach the goal of straight through processing.

LIXI has more than 100 members, including banks, non-bank lenders, broker groups, mortgage aggregators, mortgage insurers, valuers, solicitors and settlement agents.