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Layering Fintech To Improve Customer Experience

Scott Dubnoff
May 15, 2020
Photo credit: Getty Images/metamorworks

Financial service providers need to offer customer-centric services capable of combining speed and flexibility in order to compete in today’s market. With more than a dozen different entities involved in the transaction of financing a home, the financial technology, or fintech, required for such a complex financial transaction like a closing on a mortgage is multifaceted and requires seamless integration of different vendors, and an array of different technologies, to help customers achieve their goals.
Scott Dubnoff is chief technology officer at American Financial Resources Inc. (AFR)This is a far cry from more simple transactions like securing a ride with a transportation service like Uber, for example. With ride-sharing services, there is a driver with a car, a customer with a desire to go somewhere, and a nicely polished app to connect the two parties together. Simple. Compare that to a mortgage transaction, where on top of the lender and the customer, you also need to connect in a mortgage broker, a credit reporting agency, an appraiser, an insurer, a real estate agent, a title company, and many, many more. The technology system required for this type of financial transaction is in a completely different galaxy, forget ballpark.
Building this complex system requires a layered approach. On top of a solid base of well-architected cloud infrastructure you layer the vast array of required service vendors, creating an integrated network of services and capabilities. Finally, the top layer is your polished front-end which seamlessly abstracts the user from the complex web beneath it, creating a cohesive and differentiated branded experience.
Financial companies looking to develop their own enterprise FinTech solutions should approach each layer of the system separately and follow these baseline objectives to ensure they all stack together succinctly:
►Build natively on and leverage the power of the public cloud;
►Select and integrate with vendors that are built on modern tech-stacks; and
►Acutely focus on the front-end user interface (UI), to provide a seamless and unique user experience.

Power Of The Cloud

Your underlying system infrastructure sets the framework for every piece of technology you build … it’s like the foundation of a house. With little exception, the benefits of building natively on and leveraging the power of the public cloud are overwhelming. Those of us charged with managing a financial company’s technology want to focus on software capabilities and features, not hardware. Microsoft Azure and Amazon AWS, two of the leading cloud providers, offer infrastructure services that abstract away many of the traditional IT system hardware responsibilities. Since management of the servers, tools, backup, and scaling are the responsibility of the cloud provider, your internal IT staff will no longer have to worry about managing them, and are then empowered to focus on vendor integration and UI development.
Using a modern, cloud-based system design, with microservices and event-driven architecture, allows for rapid scaling, is fundamentally resilient, and allows developers to focus on business logic rather than infrastructure. It’s also extremely economical. You pay by the second of compute time; so, if you get busy, the system scales automatically based on need, and you simply get charged accordingly.
This Platform as a Service (PaaS) architecture lets companies who are not massive IT companies, like mid-sized lenders such as AFR, focus their limited IT budgets on software developers and capabilities. No more acquiring servers to add bandwidth, and no more rooms dedicated to racks. And, with public cloud architecture, you don’t go down if the building loses power. Most importantly, performance components can be adjusted in just a few clicks, from anywhere, and by people who don’t have decades of experience building servers.

Vendor Selection

Considering Fintech integration will be required with a number of different entities to achieve a successful mortgage transaction, selecting vendors that are built on modern tech-stacks is also imperative. There are a ton of service types required to secure a mortgage: Pricing, appraisal, mortgage insurance, fraud, verification of assets, verification of employment, just to name a few. While the lengthy list makes it challenging to provide a seamless transaction, it also opens the door for differentiation and innovation.
You want services that don’t just integrate with your loan origination system (LOS), but that can also be tapped by your own custom software. An interconnected system is far better than the sum of its parts. The magic happens when you create connectors between the vendors in unique and useful ways. Think of it like the smart devices in our homes: Any one of those Internet of things (IoT) devices by themselves is useful, sure, but their real power is apparent when they are working together. In the same way modern consumers invent new ways to string together their light switches with their blinds, garage doors, and thermostats, leading lenders can now connect their appraisal system to their disclosure system, to their e-mail notification system, and so on.
Fundamentally, it is important to remember that any system you build is only as performant and stable as its underlying services. So, it is imperative to not only consider your own base architecture layer, but those of your vendors. If your proprietary online mortgage app can support 500 apps an hour, but your pricing engine or LOS can only handle 50, then you’re only doing 50. Similarly, if your pricing engine falls over every time rates drop, then you will be the lender missing out on a crazy rush of business when rates hit historic lows.
Borrowers simply do not want to deal with multiple logins to multiple portals, one for each entity involved in their mortgage transaction. To provide a single portal, vendors need to have modern Fintech enabling integration. At minimum, they need to support Single Sign On (SSO), so that you can transition users from your portal to theirs without needing to re-authenticate them. An even better approach is having your vendor expose all of their capabilities via an application programming interface (API). This enables you to leverage all of their functionality, but wrap it entirely within your own portal, creating the most unified experience.
Today’s fintech developers are choosing their technology service providers more carefully. They should look for the most robust software platform with interconnected capabilities, and not necessarily the provider who has been around the longest. In fact, some of the behemoth companies that have been around a long time are using antiquated technology and are going to have to rebuild to compete.

Focus On The Front End

At the end of the day, IT managers build two things–the back-end system, comprised primarily of middleware connecting all the vendors together, and the front-end interfaces (UI) with which your customers interact.
Think of your back-end system as a platform, it is a single entity that all of your different front-end interfaces connect to. The platform provides all of the data and functions to each of your company’s UI’s. Creating your interfaces separately from your back-end platform makes your Fintech device agnostic. Rather, it makes it very easy to extend your platform capabilities to new devices. For example, with minimal effort you could spin up an Apple Watch complication to show interest rates directly on a user’s watch face, and all you’d need to do is connect it to the same back-end pricing service to which your pricing portal is already connected. This same principle can be applied to web apps (web portals), native phone and tablet apps, Alexa-enabled devices, and whatever the next consumer big device might be.
Treating these layers separately makes it easier for companies to upgrade their technology. User interfaces can be refreshed independently of the back-end, and vice versa. For example, on the platform side, vendors can be swapped out in such a way that the UI’s wouldn’t even need to be modified; a single change to the vendor service would propagate to every app that uses those services. On the UI side, a refreshed web portal could be developed and stood up alongside its older counterpart, with both sites connecting to the same back-end, allowing for a user-driven migration experience.
When developing applications for Fintech, the UI/UX design should be easy to understand and easy to use. Copy and color choices count! The text within the product should be understandable for everyone, no matter their financial and educational background. Also, a very clear and minimalistic design featuring a basic color panel that looks neutral and soothing will welcome users, rather than drive them away by a design that is too busy, complicated or colorful. Adaptability is also important: All the information users expect to get should comfortably fit into any screen to ensure a great user experience for any display size or context.
The customer is going to associate the experience they have using your technology as a reflection of your brand. For that reason, it is critically advantageous to have as much control over the top layer as possible. To do so requires the compatibility of each layer beneath it in the stack. The solid base of well-architected cloud infrastructure, layered with an integrated network of services and capabilities must adequately support the top layer–your polished front-end user interface.

Layers In A Much Larger System

Remember that to your end user, the system you build is just another service. Make sure your own system can be accessed programmatically by them. We’re all just nodes in a much larger network; so the more accessible your software is, the more it’ll be used. Or, the more you leverage your layered fintech to improve the customer experience, the more customers you will ultimately have to serve.

Scott Dubnoff is chief technology officer at American Financial Resources Inc. (AFR). Since 2013, Scott’s expertise in information systems has helped AFR develop industry-leading technology and improve the company’s growth and profitability. AFR utilizes the latest technology and delivers educational resources to mortgage brokers, loan originators and their customers. He may be reached by e-mail at [email protected].

May 15, 2020
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