Reflections - Cognizant

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The Cycle of ReformMarketDynamicsUpfront ControlImplementationImplementQuality ControlsExceptionResolutionExceptionReportsFigure 5determine the best loss mitigation option at the right time. To identify checks and balances, servicersmust be able to determine the key performance indicators (KPIs) throughout the loan’s servicinglifecycle. These KPIs should be drawn from regulations, investor preferences and servicer processes,focusing on steps within the loss mitigation program (such as decisioning, approval, denial and postworkoutmonitoring), as well as the flow between applicable loss mitigation programs.Due to a variety of constraints (technology bandwidth, multiple operational priorities, etc.), these qualitycontrols cannot always be initially implemented upfront in systems and processes. In these instances, thefocus should be on more quality control through intelligent reporting and analytics. Servicers can thenslowly move these quality controls upstream to incorporate tighter governance through processimprovements and systems enhancements.Effective mortgage loss mitigation demands a multi-pronged, risk-based approach -- gather intelligence;identify programs and campaigns; and identify exceptions and controls. We have helped implement thisapproach for a few Top 10 servicers, leading to the following benefits:■ Reduced loan losses through better business intelligence and targeted campaigns.■ Identification of the most effective loss mitigation program and campaign for each loan based onfacts.■ A sharper focus on borrowers who deliver results better and faster than others.■ Identification and resolution of process bottlenecks.With strong loan-level intelligence, targeted campaign management and quality controls, servicers can putthe right borrower in the right loss mitigation program at the right time.Ashish Shreni is also a Senior Domain Consultant within the Consumer Lending Practice of <strong>Cognizant</strong>Business Consulting and is currently the Consumer Lending Practice Lead for Asia Pacific. He has over 10years of experience in the banking and financial services space across consulting, business processoptimization and IT project execution. He can be reached at Ashish.Shreni@cognizant.com.Nate Longfellow is also a Senior Domain Consultant within the Consumer Lending Practice of <strong>Cognizant</strong>Business Consulting and is the North America Practice Lead for Mortgage. He has over 17 years ofexperience across the mortgage industry, including leadership roles in service delivery, operations and IT.He can be reached at Nathan.Longfellow@cognizant.com.http://cognizant.com REFLECTIONS 34
■ SEPA & MiFIDRethinking theBusiness Model atEuropean BanksWith regulatory changes and cost pressures -- as well as new players andlucrative opportunities -- European financial organizations need to determinewhere they fit into the new industry landscape. The focus: Outsourcing,insourcing, core value propositions and exploiting efficiencies of scale.By Sanjay BhanotThe global financial services industry is enduring a time of unprecedented crisis, but particularly hard hit arefinancial institutions in Europe. On one side, there is the impact of the credit crisis following the collapse ofthe global economy, which continues to thwart access to new capital and threaten more stringent oversight.A second force is the growing call for stricter regulations in the U.S., as these may flow to other economies.These include re-enactment of the U.S. Glass-Steagall Act -- which was repealed in 1999 and called forseparation of investment and commercial banking -- and proposals such as The Volcker Rule, which advocatesfor limiting certain trading and investment capabilities for banks. Such regulations would further impactfinancial services firms’ revenue streams and cause them to incur substantial reorganization costs. Mostbanks in Europe come from a long tradition of universal banking, and this is a strong value proposition forprivate banking/wealth management clients. A potential split of the investment bank and the commercialbank would seriously impact these organizations, as they are, by design, conceptualized as integrated entities.A third dimension in Europe is the number of directives and industry-led initiatives that are demandingsignificant spending on harmonization programs. These directives include the Markets in FinancialInstruments Directive (MiFID) on the securities and investment banking side, and Single Euro Payments Area(SEPA) in the payments arena.MiFID allows investment banks to provide services across country boundaries and abolishes the idea ofshare-trading as exclusive through national stock exchanges. SEPA enables European cross-border paymentsto be made or received with the same rights and conditions across the region. To comply, businesses needto increase reporting, data storage and audit responsibilities, which translates into new business processes,communications infrastructures and IT platforms.35 REFLECTIONS http://cognizant.com
Page 1 and 2: September 2010Cognizant Community 2
Page 3 and 4: Table of Contents4Editor’s Note5T
Page 5 and 6: ■ Cognizant Community 2010Thrivin
Page 7 and 8: Four Key Themes for 2010 in theFina
Page 9 and 10: The retail bank has seen client exp
Page 11 and 12: ■ Business Process OutsourcingWhy
Page 13 and 14: standardize areas such as investor
Page 15 and 16: that we lowered processing costs fr
Page 17 and 18: UI Breakthroughs ■Transforming th
Page 19 and 20: Trading System Process Flow■ Rese
Page 21 and 22: EDZO 00.73 00.68 00.72 00.72 0.02 0
Page 23 and 24: 4. Use of a business-driven, iterat
Page 25 and 26: Managing risk involves understandin
Page 27 and 28: 543210Solution ArchitectureData Sou
Page 29 and 30: ■ Lending ServicesMortgage-LossMi
Page 31 and 32: 1008060Aged Trialsas Share of Activ
Page 33: Loss Mitigation Program TrackingThe
Page 37 and 38: Stepping Up to SEPAWe have helped s
Page 39 and 40: For instance, banks that need to of
Page 41: About CognizantCognizant’s single

Reflections - Cognizant

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