Why APIs Are the Next Step for Credit Unions

By Susan Graham07.08.2019

To thrive in the highly competitive mortgage industry, credit union mortgage lenders need to reduce costs and improve the member experience. Digital technologies can help credit union lenders reduce errors, costs, and processing times, thereby delivering better member service. Mortgage lenders view Application Programming Interfaces (APIs) as the top technology with the greatest potential to help improve or streamline processes, according to a recent Fannie Mae® survey [Source: http://fanniemae.com/portal/research-insights/perspectives/mortgage-lenders-new-technologies-042219.html]. An API is a software-to-software interface that enables applications to easily communicate back and forth without the need for user awareness or intervention.

APIs can be used internally specifically for a given company or organization, or externally and made available to any and all parties interested in developing an interface or connection to their product or service. APIs can also differ in functionality, which increases their usefulness across a broad range of areas. In the Fannie Mae® survey, mortgage lenders were most interested in an API to verify borrower qualification and another API to obtain appraisers’ property appraisal value and comparables.

Sometimes it’s easier to use an API than to develop new functionality from the ground up. By utilizing available APIs, credit unions can leverage multiple solutions to achieve the specific functionality desired and create a centralized database.

APIs let mortgage professionals seamlessly order fulfillment services from various service providers or share data across platforms, allowing users to remain in one system to provide support to their members. APIs also offer several important benefits to mortgage professionals and borrowers, including improved efficiency, data quality, and user experience.

Efficiency through Automation

One of the biggest benefits of utilizing APIs is the workflow-automation they provide. APIs support integrations between software programs, allowing mortgage professionals to create a comprehensive technological ecosystem that supports automatic communication between systems.

Increased automation provides a wealth of benefits, including fewer errors, reduced staff hours and monetary costs, and more seamless operations. In addition to saving time, the API reduces mistakes caused by human error and can provide borrowers with quicker updated access to statements and loan information on the consumer-facing website.

APIs can also query data and/or update a database when processing a loan application. In the past, to determine loan eligibility, lenders had to pull information, such as borrower credit scores and liabilities, manually. Now, by using an API, lenders can integrate their online portal or loan origination system (LOS) with credit agencies to determine loan eligibility almost instantaneously.

Improving Data Quality

APIs can provide further automation for specific programs. By openly sharing information between platforms, such as servicing and loan-origination software, an API eliminates the need for data to be manually migrated. With reduced human intervention, data consistency and accuracy increase dramatically, improving the data-management process.

In addition, the API determines how data is shared, ensuring full compatibility, whereas separate systems may result in data that is incompatible. Going a step further, APIs can even allow real-time access to specific data within another system, even if that data is not physically stored in the other system.

When loan origination software and web applications use internal APIs, borrowers have real time access to loan application documents and status updates. Borrowers can also upload supporting documents all the way to closing. Additionally, the data from the mortgage application can be automatically imported into the separate platforms, eliminating the need to manually re-enter the information.

Enhancing Members' Experience

Increased automation provided by APIs improves the lending experience for borrowers as well as mortgage professionals. Today’s borrowers desire transactions that are as quick and convenient as possible.

By utilizing APIs, lenders and servicers can expedite their processes and eliminate much manual labor, allowing them to more quickly and accurately deliver loan information to borrowers. Instead of waiting up to 24 hours to see changes reflected in their online banking application or servicing portal, for example, borrowers would be able to receive real-time loan-status updates and access to statements and disclosures.

APIs allow for the exchange of data and execution of programs between applications. On the servicing side, borrowers gain immediate, real-time access to their specific loan data and statements and can conveniently make online payments 24/7.

API Benefits Test

Most mortgage professionals will benefit from implementing APIs that build on existing functionality and automate processes to create custom solutions without the need to switch or upgrade platforms. To see if APIs may be right for your credit union, answer the following basic questions:

  • Are there any repetitive tasks that my team and I must take care of every day?
  • Is there information I’d like to share with my members that isn’t accessible in real time today?
  • Is there any additional functionality or workflow we’d like to add to one of the applications we’re currently using?
  • Would I like to use automation to give my staff more time to better serve members?

If a lender, servicer or originator answered “yes” to any of the above questions, the credit union would likely benefit from an API. Ultimately, APIs can provide significant benefits, both internally and externally, for mortgage professionals and members.

The key is to leverage technology changes available to the mortgage industry by choosing software systems that work together seamlessly. The result is a much more efficient and enhanced process for credit union mortgage professionals and their members alike.

Susan Graham is president and chief operating officer of Financial Industry Computer Systems Inc. (FICS), a mortgage software company specializing in cost-effective, in-house mortgage loan origination, residential mortgage-servicing and commercial mortgage-servicing software for financial institutions.