Loan application study tackles data exchange standards

Local technology is driving massive change in home loan lending processes. The turnaround for residential home loans has reduced by 50 per cent in the past four years, according to the Lending Industry XML Initiative (LIXI).

In collaboration with the National ICT Australia (NICTA), LIXI is undertaking a world first study to make home loan applications more efficient, and ultimately lead to straight-through processing.

"The implications/applications from this study are endless and are bound only by the imagination of how LIXI members wish to use it," according to LIXI CEO Socrates Vasiliadis.

"We are talking about innovation though standardisation, that is, we standardise the process part so that the business is free to innovate with product features and other packaging options that are considered too difficult to disseminate to the market or implement with current systems," Vasiliadis said.

A not-for-profit group with more than 65 members including Macquarie Bank, ANZ, ING Bank, Commonwealth Bank of Australia and St George, LIXI introduced e-commerce standards in 2002, to allow home loan information to be standardised and transferred electronically.

While LIXI's Credit Application Language (CAL), has cut processing times by half saving industry up to $10m annually, Vaso;oados saod it's time to take the next step and develop a method to fast-track the entire loan process.

The study is expected to create a reference model for further development.

"The reference model will provide a method to audit the creation of the loan which will in turn help to get fully documented loans through the loan queue and into the market faster," he said.

In principle, interactions between the industry players are often straightforward, however they can be difficult to automate and optimise in practice.

NICTA Empirical Software Engineering (ESE) Program industry liaison Paul Mackie said difficulties arise from differences in business rules between competing parties, as well as a wide diversity in technology platforms and communications systems between participating organizations.

"We have started gathering information from lenders about their current business processes, such as the sequence in which they do credit checks, valuations, and validate information received. Once this information has been captured and standard business processes defined, we will be able to establish a benchmark for best practice for the industry," Mackie said.

Prior to CAL's launch, each lender had separate, non-compatible systems. Now all players in the lending chain are able to 'talk to each other'. But the study will eventually lead to data exchange standards.

The project will continue through to mid 2008. While loan application processing is the main focus, it has also started to look at secure Web services.

For more information about the project visit LIXI at or NICTA at

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