When John Studdard talks about auto loans he says he likes to think the "auto" stands for automated not automobile.
That's because Studdard, CTO for Lydian Trust Co., a financial services company in Palm Beach Gardens, Fla., has created an automated car loan processing system called BizCap that uses Web services to turn an auto loan business losing hundreds of thousands of dollars a year into one that's making a profit.
A year ago, Lydian deployed BizCap to pull auto loan applications off the Web and process them. BizCap includes a series of Web services that use XML to integrate data and perform duties such as fraud and credit checks needed to evaluate a loan applicant.
BizCap also has Web services that act as data integration points with partner systems. There also are Web services that connect BizCap with Lydian's manual workflow system for human tasks, such as evaluating special cases or mailing paper documents.
BizCap uses secure HTTP to post XML-based documents to specific URLs on its intranet that are actually Web services. From there, other systems pick up the documents, process the data and respond. In the future, the documents will be sent via Simple Object Access Protocol, which will allow for more sophisticated programmatic integration.
But for now BizCap, which took US$250,000, three developers and a business analyst six months to develop and test, is eclipsing the previous system that required that a human evaluate all applications during the approval process.
Now only 30 percent of applications need human review, which has let Lydian increase the number of loan applications processed per day from 60 to 600 without adding any full-time employees. And with a forthcoming BizCap upgrade, Studdard expects that number to hit 2,000 without adding staff or changing network architecture.
Studdard also is plotting to reuse the BizCap model to supercharge Lydian's mortgage business, which generates US$100 million per month in loan origination. And he is building a set of Web services called iCoreServices Interfaces that will sit in a directory and can be called on via a URL to perform duties such as user authentication for any of Lydian's future Web-based applications.
"Web services really commoditizes the services that we can offer without the complexity of the infrastructure getting in the way," Studdard says. "You can kick out a Web services .exe file, throw it in a directory, point a URL to it, and something can happen now."
He says Web services provide a loosely coupled architecture that spreads out processing duties and increases scalability. "In our case, Web services have really cleaned up a lot of monolithic stuff we were building," he says.
Lydian's previous auto loan approval process, which was a hodge-podge of automated SQL tasks and Windows NT service, made the database a workhorse that not only served up data but also processed it. The database was susceptible to crippling volume spikes, and there were often "train wrecks," in which a failed process would mean starting all over again, Studdard says.
"We had wrapped [Component Object Model] components into extended stored procedures, all kinds of techniques that appeared to be crafty things, but didn't scale," he says.
With BizCap and Web services, the processing load is spread around, and the database is back to its old job, serving up data.
BizCap, which was built using Microsoft Corp.'s .Net technology, works on the back end after a user completes an auto loan application at Lydian's Virtual Bank.com Web site or with Lending Tree, a partner integrated through a Web service that directs XML-based applications to BizCap.
When the customer hits the "submit" button, loan application data is sent as an XML document to a queue based on Microsoft Message Queue, which guarantees delivery. From there, it is picked up by Microsoft BizTalk Server, an XML data transformation and business process workflow engine that runs on Windows 2000 and is the cornerstone of BizCap.
BizTalk then becomes a virtual back-office employee, organizing and ensuring execution of a series of steps the application must go through.
"The goal is to get the application as far down the automated BizCap path before it has to go to a person," Studdard says.
BizCap assigns an account number and enters data into a cluster of seven Microsoft SQL Server 2000 databases, which run on dual processor Compaq ProLiant, Pentium 4, 800-MHz Xeon servers connected to an EMC storage array.
BizCap then starts a decision engine that checks fraud and credit on the applicant.
BizCap packages relevant data into an XML document and sends it over the Internet via a VPN to Lydian's fraud partner, Equifax Inc., which sends an XML-based fraud score back through the Web service. Previously, a Lydian employee had to call a toll-free number, read the information over the phone, pick up a return fax and key the fraud score into the system.
Now BizCap gets the score directly, analyzes it, and declines the application or moves it on to the credit check Web service, which operates like the fraud service. Lydian's credit checks are done through Digital Matrix Systems, which aggregates data from three credit bureaus into a single XML document it feeds to Lydian through a Web service interface.
If the fraud or credit check produces exceptions BizCap can't understand, the application is kicked out to a person through another Web services interface. That interface accepts XML documents and directs them into the appropriate queue for human evaluation. Once the exception is worked out, the application can be fed back to the BizCap system through the same Web service for further automated processing.
Once the application is approved or declined, BizCap again sends it through the Web services interface to a queue where a customer service representative takes over. BizCap also automatically triggers printing of a rejection or acceptance letter and other supporting documents.
BizCap also has automated another option. If the loan is declined because the applicant's credit score is too low, Lydian can pass the applicant to one of three partners that pay a referral fee for the names of high-risk applicants.
Studdard says he thinks of Web services as something practical, like using an umbrella to keep the rain off, rather than trying to convert it into a crazy flying machine. "Running a solid business is not about that. It's about keeping the rain off of you," he says.