Adelaide Bank has increased its monthly loan approvals potential from $40 million to $300 million with the implementation of a new extranet, but large organisations often underestimate the change management issues associated with similar wide-scale deployments.
IDC analyst Graham Penn said companies with extranets often advertised state-of-the-art technology and efficiency without accepting the -two or three-year learning curve" typically incurred by such large-scale initiatives.
Mike Gulliver, Internet business manager at Adelaide Bank, agreed technology initiatives such as extranet deployments could sometimes incur substantial periods of -adjustment" before benefiting the business. However, he suggested that customers were often more reluctant than businesses to -embrace" new technology.
But according to Gulliver, that was not a problem for Adelaide Bank when it deployed an extranet Web site and data interface late last year. He said the mortgage orginators it communicated with had -embraced" the extranet and those partners were -already reaping significant cost-cutting and time-saving benefits".
The implementation took place following completion of a benefits realisation plan, which showed an extranet would reduce costs, increase efficiencies, and speed Internet communications between the Adelaide bank and its mortgage originators.
Adelaide Bank provides wholesale home-loan packages to partnering commercial loaning companies (-mortgage originators"), which then resell the products to customers.
The mortgage originators refer home loan applications to the bank, which assesses and potentially authorises and finances the loans.
-Customers don't even know they've taken out a loan with the Adelaide Bank," Gulliver said.
The bank had 50 partnering home loan companies in Australia, including NSW Home Loans operator IF&I Securities, VIC Home Loans and WA Home Loans, according to Gulliver.
-It was important for us to deliver a system for the mortgage originators to manage the complete funding relationship with Adelaide Bank through one interface," he said, adding mortgage originators would typically require access to information regarding -arrears management", not customer data.
Automating the delivery of routine information between the mortgage originators and the bank enabled it to process home loans within four hours, whereas with the previous system it could take -a couple of days". Gulliver said as a result, the bank had increased its potential loan-approval-per-month dollar value from $40 million to $300 million.
The extranet allows mortgage orginators to track the progress of loan approvals via the Internet and more easily update customers on the progress of their loan applications.
Gulliver said the Web site was equipped with 128-bit encryption, protected by password access, and had a controlled access function, which limited mortgage orginator employees could access -depending on their role within the organisation".
He said a champion' had been elected from each mortgage originator to administer staff access, however they were not able to use the system to access information on competitors.
The Hiser Group, a Sydney-based interface design group, developed the extranet interface while Com Tech's South Australian operation built a Microsoft Site Server-based engine to integrate the bank's inhouse data with the -front-end" interface of the extranet.
Gulliver said the Site Server engine and interface did not replace any existing technology, -it just replaced paper", and the integrators had completed their portions of the project on time and on budget.
He said the bank was aware of Com Tech's reputation for timely delivery, and was attracted to the integrator's fixed (undisclosed) installation rate. Success of the project was suggested early when the bank piloted the extranet in October last year with access only available to WA Home Loans.
Following a successful trial, the extranet was launched in the following month with access to all the bank's home loan partnering companies.
What is an extranet?
According to IDC analyst Graham Penn, extranets are a -reworking" of enterprise resource planning solutions. Ideally extranets are part of an overall solution, which involves other customer relationship management technology and strategies in addition to extranets, he said.
-You don't have one or the other," Penn commented. -The term is used by companies to describe any Internet-based communication between the company and outside authorised clients'."
-When they take [Internet communication] out beyond their organisation, either to customers or to suppliers, it's dubbed extranet'," he said, stressing that the term was dependent on the inclusion of Internet technology.
-EDI applications, which typically ran in a proprietary environment in the old days, would not be part of an extranet," he explained.
Penn said the primary advantage of extranet technology was controlled external access, which can speed up Internet communication and allow for more vulnerable information to be transmitted.
He said that may necessitate implementing security measures like a firewall in order to gain maximum benefit from an extranet and customers could still be required to have some sort of authorisation to tap into it.
-An extranet is secure by definition," Penn said. -Otherwise, you might as well just put [the information] up on the Internet and make it available to the whole world."