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Our vision is to revolutionize and automate the loan servicing workflow of the global financial community.
Shaw Systems and Data Migration
At Shaw, we know your portfolio is alive. It’s a living, breathing ocean of borrower, account, and lending data that ebbs and flows on a minute-by-minute basis. We also understand that you are accountable to borrowers, investors, and regulators. Migrating your portfolio to a modern loan servicing platform is an intimidating thought. The migration will either be perfect or unacceptable. What can you do to ensure such a migration is as smooth as possible? Can you be sure the accounting is accurate? How can you know if your loan servicing software partner has the expertise and experience to get it done?
In our 55+ years of business, we’ve migrated from every version of legacy systems and decades-old homegrown applications. But, even for us, as soon as that thought sets in, we are presented with a new challenge.
What Can You Do to Help Yourself?
To help yourself in the migration process, begin with the basics. First, look at the technical mechanics of the data in your system. Does your legacy application provide you with access to the data? If not, can your team externalize the data? At Shaw, we know that no question is too fundamental to ask at the beginning of a migration.
Once you’re confident that you can access your servicing data, it’s a great idea to do a chronological inventory of the data over time. How the system was used in the past may be different from how it’s used today. Break down data analytics by logical domains. For example, create a complete record of customer and account information. Also, look at how your finance company’s lending products have evolved over time. The conversion will have to account for each iteration down to the penny. Once the logical layout of the data begins to take shape, you can start to imagine what a mapping process will look like in your new loan servicing system of record.
Shaw Systems can help you migrate your data into our loan servicing software system. Before you start migrating data, it’s recommended that you look at the integrity of that data. By looking at your data beforehand, you will get an idea about the state of your data and where converting it might be challenging.
Data conversion is the step in the migration process that will most likely take the longest to complete because it is the most complex. Data migration typically takes place after workflows and configuration are done.
Data migration is complicated because there are rules and laws regarding the data used. For example, the data could include things like fractions of pennies and a specific number of decimal spaces on accounts. It must be near perfect before it’s migrated to a new system.
Shaw Spectrum loan servicing software is intelligently edited, meaning it can only accept a specific designation in a specific field. For example, you can’t put a phone number in a field that requires text. Spectrum is a system that cannot be abused, meaning no junk data can be put in, which is a pro when it comes to data integrity. However, if there is junk data on the system being migrated over, it will not convert and must be dealt with.
Shaw’s Step-By-Step Approach
At Shaw, we’ve written scores of conversion scripts to help automate this complex process. For most conversions, we expect to convert 80% of the portfolio once mapping is complete. We expect, and you should too, to work together to investigate and understand some of the account and borrower data that does not automatically convert. To get this right, we’ll need your teams’ SME’s. We will need people who know how the system was used for a specific lending product or in the context of a specific initiative your company had. Often, this product or initiative no longer exists.
From day one of the project, Shaw will plan for multiple ‘mock conversions’. A mock conversion is just what you’d expect. It’s a practice run. Once we’ve done all the mapping and the conversion script has run, Shaw will begin running mock conversions to measure the success of our automation. Depending on what percentage of the portfolio needs further investigation, we’ll work with your team to schedule the appropriate number of remaining mock conversions. This process is repeated until everyone is confident that the conversion will go exactly as planned.
During a migration, there are various challenges to account for. For example, there could be multiple systems to convert, with data taken from all. A client could nearly complete a conversion but be left with a subset of account data that may be corrupt, requiring further investigation. Or a client might have a homegrown system with data that doesn’t convert easily.
Shaw will run standard conversion scripts during a migration. Typically, we expect to automatically convert 80% of the borrower and account data on our first mock conversion. The remaining 20% could not be automatically converted because of inconsistencies in the data. From here, our teams will work together to understand the nature of those inconsistencies and adjust the conversion scripts to account for the remaining 20%. We typically plan on 4 mock conversions from the onset to account for the various iterations of data in a migration. The last mock conversion represents a final test run for go-live.
Checking For Accuracy
As part of these practice runs, Shaw experts will take several steps to ensure the conversion is accurate. Calculations of interest and fees from one servicing system to another can have slight variations. This is primarily due to how many ways a system can accrue interest and how many decimal places a system calculates. Such small differences can turn into real dollars when accounting for a large portfolio.
Shaw will work with your finance team to make any adjustments required to meet your compliance and treasury department's requirements. Together, we’ll check fundamental markers like number of accounts, total portfolio value, and total outstanding due. Such markers are great indicators of the success of the conversion.
Big Bang VS Phased Approach (Xpress)
Today, organizations are much more likely to consider a two-phased approach than in the past. That two-phased approach includes going live as quickly as possible with new loan boarding, with the second phase being the conversion of the existing portfolio.
There are a few keys to this approach and a couple of reasons why it’s largely adopted today. One key to this approach is starting both phases simultaneously. That is because with a portfolio of relative size and complexity, you will most likely go live with new loan boarding before you convert the portfolio. This allows organizations to begin experiencing a return on their technology investment much more quickly. It also pushes forward other important aspects of the project, like training and interfaces. To begin to service the new loan, your team will accelerate the technical work associated with the needed interfaces. Interfaces including originations, statements and letters, dialers, money movers, and potentially many others. Additionally, it forces your team to begin training, often with a more limited number of users, for a soft rollout.
One reason this is possible is because of Shaw’s Spectrum Xpress offering. Xpress represents standard industry queues, rules, activity codes, and workflows. These are processes that all finance companies must perform. Xpress is an opportunity for associates servicing new loan boarding to understand what the new system is capable of, and which pieces of the old system need to be configured in Spectrum.
As your team becomes more familiar with servicing in Spectrum, they’ll be better prepared for the influx of account volume as both teams draw nearer to completing the data.
If you would like to learn more about our loan servicing software or how we can help you, email us at solutions@shawsystems.com. Follow us on LinkedIn for more blog posts.