Use case: How next-gen blockchain delivers a “golden record” for mortgage servicing

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Centralized IT and blockchain technologies don’t need to be at odds with one another. Next-gen platforms give financial institutions the best of blockchain, plus the best of central IT to empower transformation, securely share real-time data, and eliminate errors and the need for massive reconciliation.

Next-gen blockchain offerings …

  1. Combine the decentralization and trust of blockchains, the scale of public cloud services, and the TCO benefits of being delivered as a service
  2. Are designed for rapid time-to-market and easy adoption
  3. Deliver the compliance and security features that financial services require, including secure operational data sharing across partners, high throughput and low latency, integration with existing enterprise systems, and full lineage and traceability for all data types.

Mortgage servicing with next-gen blockchain

Outside the financial services industry, a mortgage payment may seem like a simple payment from a borrower to a lender. However, insiders understand that, behind-the-scenes, critical data is continuously being shared and reconciled among various parties:

  • Lenders need to reconcile the status of debt and interest payments
  • Servicers must ensure that property taxes and insurance premiums are paid to the right parties
  • Organizations such as Fannie Mae and Freddie Mac need to keep track of mortgage transfers between servicers
  • Secondary markets that securitize mortgages must determine how to package mortgages into securities, including making necessary adjustments when borrowers delay or default on payments and providing appropriate disclosures

Because these are financial transactions, every detail matters: The order of operations, the precision of shared calculations, and unanimous party agreement on a single source of truth regarding the status of every transaction. Accuracy, completeness, and up-to-date information are all key to the system’s correct functioning … and the health of each participating organization’s balance sheet.

Operating in this sophisticated system without real-time data sharing can require weeks (or months) of manual reconciliation work across disjointed systems. It can also expose financial service providers to a range of bottom-line and regulatory risks.

Next-gen blockchains can create a golden record

Next-gen blockchains offer the various parties in a financial services ecosystem, such as mortgage servicing and securitization, a single source of truth that’s accessible and visible to everyone—with a clear record of every transaction that occurred. Records cannot be tampered with or deleted, making disagreements over the source of truth impossible. Costly and repetitive dispute resolution processes are unnecessary, and parties can experience unprecedented levels of trust in their data alliance.

In the case of a mortgage servicing company, every party in the process can be connected to a shared set of records, visible and auditable by everyone participating in the network. This connection removes the delays and errors caused by disjointed and manual processes as records are shuffled from one party to another, often with errors or omissions being introduced. A next-gen blockchain approach also makes it possible to get a real-time view of risk exposure and cash flow movements without waiting for data reconciliation delays: Every party knows the status of every transaction (to which it has access) within seconds of that transaction taking place…even if it originated in the IT architecture of another company.

The structural benefits of blockchain include its immutability, transparency, and the ability for every party and system involved to trace every transaction and change that’s taken place. The new enabler is the scalability, cloud integration, and enterprise readiness of next-gen solutions. Together, these emergent benefits provide the foundation for an entirely new level of trust that can unlock innovation, new products, and competitive advantages for financial services organizations—from tracking mortgage servicing across providers to helping banks provide accurate and auditable environmental, social, and governance (ESG) data.

Transform into a data-driven market leader

Functionally, next-gen blockchain solutions allow financial firms to share real-time data securely, eliminate errors, and erase the need for massive reconciliation. When applied correctly as part of a complete data and application strategy, next-gen blockchains can accelerate innovation, unlock new revenue, and create new market leaders in banking, lending, insurance, asset management, and financial technology.

Ready for new, proprietary data applications?

When applied correctly as part of a modern data and application strategy, next-gen blockchain can accelerate innovation, unlock new revenue and cost savings, and create new market leadership in banking, lending, insurance, asset management, and financial technology.

  • Explore a reinsurance use case, featuring Atos. Read the case study
  • Get our guide on Blockchain for a Modern Data Strategy, exclusively for innovation leaders in the financial services sector. Download the guide
  • Contact us to explore use cases for your organization. Talk to an expert