LIXItech

Anti-Money Laundering

Draft requirements for AML/CTF (Anti-Money Laundering/Counter Terrorism Financing) are up in the Applications Working Group area on the LIXI site. Unfortunately it is far from easy to pin down just what the actual requirements will be - lenders have a fair bit of discretion about how they comply, plus they have a long non-prosecution period which makes them feel relaxed and comfortable about getting this work done. Which is great for them but LIXI needs to have updated standards available in time to support the first lender's who comply - which could be as early as the official start date of December 13.

Brokers are also facing this problem in that of course they don't want to have to comply with differing processes from every lender, but it is difficult for them to "encourage" lenders to agree on a common process (let alone do so quickly). Thankfully the MFAA has in fact made a lot of progress and has already prepared a solid draft common approach. I've used this common approach as a starting point for determining what will have to change in LIXI/CAL, but the bottom line is that the requirements I've published are still largely just my informed guesses and interpretations. We really need lenders to get in and review the requirements and comment on their completeness or otherwise, and this needs to happen SOON. To have CAL updated in time for implementations that may go live as early as Dec.13 we have absolutely no time to waste.

I know a lot of lenders are thinking that they'll just institute manual processes in parallel with the existing electronic submissions, and of course this can be workable in the short term. But really, it's going to annoy customers and brokers - and no lender can afford to do that for long in a competitive environment. It is in everyone's interests for us to get a comprehensive, LIXI-compliant solution in place ASAP.

Lean Six Sigma and loan processing

One of the more interesting presentations at the IQPC Mortgage Processing conference in Melbourne on Aug. 28 was by Kerri Gill of CBA. She presented on Lean and Six Sigma as implemented in CBA's CommWay program. As a bit of a Quality Management old-timer (in fact I worked in QA for Comm Bank IT for a while back in the early '90's) the whole presentation was music to my ears. I've always felt that the LIXI message would be much easier to preach if the audience were better educated about best-practice process improvement techniques.

The Japanese pioneered much of what now gets bundled under the "Lean Six Sigma" banner and it literally transformed Japan's place in the world. Yet the American auto giants totally underestimated what Toyota and the like were doing. They were quite certain that they knew how best to make cars and felt they had nothing to fear from all that "TQM" and "kaizen" waffle. It's not hard to see the parallels with lenders wedded to existing loan processing practices so it is refreshing to see an organisation as large as the CBA actively embracing what boils down to evidence-based process improvement.

I'd love to hear from anyone else who's experienced applying Lean Six Sigma or related techniques in financial services. There's certainly plenty of opportunities for improvements.

Download kerri_gill_presentation.pdf