The development of a common Internet language has long been a Holy Grail. Servicers may have what they need with XML.
By Jim Brown
Two major trends having the greatest impact on the mortgage banking industry the last two years have been consolidation and the Internet. At times, they have intertwined.
Consolidation produces mega-lenders who need to outsource some functions in order to remain competitive and the Internet is enabling them to do this.
For the first time, the Internet has made it cost effective to connect virtually every computer in the industry on a single network.
Traditionally, companies have used Electronic Data Interchange (EDI) to connect to their trading partners. However, EDI has been a technology with a long ramp-up period: extremely time-consuming and expensive to implement.
Because EDI requires the integration of third-party tools and communication networks, its adoption rate has been relatively low in spite of industry support. In addition, the strict standards-based nature of EDI has resulted in countless implementation delays.
Extensible Markup Language (XML) promises to lower these barriers in several ways. (Ed. Note: XML is a simplified subset of the Standard Generalized Markup Language - SGML, ISO 8879 - which provides a file format for representing data, a schema for describing data structure and a mechanism for extending and annotating HTML with semantic information.)
XML technology is far easier and much less expensive to implement than EDI. XML’s open architecture enables seamless communication, securely linking data and collaborative processes in real time, regardless of industry or technology.
An EDI implementation requires costly and cumbersome third-party translation software. Also, EDI communications usually require expensive Value Added Networks (VANs), which transfer the data and ensure its security.
In contrast, virtually every programming language and development tool now has built-in support for XML. Many vendors are also creating software tools to assist with the communication and tracking of XML messages across the Internet.
In addition, many companies are beginning to provide specialized “marketplaces” on the Internet for handling specific types of business transactions.
XML provides a degree of extensibility not found in X.12 EDI. Because it uses a text-based “markup” language, it is very easy to extend a standard format to include custom information required for a specific situation. This ability to adapt the formats to existing systems makes it possible for most programs to adapt to XML. As long as you and the company you want to conduct e-business with can agree on a format, it is easy to create and implement one.
Adopting standards
The real challenge comes when trying to connect large numbers of companies together. The adoption of standards makes it easier by reducing the total number of interfaces with which a system must be compatible.
In fact, the extreme flexibility of XML may prove to be its downfall if too many competing transaction formats hamper the overall growth of e-commerce.
To prevent this type of chaos, the Mortgage Bankers Association of America has formed the Mortgage Industry Standards Maintenance Organization (MISMO). In addition to its success in transitioning the existing EDI X.12 standards to XML, it is working towards the creation of an industry-wide data model and collection of XML message formats.
Using the Internet as a communications network offers many more options, and typically a lower cost, than traditional VANs. The Hypertext Transfer Protocol Secured (HTTPS) is allowed through most corporate firewalls, and it employs encryption technology that is so secure that the U.S. government has struggled to regulate it and control its export.
Many companies also choose to implement Virtual Private Networks (VPNs) over the Internet. This approach wraps the entire Internet conversation in encryption, allowing you to use common protocols, such as File Transfer Protocol (FTP), in a secured fashion.
These easily available Internet encryption tools can be used to authenticate and encrypt your data transmissions and rely on a “public-private” key-set that must be created and held by a trusted source. Companies are now beginning to implement Public Key Infrastructure (PKI) tools to manage these key-sets themselves without having to rely upon third parties to do this.
In addition to creating message-based interfaces as described above, XML is also a good choice for exposing remote system objects without the use of expensive middleware solutions.
Internet-based applications, and Internet “adapters” for legacy systems, are typically constructed using object-oriented software development tools. These systems usually employ transaction control monitors or application servers to manage the high transaction volume that Web-based systems can experience.
The problem is that there are several variations of transaction management systems including COM and CORBA. Most systems have adopted support for one of these two “standards.” COM is based in the Windows world and CORBA implementations are most typically found in the Unix environments.
Many Unix developers are now moving towards the Java 2 Platform Enterprise Edition (J2EE) specification as a standard means of managing transactions and software components.
The problem is that all of these object environments have their own “languages” making it hard to connect systems from different companies.
Software components written for COM cannot directly call objects written for CORBA and vice versa. Some companies address this problem by providing bridging capabilities in their application server, but the technology is not widespread and most companies still struggle to make their computer systems communicate effectively with other systems. The incompatibilities between COM and CORBA include data formatting standards and data communication protocols.
However, companies are beginning to use XML to address these problems. By combining XML with HTTPS, companies can connect computer systems without having to purchase additional software technology. Using HTTPS also allows a company to use existing Internet connectivity for communications with industry standard encryption and authentication technology.
Protocol definitions, such as XML-RPC (Remote Procedure Call) and SOAP (Simple Object Access Protocol), allow application objects on any platform to communicate over HTTP with any other object that also conforms to the XML-RPC or SOAP standard. Rather than costly middleware solutions, common Internet tools like Web servers and scripting can now be used to integrate systems on disparate platforms.
As the consolidation trend continues, mortgage lenders will look increasingly to third-party specialists to minimize costs. The successful players will be the ones who are able to tightly integrate their systems with the systems of their business partners.
By leveraging the Internet as an extremely low-cost and universal communications medium, and by using technologies like XML that are very widely supported, lenders and service providers can ensure themselves a place in the e-commerce enabled mortgage banking marketplace of the 21st century.
Jim Brown is chief technology officer for
London Bridge Group’s mortgage division. He can be reached at (770)
810-8373 or by e-mail at jbrown@lbss.com.
This article was previously published in the November 2000 Issue of Secondary
Marketing Executive.
