Q/A with Marc Riccio of Specialized Data Systems Inc.

MBA NewsLink recently posed questions to Marc Riccio, President of Specialized Data Systems Inc., East Haven, Conn.

Riccio has more than 30 years of experience providing software solutions to the financial industry. He is known for his forward thinking and vision of introducing new and innovative technologies including “rules-based” Loan Origination software, COLD/Document Image Systems, Internet Security Services on Demand, Cloud Computing and now Operational Risk Management software.

Prior to founding Specialized Data Systems in 1989, Marc worked for several technology companies as a systems analyst, account manager and sales manager. Among his significant previous positions, Marc served as senior marketing representative for FiServ-Connecticut and worked in the Retail Banking and Systems group for Bank of America.

MBA NEWSLINK: You founded this company in 1989. What have been the biggest changes you’ve seen in the time since?

MARC RICCIO, SPECIALIZED DATA SYSTEMS INC.: Besides the inevitable change in regulatory reform and mandated improvements in balance sheet strength, the importance of partnering and working together with 3rd party providers to ensure our technologies interface with each other is one of the most significant changes in the industry that I’ve encountered.

When we started more than 25 years ago, our LOS had three interfaces…today there are more than 50 interfaces with third party providers and core banking systems. It is so important to work with our partners to ensure that these interfaces function properly especially to enhance the client experience.

NEWSLINK: What is the idea behind “rules-based” loan origination software?

RICCIO: The “rules-based” loan origination software, sometimes referred to as “business rule” software, is the engine that supports a lender’s unique workflow process. If designed properly, the engine allows business without any programming experience to add, modify and delete “lending-rules” within the loan origination system without effecting the underlying code. The “lending-rules” can be different from one lender to another and allows each lender to have their “own” unique loan types, data field definitions, screens, tables, forms, reports, work queues and workflow process.

NEWSLINK: According to a recent QuestSoft survey, nearly 20 percent of mortgage lenders consider changing their loan origination software every year. Why is that number so high?

RICCIO: There are three reasons: First, the architecture of many LOS are rigid and/or very difficult to manage and customize. Sometimes lenders are only thinking about their needs for today and not looking at the bigger picture and thinking long term. We have clients that have been using our LOS platform for 10, 15 even 20 years! That is off the charts.

Second, currently two major players are in the process of sunsetting their LOS. Which in turn leads to lenders looking to switch.

The third reason is that some LOS are patched together as a result of a merger between two technology companies. As a result, their technology is “choppy” and includes separate modules for Origination, Processing, Underwriting, Closing Module, etc. In some cases, some of the LOS don’t do a good job with basic Doc Prep and their clients are forced to use a 3rd party Doc Prep vendor. Whereas, our LOS platform is “end to end” and seamlessly supports Origination, Processing, Underwriting, Closing, Post Closing, Secondary Marketing, Doc Prep, Reporting and seamless, real-time interfaces to 3rd party vendors like GSE’s, Credit, Flood, MI Companies, etc.

NEWSLINK: What can lenders do to better embrace how technology can improve their business processes?

RICCIO: Banks, credit unions and mortgage companies are struggling to grow efficiently and they are being smothered with regulatory scrutiny, inefficient legacy LOS systems, and higher operating costs. They have to do a better job identifying their specific automation needs and focus on what they do well. As the old saying goes “stick to your knitting.”

They should also consider investing in “rules-based” technology that allows them to modify their workflow in order to accommodate new processes. They should embrace technology that is scalable…find technology that can grow and change as your business grows and changes. The one thing we can always guarantee is that there will be changes in the banking industry.

NEWSLINK: You recently introduced RemoteComply to address operational risk. What is operational risk and how does RemoteComply specifically help lenders address it?

RICCIO: Operational risk is an increasingly popular topic in today’s financial industry. Operational risk management covers a span of processes including ways to identify, mitigate and control risk associated with operating tasks.

Traditionally, institutions would rely on manual processes to monitor their operational risk but with the growing concern with managing third parties and cybersecurity threats, more and more regulatory requirements are forcing institutions into re-evaluating their current processes and systems.

RemoteComply is our software suite which allows financial institutions to centralize all operational risk management onto one platform consisting of vendor management, incident response, disaster recovery, and alert notification. The suite allows institutions to stay compliant while only having to vet one vendor, reducing the amount of resources needed to manage all processes, and saving valuable time and money.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mba.org.)