As the trend toward cloud computing continues its march across an ever-expanding set of industries, it is worth pausing briefly to contemplate how it can benefit those of us who work with mortgage data for a living.
The inherent flexibility, efficiency and scalability afforded by cloud-native systems driving this trend are clearly of value to users of financial services data. Mortgages in particular, each accompanied by a dizzying array of static and dynamic data about borrower incomes, employment, assets, property valuations, payment histories, and detailed loan terms, stand to reap the benefits of cloud and the shift to this new form of computing.
And yet, many of my colleagues still catch themselves referring to mortgage data files as “tapes.”
Migrating to cloud evokes some of the shiniest words in the world of computing – cost reduction, security, reliability, agility – and that undoubtedly creates a stir. Cloud’s ability to provide on-demand access to servers, storage locations, databases, software and applications via the internet, along with the promise to ‘only pay for what you use’ further contributes to its popularity.
These benefits are especially well suited to mortgage data. They include:
- On-demand self-service and the ability to provision resources without human interference – of particular use for mortgage portfolios that are constantly changing in both size and composition.
- Broad network access, diverse platforms having access to multiple resources available over the network – valuable when origination, secondary marketing, structuring, servicing, and modeling tools are seeking to simultaneously access the same evolving datasets for different purposes.
- Multi-tenancy and resource pooling, allowing resource sharing while maintaining privacy and security.
- Rapid elasticity and scalability, quick acquiring and disposing of resources and allowing quick but measured scaling based on demand.
Cloud-native systems reduce ownership and operational expenses, increase speed and agility, facilitate innovation, improve client experience, and even enhance security controls.
There is nothing quite like mortgage portfolios when it comes to massive quantities of financial data, often PII-laden, with high security requirements. The responsibility for protecting borrower privacy is the most frequently cited reason for financial institution reluctance when it comes to cloud adoption. But perhaps counterintuitively, migrating on-premises applications to cloud actually results in a more controlled environment as it provides for backup and access protocols that are not as easily implemented with on-premise solutions.
The cloud affords a sophisticated and more efficient way of securing mortgage data. In addition to eliminating costs associated with running and maintaining data centers, the cloud enables easy and fast access to data and applications anywhere and at any time. As remote work takes hold as a more long-term norm, cloud-native platform help ensure employees can work effectively regardless of their location. Furthermore, the scalability of cloud-native data centers allows holders of mortgage assets to grow and expand storage capabilities as the portfolio grows and reduce it when it contracts. The cloud protects mortgage data from security breaches or disaster events, because the loan files are (by definition) backed up in a secure, remote location and easily restored without having to invest in expensive data retrieval methods.
This is not to say that migrating to the cloud is without its challenges. Entrusting sensitive data to a new third-party partner and relying on its tech to remain online will always carry some measure of risk. Cloud computing, like any other innovation, comes with its own advantages and disadvantages, and redundancies mitigate virtually all of these uncertainties. Ultimately, the upside of being able work with mortgage data on cloud-native solutions far outweighs the drawbacks. The cloud makes it possible for processes to become more efficient in real-time, without having to undergo expensive hardware enhancements. This in turn creates a more productive environment for data analysts and modelers seeking to give portfolio managers, servicers, securitizers, and others who routinely deal with mortgage assets the edge they are looking for.
Kriti Asrani is an associate data analyst at RiskSpan.
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