Context is crucial in communicating effectively. In every language, there are homophones that sound similar and would require you to either know the exact spelling or the precise context of the word or term discussed to decipher its meaning. For example, some common homophones in English include words such as:
Now, imagine the confusion introduced when we use the same vocabulary in communicating with customers across various industries. Unless those customers have spent time in those industries or have spent significant time researching specific words and terms, it’s easy for them to misunderstand the context and connotations of that vocabulary.
Let’s take a couple of examples from the finance industry; what is the difference between a “fee” and a “charge,” a “credit” and a “concession,” or “approval” and “qualification”? This isn’t a play with words. Those terms could mean entirely different things with and without proper context. I can site dozens — if not hundreds — of such examples. However, few will help prove this point as well as the examples below from the mortgage-finance industry will.
Readers (especially homeowners) might be surprised to learn the differences between the following terms:
Origination Fee/Origination Charge
Discount pts./Origination pts.
Lender Concession/Lender Credit
Apartments/Condominiums [Credit Policy Specific]
We need a system that has contextual knowledge of the items being compared with regards to these varying terms. In the example above of “See/Sea”, knowing that the user is steering a sailing vessel can help us better predict which “sea” is being referred to. Subsequently, we can then add an element of time to the comparison to make it even more meaningful. For example, have you seen a parent bargaining with their child through conversations like, “if you eat your vegetables, you will get mac-n-cheese later”? In this instance of context, there is value in adding an element of time to a comparison to make it more meaningful.
Keeping with examples from mortgage finance, it would be useful to know how to choose two deals to compare against each other; one where the rate is higher but can close sooner versus another mortgage offer with a slightly lower rate but will close a month later. Time is money, so the answer could vary if borrowers are refinancing or purchasing, and if it is an existing home or new construction builder home. This is what makes the notion of Compare-as-a-Service (CfaaS) a valuable resource for borrowers in this regard.
What is Compare-as-a-Service (CfaaS)?
CfaaS is a cloud-based industry-specific contextual comparison service with the introduction of the concept of ‘time’ to that comparison. It can help compare financial services ranging from mortgages to ancillary services required to fulfill a transaction using container-based abstraction. As a cloud service, CfaaS is highly scalable, available, and configurable with minimal-to-no cost in maintaining protocol across the industry.
Through this orchestration, essential IT functions specific to financial services — such as comparing costs of specific services — can become automated. Through CfaaS, users can centralize their data into a single repository where they can manage it, categorize it, make it available for comparison, search for it, or do whatever they wish with it to facilitate comparisons for borrowers as clients. Because the CfaaS framework works on principles of Web 3.0, it is imperative that borrowers retain ownership and privacy of their data while comparing financial services.
The most significant benefit of CfaaS is that users can apportion their processing/computing power between several virtual environments without having to worry about scalability and integration to new aggregators while allowing the CfaaS provider to do the same for their users. Additionally, users won’t have to worry about more recent releases on standards across the industry, such as moving from MISMO 3.6 over to MISMO 4.0 when it is released.
To put it simply, CfaaS provides the financial services industry the benefit of reduced time, providing no-cost to development, and providing plug-and-play framework for the advancement of existing services (and/or building newer services) to meet the demands of Web 3.0.
MISMO has long made strides to address electronic commerce issues in the mortgage industry. Through broad industry collaboration, MISMO has created — and continues to develop — new standards that support solutions to the industry’s toughest business issues, reduce costs, and improve transparency and communications in housing finance. Now, with CfaaS building upon the progress MISMO has made, smaller players, newer players, and trailblazers all have a real shot at leapfrogging the industry’s gorillas; big banks.
Throughout our history, human beings have shown that they became smarter by learning, but especially learning through comparing. Inventions are inventions because they do something different from what already existed, be it a process or a device. If we compare two items and both are identical, does the second item still qualify as an invention? We have to compare to find out.
Now, imagine the importance of comparison in financial services. There is a cache of use cases for providers of financial services (e.g., appraisal services, title & closing services, inspection services, insurance services, etc.), but let’s focus on borrower use cases. Borrowers can quickly compare insurance providers (auto, life, title), closing services (closing, escrow, attorney, survey/search), inspection services (pest, roof, structural), and more. One excellent use case of CfaaS on behalf of borrowers is to view all of the above services being compared and — with the help of tools like automation and AI — find cheaper opportunities than those that Lenders offer them, using machine learning to create predictive models to craft a custom mortgage for their benefit.
As complex as it might be, comparing financial instruments today is possible, but is widely done by experts using different systems and services available to them. By ensuring comparisons are contextually relevant and can adhere to multiple goals within the same CfaaS search, the industry can help take the comparison of financial products and services to the next level.
The author, Yatin Karnik is the founder and CEO of Confer, Inc. After 18 years in the Home Lending industry with Wells Fargo Home Mortgage as a Senior Vice President, Yatin founded Confer, Inc. and developed a revolutionary and disruptive application that will allow consumers to compare loan estimates.