Why LIXI2 is a Game-Changer (Part 2)
Solving for Complexity!
In Part 1 we described the ways in which innovative approaches to maximising the benefit of LIXI2 are driving automation.
In this post, we describe how LIXI2 is reducing the complexity of the data messaging ecosystem, thereby improving efficiency and speed of delivery.
LIXI has been an integral part of the evolution of data exchange in lending for 20 years. Through a number of generations of data standards we have seen first-hand the complexity that has evolved in an environment that involves large data sets interacting through a series of proprietary APIs with multiple participants, platforms and systems.
Brokers tools, aggregators systems, valuation platforms, electronic lodgement gateways, credit bureaus, decision platforms, documentation systems, panel lawyers, core banking systems, and loan servicing platforms all interact with the data involved in a credit application. Many of these are members of the LIXI Community.
We have seen the unnecessary and wasteful complexity that has evolved where ecosystems of co-reliant business partners each use what appears to be the right architecture for that project, in their organisations, assessed against a business case that doesn't include an appropriate value on future agility. It has become hard for any single participant to upgrade their offering because of all the other parties still wedded to old versions - the ecosystem is gridlocked with inefficiencies.
By relentlessly focussing on the internal at the expense of the external, and on the short term at the expense of the long term, their ability to address change demanded of them has been compromised. This is a situation that requires the application of different thought processes than those that contributed to the predicament.
This complexity means that traditional Enterprise Architects (EAs) are being challenged in different ways. A purely internal focus is not sufficient for success.
If you find yourself in a hole, stop digging! If your approach to architecture and project planning with respect to exchanging data across the ecosystem is contributing to complexity - find another way.
As the often-repeated quote attributed to Einstein says:
"We can't solve problems by using the same kind of thinking we used when we created them."
The early LIXI data standards have been extremely widely adopted, although almost all of these data integrations have been customised to a large extent. This has created a problem with interoperability - new implementations have become too complex and expensive. In addition, once implemented, the complexity and lack of automation make it difficult for any participant in the ecosystem to upgrade their interfaces without impacting others.
The desire to differentiate with APIs is misguided. True standardisation supports sustainable differentiation by lowering the barrier to exchanging data, allowing each participant to focus on where they add value - which is almost always what they do with the data. There is no long term advantage in maintaining custom APIs in this complex ecosystem.
APIs based on LIXI2 are now the most efficient, sustainable, and agile way to exchange data within this ecosystem.
Those that persist with custom APIs waste valuable effort on areas that do not add business value and do not differentiate from competitors.
Deloitte Australia, in a recent paper, describes the 'Emergence of the Ecosystems Architect'.
They explain how success requires expanded horizons, not a narrow focus on the development of platforms and business capability.
This broader focus encompasses new business strategies, partners and models as well as internal systems.
LIXI's experience in the complex credit ecosystem supports the observations in the Deloitte paper.
The cost of change in the old ecosystem has become too high, but change is needed to meet regulatory and market demands - the question is how to reconcile these two competing demands.
The answer is the adoption of interfaces based on comprehensive, unambiguous data standards maintained with a robust, industry-wide collaborative change management framework. There has to be a support model that can efficiently adapt to industry-wide changes, whilst at the same time supports differentiation.
Not only do the standards solve problems of complexity by improving interface interoperability, but they also provide a platform for the development of more tools and frameworks for even more automation covered in Part 1. The rate that these tools evolve will accelerate as an increasing number of LIXI2 implementations take place.
In addition, since the suite of standards are consistent across the entire mortgage life-cycle, a wide range of organisations can collaborate, contribute, and benefit from the the standards and tools.
If you're interested in learning more, please get in touch.
Shane Rigby, LIXI Limited CEO
First Published: April 23, 2020