The mortgage industry is becoming increasingly dependent on technology. As a result, the survival of most companies is dependent on their technology solutions working effectively. Some of the crucial elements of using technology effectively include interoperability and the use of open standards.

The rapid growth of PCs and computer systems was driven primarily by interoperability, which allowed a large number of vendors to create products that could work together. This meant that you were not locked into buying products from one vendor. In addition, vendors could buy components from a variety of suppliers. Competition drove prices down and made technology affordable for the masses. So today the majority of US households have a PC and an Internet connection. None of this would have been possible if there had not been a strong commitment to creating and following industry standards.

In the mortgage industry, we have been much slower in adopting standards and as a result our pace of innovation has not been as great as in the computer industry. One of the reasons why we have not adopted standards so readily is that the mortgage industry is very complex and has a large variety of players that have different requirements. Another factor is that many industry vendors have continued to use proprietary file formats that have their roots in the DOS world!

With the advent of MISMO we now have a truly open standard based on XML. Even though MISMO has limitations and will probably evolve over time, it is one of the most significant developments in our industry. Over time, if the majority of vendors adopt MISMO, this will accelerate the pace of innovation and adoption of technology. Another "standard" that is prevalent in today's market is Fannie Mae's DU file format. Many vendors have chosen to make their systems compatible with both MISMO and DU.

Going forward, we will most likely see an increasing amount of connectivity between the various systems used by a company and the systems used by the company's partners and vendors. In today's world you have to be able to interact with consumers in a variety of ways - online, over the phone and face-to-face.

Consumers don't really care what system you use. They expect you to know all the information they have sent you regardless of what channel they use. So if they complete an application online and then call the next day, they expect that the person answering the phone to have access to the information that they submitted. To do this, all your systems have to be interoperable. Since it is very unlikely that all your systems are going to be purchased from the same vendor, it is important that all systems you purchase be based on open standards.

Having open standards will make it easier for your systems to be interoperable and will reduce or eliminate the cost of integration. As a result, it is important that you take stock of all the new systems you plan to buy and your current systems and find out:

1. What open standard does the system comply with?
2. Are future upgrades going to be compliant with open standards?
3. Can other vendors interface to the system easily? Get a list of other vendors that already have interfaces developed.
4. Is there a cost to other vendors to use the interface? If so how much?

In today's fast-changing markets, it is very expensive to have systems that are not based on open standards. If a new product comes to the market in the future that can give your company a competitive edge you may want to deploy it quickly at a low cost. This is only possible with systems that are based on open standards.

Vendors that do not migrate to open standards will probably lose market share just like vendors who had proprietary systems in the computer industry. Vendors that based their systems on open standards will have a better chance at succeeding. In addition, it will be easy to build interfaces on these open systems, which will make it easy for companies to purchase products from multiple vendors and make them all work together.

Today you can buy your PC from one manufacturer, your printer from another company, and your monitor from yet another company. Yet when you put them together they generally work most of the time! With the advent of MISMO and other standards in the mortgage industry, we are not too far away from having our various systems work easily with one another. So it will be possible to purchase your front end loan origination system from one vendor, your website from another vendor and your servicing system from yet another vendor and when you put them together, you should expect them to work together!

Warren is the CEO of Myers Internet, Inc.. He has an MS in Computer Science from the U. of Delaware and an MBA in Finance/Marketing from the U. of Chicago. Warren has been featured as an expert on online mortgages on CNN and has been interviewed and quoted in numerous publications including Money Magazine, and Fast Company. Web: www.myersinternet.com