The Business of APIs – Building a Strategy That Works
Satya Addagarla
VP– Single Family Technology, Fannie Mae
For use at 2018 Mortgage Collaborative Summer Member Conference Only – Do Not Distribute
Executive summary
This session will examine…
• How Fannie Mae developed an API strategy to solve our customers’ business challenges
• How we enhanced our existing product development model to discover efficiencies gained through APIs
Looking through a strategic lens…
• We’ll discuss our approach to research & development of APIs
• Organizational change required to build this technology into the future
Key lessons learned include…
• Rely on your customers, market insights and on the resources
of your business leaders
• Be flexible - it is hard to plan a roadmap
• Be thoughtful on API catalog design
Questions…
• How are you thinking of leveraging APIs?
• What questions are you trying to answer?
• What challenges are you facing?
• APIs (Application Programming Interfaces)
• A means for 3rd parties to write code to interface w/ other code
• Enables content & data to be shared between components
• Almost always uses HTTP (Hypertext Transfer Protocol) which is the underlying protocol used by the World Wide Web
• Where/How Are They Used?
• Used everywhere in your everyday life…
• Ex: Order a Domino’s pizza from your smartphone, API’s are helping to facilitate the transaction as far as…..
• Ordering
• Payment
• Tracking
• Delivery
• Social Media
• Customer Feedback
What’s an API and how are they used?
Source: MBA Tech 2018 Presentation; Alphansotech / Twilio
Application programming interfaces (APIs)
How are we pursuing APIs
Test, Learn, and DiscoverPilots used to discover & learn how to effectively enable APIs
New Integration ChannelAccess existing capabilities through a new integration channel with agility, flexibility and as discrete services
Enable innovation for customers APIs are an enabler for innovation -Customers can use these capabilities in new ways
Our strategy is to create APIs that bring customers’ value
What’s in it for me?
Worth investing in change? Will I
save/make money?
Hmm… this is the 3rd customer
with this problem
To API, or not to API?Engage with your customers
Insight driven changes
Investments driven by customer demand
Q: Which of the following statements best describes your firm’s current status with APIs for your mortgage business?
For use of 2018 Summer Conference Only – Do Not Distribute
APIs usage & future adoption is expected to grow
According to the Mortgage Lenders Sentiment Survey (May 18, 2017):
50% lenders surveyed have either incorporated APIs into their mortgage process or used them
While future adoption of APIs is projected to grow nearly 20% of lenders say they do not plan to use APIs in two years.
Q: What do you think the status of your firm’s adoption will be in two years for your mortgage business?
APIs offer differentiated customer and borrower experiences
Faster to deploy using common industry standards that developers from any company understand
Innovate and create lightweight business capabilities with just-in-time access to fine grain interactions
Easy to integrate by embedding our data and services directly into systems giving opportunities to optimize workflows, save time and resources
Lower overall cost by eliminating channel-specific development work by coding once and using the API results seamlessly across desktop, web, and mobile systems
APIs can help answers some of your borrower’s questions & create an interactive experience
What are the delivery options for a loan?What loan amount
would I qualify for? What are the total Loan Level Price Adjustments that apply to this loan?
What is the minimum contribution required for a borrower?
What is the required Mortgage Insurance coverage percent?What is the property type?
Source: MBA Tech 2018 Presentation
Sample APIs available today
• Easily publish rate sheets• Reduce risk or errors
• Retrieve DU findings Report messages
• Automate workflows
• Automate daily ingestion of data
• Identify & monetize case file LLPA savings
• Upload reports daily to local systems
• Reduce need for month-end manual “crunch time” for financial reporting
Benefits
Our customers have said…
Q: You mentioned that your firm has started using APIs for your mortgage business. In the space provided below, can you share examples of some specific functions for which your firm uses APIs for mortgage lending, such as embedding business partners’ appraisal or e-mortgage APIs into your process?
“Lenders’ Experiences with APIs and Chatbots,” Mortgage Lender Sentiment Survey® Special Topic Analysis, released on May 18, 2017, http://www.fanniemae.com/resources/file/research/mlss/pdf/may2017-topicanalysis-presentation-apis-chatbots.pdf
“We use APIs primarily to have our various internal systems be able to communicate and transfer data between them.” – Larger Institution
“We use various API's to make our processes more efficient and connect with our LOS. We have a 3rd party consumer facing web app that we built API's to automate import and other tasks for example.” – Mid-sized Institution
“Our mortgage LOS incorporates digital documents, LP, credit reporting, and digital loan docs from outside providers.” – Smaller Institution
Concerns with adopting APIs
Q: What are the major concerns, if any, your firm has with adopting APIs?
Themes• Data security• Resources• LOS
• Usage – effectiveness• Learn more about the technology• Is this right for our firm?
“Data security, fraud prevention and risk management.” – Mid-sized Institution
“Privacy and cyber security risks.” “Cyber security concerns.” – Mid-sized Institution
“Breaches of private information.” – Smaller Institution
“Ability for our core LOS to support them..” – Mid-sized Institution
“Cost of entry and getting the true value add to offset.” – Larger Institution
“Lack of dedicated staff to develop & oversee.” – Smaller Institution
“Need to understand why it is important to our process and how they are set up.” – Smaller Institution
Selected Responses
“Lenders’ Experiences with APIs and Chatbots,” Mortgage Lender Sentiment Survey® Special Topic Analysis, released on May 18, 2017, http://www.fanniemae.com/resources/file/research/mlss/pdf/may2017-topicanalysis-presentation-apis-chatbots.pdf
Lenders are concerned with data security and resource issues when adopting APIs.
Thank You
What challenges are
you facing?
How are you thinking of
leveraging APIs?
What questions are you trying
to answer?
Design considerations
Think API firstFind opportunities to leverage APIs that either create a new capability or optimizes an existing
Standard Naming Conventions Leverage MISMO naming conventions (including allowable values/codes)
Platform Approach
Customer Centric Develop and prototype potential API candidates
Consumption Driven
Gateways can help manage APIs (traffic, enterprise consistency)
Lightweight and industry standard
Governing API development is key
The Advisory Board provides collaborative and cohesive oversight of the API program, ensuring that all aspects of the product lifecycle are established and embraced.
Advisory Board
Key functions of an API Advisory Group:
• Create visibility of APIs in progress
• Compile demand between departments
• Prioritize demand and mapping to existing and/or new API products
• Determine dependencies/re-use opportunities
• Communicate usage and metrics to all relevant stakeholders
Our lessons learned include…
• APIs development is different than conventional product development. Think finer grain, think light weight interactions – let the market orchestrate.
• Different audience – you are reaching a technical population of developers.
• Need more interaction and communication between a wide set of experts (e.g., business, legal, marketing, architecture)
• Collaborate with partners –design in context of the broader ecosystem
• Security & data architecture should work for both the API provider and consumer.
• Be open to process change – APIs implementation success may require it.
• You may need to rethink your customer experience.
Approach to API Product Strategy
Collaborate Co-create
Affect Business Process Changes
APIs should solve customers pain points
Pain point: Fannie Mae Connect™ offers customers purchased loan data reports. The dataset requires manual processes to reconcile and upload the data to local systems.
Solution: Whole Loan Purchase Advice for Sellers API eliminates manual processes required to use the Fannie Mae Connect report -allowing customers to free up internal workflow, identify opportunities, and lower discrepancies.
API: Whole Loan Purchase Advice for Sellers
Benefit: Sellers see faster month-end accounting for investor loans with detailed pricing attributes that support specific and uploaded data interactions.
APIs that can help answers some of your borrower’s questions
• What is the maximum loan amount for a particular borrower/property?
• What is the total Loan Level Price Adjustments that applies to a loan?
• What is the minimum contribution required for a borrower?
• What is the required Mortgage Insurance coverage percent?
• What are the delivery options for a loan?
What’s type of property is
this address?
It’s a single-family
Question Examples
• Loan origination and processing are seen as important areas where APIs can help improve efficiency.
Areas of Potential for APIs
Loan Production
Warehousing, Quality Control, and Shipping & Delivery
Secondary Marketing
Loan Administration
Regulatory Compliance
0%15%
19%12%
10%20%
11%23%
6%7%
4%9%
4%8%
2%2%
30%22%
40%44%Originating loan applications (including Point of Sale systems and appraisal)
Processing: verifying borrower information and documents
Underwriting: analyzing whether the lending risk is acceptable
Closing: delivering disclosures and closing documents, signing, and settlement
Funding the loan
Managing the warehouse line
Performing quality control (QC) checks
Shipping and delivering the loans to an investor
Managing the loans in process but not closed ("pipeline")
Negotiating investor commitments
Setting prices for loans
Managing market risks
Receiving payments from borrowers
Remitting funds for principal and interest (less a "servicing fee" for the lender)
Paying taxes and insurance from escrow accounts
Handling loan payoffs, assumptions, loss mitigation, and foreclosures
Responding to customer inquiries
General Regulatory ComplianceAnalytics/Business Intelligence
Other
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Business Analytics
Q: What are the most important functional areas where you see APIs have the greatest potential to be applied to streamline processes, reduce costs and errors, and/or deliver a better customer experience? Please select up to three functional areas and rank them in order of potential levels.
Greatest Potential
2nd greatest potential
3rd greatest potential
“Lenders’ Experiences with APIs and Chatbots,” Mortgage Lender Sentiment Survey® Special Topic Analysis, released on May 18, 2017, http://www.fanniemae.com/resources/file/research/mlss/pdf/may2017-topicanalysis-presentation-apis-chatbots.pdf
API areas that have the greatest potential to provide benefits
• Lenders also see the potential for using APIs in paying taxes and insurance from escrow accounts.Key Insights
