ANNOUNCING LIXI 2.0AN INDUSTRY OPPORTUNITYAN INDUSTRY OPPORTUNITY

What is LIXI 2.0?What is LIXI 2.0?

A fresh look at data messaging standards for the lending industry A renewed “language of lending”g g g A world’s‐first approach to ‘electronic guidebooks’ An industry opportunity A connected, communicating community Based on requirements and feedback from LIXI members

LIXI TodayLIXI Today Is a collaborative member‐based non‐profit organisation

Is the custodian of the standards developed with the lending p gindustry

Core objective is to enable improvements in efficiency 

Has members from all areas of the lending value chain

Funding is from the industry by way of membership and license fees Funding is from the industry by way of membership and license fees

LIXI standards cover the breadth of transactions from lodgement through settlement to dischargethrough settlement to discharge

LIXI‐based messages are now universally used across the lending process by essentially every bank as well as most service providersprocess, by essentially every bank as well as most service providers

The Basis for Reform The Basis for Reform –– Members ViewMembers ViewFundamental requirements are based on input from LIXI Members via the working group process The fundamental cost and complexity of connecting to other 

LIXI members is too highThe time complexity and cost of implementing change is too The time, complexity and cost of implementing change is too great

There has never been a LIXI Certification program, There has never been a LIXI Certification program, implementation guidelines, or supporting tools and services to make adoption easy

Lack of ability for lenders to publish change selectively and in real time to the broker channel

The Basis for Reform The Basis for Reform –– ObservationsObservations The current standard is flexible, not prescriptive, so the 

‘standard’ has diverged between every lender and with every updated release

Rather than fostering innovation, divergent ‘standards’ at e t a oste g o at o , d e ge t sta da dsnow stifle it 

Rather than enabling efficiency the lack of true Rather than enabling efficiency, the lack of true competition in standards‐based service delivery arguably inhibits ity g y

Overall objectives for reformOverall objectives for reform Reduce the costs of working with business partners along the 

lending chain; Increase ability to bring new products to market and create 

quick changes while maintaining differentiation;Enhance the industry’s ability to respond to regulatory changes Enhance the industry’s ability to respond to regulatory changesquickly and efficiently;

Protect the lending industry by providing an open, standards‐ Protect the lending industry by providing an open, standardsbased environment for commercial providers and suppliers.

The components of LIXI 2.0The components of LIXI 2.0True Standards Define every piece of data shared across the lending 

industry – the Data Dictionary A universal super‐set data message standard – the CAL 2 

schemaschema Conformance testing and certification to the standard

The components of LIXI 2.0The components of LIXI 2.0Electronic Guidebooks Contains all the business rules, data logic and print form 

templates that are currently in manually generated and implemented guidebooksLender control over their own guidebooks Lender control over their own guidebooks

True standards enable efficient guidebook management Automatically reconfigure lodgement user interface Automatically reconfigure lodgement user interface

The components of LIXI 2.0The components of LIXI 2.0Change management for the Standards LIXI website for form submission, tracking and workflow A new Glossary of industry terminology Responsive to industry needs Simple vs. complex changes Monthly release schedule

ImplementationImplementation Commercially provided management tools – off‐the‐shelf 

or custom solutions, using the Data Dictionary  In‐house or outsourced maintenance Changes and updates in the control of lenders and their 

business partnersbusiness partners Automatically reconfigure broker UI CAL 2 messaging ensures interoperability CAL 2 messaging ensures interoperability Ensure backwards compatibility to protect LIXI members’ 

existing investmentsg

LIXI 2.0 Strategic Solution ArchitectureLIXI 2.0 Strategic Solution Architecture

Lender SystemsSystems

Broker Systems

CAL 2 CAL 1.x

Gateway transformation

Loan assessment

Electronic Guidebook

transformation assessment

Lending policy and document templates

LIXI Data Dictionary

The Benefits of the SolutionThe Benefits of the Solution True standards enables licensees and their service providers 

to easily assemble new guidebooks, maintain existing ones f i d di ib i llfrom its component terms, and distribute universally

Change management protocol will enable LIXI to keep pace with member requested changes in order to reduce licenseewith member requested changes in order to reduce licensee resource requirements and deliver certainty for licensee project timelines. 

Certification of guidebooks to reduce the time, effort and cost associated with testing and conformance

The Benefits of the Solution (cont’d)The Benefits of the Solution (cont’d) Lender control over change  No implementation coding, no time delay, no errors Low rollout cost, minimal impact on existing systems Common format which can be implemented across 

different channels and delivers increased commonality of back end processes

Standards applicable across the lending chain Standards applicable across the lending chain Open standards empower competition in service delivery

What is the current status:What is the current status: LIXI has released the Data Dictionary and the CAL 2 schema Electronic guidebooks are being tested in a live environment The guidebook schema will be released by a LIXI working 

group LIXI licensing agreement is available from the LIXI website at 

Standards > LIXI 2.0 A new Change Management process has been implemented A new Change Management process has been implemented Products and services will be competitive commercial 

offerings built on LIXI standardsg Testing and Certification will be rolled out out in 2014

LicensingLicensingChanges to the End User Licensing Agreement No divergent user‐specific versions of the standard Licensing of the electronic guidebook schema, where the 

lender owns the IP in the guidebooks Open availability of guidebooks to authorised recipients Benefits 

P it if f t ti Permits uniform conformance testing Lower cost of managing change, consistent quality of data

PricingPricingLIXI is not for profit, prices are related to LIXI costs and licensee benefits CAL 2 price is similar to CAL 1, with no double‐dipping EGB price is extra, only charged to the guidebook owner No charge for developers, or for intermediary routingBenefits 

P i i d i d t b f i d it bl Pricing designed to be fair and equitable.  Developers encouraged to use CAL 2 and the Data 

Dictionary across every interface – a universal language ofDictionary across every interface  a universal language of lending

Change management Change management –– for the standardsfor the standardsLIXI will manage changes to the Data Dictionary, with SLA’s Simple additions will have fast turn‐around Complex changes require some form of collaborative 

information gathering, analysis and consensus Changes to the Data Dictionary will automatically generate 

new schemas BenefitsBenefits  Maintain the universal language Ensure members requirements are met, on a realistic Ensure members requirements are met, on a realistic 

timeline

Change management Change management –– for the standardsfor the standards

Change Request Submission

Evaluate Request

Simple Change?

Define Definition, Metadata,

Business Rules.

Scheduled Release

yes

Begin Full Change

Management Process

Define Definition, Metadata,

B siness R les

WG Peer Review Ready to release?

noyes

Process Business Rules.

no

Change management Change management –– for guidebooksfor guidebooksLenders will be responsible for management of their own guidebooks LIXI will assist with guidebook distribution Changes will happen on any timeline the lenders (and their 

business partners) agreebusiness partners) agreeBenefits  Lenders have complete management control over changes Lenders have complete management control over changes 

to their own guidebooks, and over the timing of distribution

ImplementationImplementation LIXI will provide boilerplates for the electronic guidebook and 

for CAL 2 to CAL 1 transformation Commercially provided guidebook tools – with embedded Data 

Dictionary and CAL 2 ‐ have been tested with several mortgage managers retail and wholesale lendersmanagers, retail and wholesale lenders

CAL 2 to CAL 1.x transformation with  live lodgement to an existing CAL 1.x lender will be trialled early in 2014

Implementation “what work do I need to do?”Implementation “what work do I need to do?” Electronic guidebooks make aggregators life easy – the key 

is managing relationships, not implementing changes Transformation makes lenders life easy – the key is 

managing the process, not managing the implementation

TransitionTransitionLIXI recognises the critical nature of supporting legacy environments and managing change during the implementation period

CAL 2 CAL 2

L d S t

CAL 2

CAL 1.x

CAL 2

CAL 1.x

Lender SystemsBroker Systems

Testing and CertificationTesting and Certification Testing will ensure that Guidebooks are valid and that 

CAL 2 data files conform to the specifications Certification process will be optional Automated conformance testing program

The Package ConceptThe Package Concept

Work InstructionsProcess Application

Application

Process Application

LMI Request

Prepare Loan DocsProcessing Status

Settlement InstructionsAssessment Metrics

LMI ResponseLMI Response …

…

Embedded GuidebooksEmbedded Guidebooks

Broker Guidebookd t i t- data requirements

- business rules- document templates

L d G id b kLender Guidebook- data requirements- business rules- document templates- document templates

Funder Guidebook- data requirements- business rules- business rules- document templates

Industry OpportunitiesIndustry Opportunities Wholesale and white label product distribution via  

electronic guidebooks  Cross‐sell, by aggregator or by lender LMI – true standards Outsourced services like doc prep – plug and play  Credit reporting

S t t t th l f l di System‐to‐system – the language of lending Guidebook maintenance services B2B Guidebooks B2B Guidebooks

Summary and Next StepsSummary and Next Steps LIXI strategic focus – custodian of the standards, responsive 

to industry Imminent implementation of CAL 2 Feedback is encouraged from those who plan to adopt 

LIXI 2 0 in 2014LIXI 2.0 in 2014 Working groups for Data Dictionary, CAL 2, and Technical 

ArchitectureArchitecture