As the cloud has grown, so has XaaS. From the well known Software as a Service (SaaS) to the rapidly growing Platform as a Service (PaaS) and the nefarious Ransomware as a Service (RaaS), the cloud has given developers the ability to provide a wide range of digital services in a format that is easier to implement, easier to update, and less expensive for users.
CfaaS, which stands for Compare as a Service, is a newcomer to the XaaS universe that promises to revolutionize the financial industry. It provides a way for critical factors in any financial transaction to be subjected to an industry-specific contextual comparison, something that has proven to be problematic to obtain in a wide range of settings.
The importance of context
If you doubt the importance of information being presented within a defined context, consider the following example: You get a text message about an upcoming overnight wilderness hike that explains you will “need to have a good ass.” You might suppose that they are talking about the donkey that will carry your supplies, or you might suppose something else. Without proper context, it is impossible to know whether or not this is a hike that you want to take.
“Ass” is an example of a homonym, which is a word that has more than one meaning. “Bank” is another example and one that seems relevant because of how often context can be an issue in financial transactions.
Words like “fee,” “charge,” “credit,” “concession,” “approval,” and “qualification” are words that are used by almost every financial institution to refer to everyday components of a wide variety of transactions. The problem is that one institution may use the term “fee” to refer to one thing while another institution uses it to refer to something completely different. Likewise, what one institution refers to as a “credit” may be the same thing that another institution refers to as a “concession.”
It is easy to imagine the confusion that results from industry jargon when exploring these “financial homonyms”. Unless you have spent time in those industries, or have spent significant time researching, it is easy to misunderstand common vocabulary.
“I could cite dozens, if not hundreds, of examples of financial terms that could mean different things depending on the context in which they are used,” explains Yatin Karnik, Founder and CEO of Confer Inc. “But one area where the issue really hits home is in the mortgage-finance industry.”
Confer Inc. is an innovative mortgage platform powered by artificial intelligence and continuous machine learning that helps home buyers by customizing a mortgage so that it is financially beneficial to the borrower. The Confer app makes it easier for borrowers to compare the various costs associated with mortgages and, ultimately, save money. It launches on April 1, 2022.
Context in the mortgage industry
Yatin provides the following examples of terms commonly used in the mortgage-finance industry that lead to confusion, especially when shoppers are trying to conduct comparisons of products offered by a variety of lenders:
- Origination Fee, sometimes referred to as an Origination Charge
- Discount Points, sometimes referred to as Origination Points
- Lender Concession, sometimes referred to as Lender Credit
- Pre-Approval, sometimes referred to as Pre-Qualification
The Consumer Financial Protection Bureau encourages consumers shopping for mortgage loans to contact banks and other lenders for information on fees and other charges that can be expected when obtaining a mortgage. However, with the issue that Yatin brings up regarding the lack of standards with industry terms, this approach has the potential to leave shoppers confused and frustrated.
“It’s time for the mortgage-finance industry to have a system that has contextual knowledge of items being compared,” Yatin says. “CfaaS could provide that as a cloud service that is highly scalable, available, and configurable with low to no cost, all while allowing for the establishment of an industry-wide protocol that does away with all of the confusion.”
Yatin also believes that a CfaaS system could help mortgage shoppers who are comparing products to factor in “time to close,” which can be an important component to consider.
“Have you ever witnessed a parent bargaining with their child? It is not uncommon for them to broker a deal by explaining that something will follow quickly. For example, ‘If you eat your veggies, you will get mac-n-cheese.’ Parents know there is a value in adding an element of time to make the offer more compelling,” Yatin explains. “In the same way, it is useful to know when deciding between mortgages how long the deal might take. Would it be useful to know how two deals compare with each other? To know that one where the rate is higher can close sooner while another offer with a slightly lower rate will close a month later? Time is money, which means it should definitely be a part of the consideration when shopping for a mortgage.”