Making the dream a reality
Making the dream a reality
CLIENT STORY

Making the dream a reality

KPMG helped a mortgage giant simplify accounting and gain greater insight into portfolio performance as well as loan-level business risk.

Client
Major mortgage guarantor
Sector
Financial services
Project
Streamlining and simplifying the accounting system
  • Client challenge
  • Benefits to client
  • Approach
  • KPMG insights

Client challenge

Our client, a mortgage giant, helps millions of people realize the dream of home ownership. The company handles more than 25 percent of all single-family mortgages in the U.S.

But behind the dream was a hard reality: The company relied on a patchwork accounting system that made it difficult to manage loans across their lifecycles, led to a long financial close process, and slowed its ability to introduce new risk reduction products to the market.

The mortgage giant needed to separate operational processing from its accounting systems, and provide a flexible loan accounting sub-ledger that could incorporate future accounting rule changes.

Benefits to client

The new loan accounting sub-ledger, allowed the client to view the state of loans and the associated accounting treatments across the entire loan lifecycle. This new perspective provided the accountants greater insight into portfolio performance and an unprecedented loan-level insight of potential business risk, realizing significant, sustainable results that drive straight to the bottom line:

  • simplified accounting operations and reduced risk by eliminating and automating a significant portion of legacy manual processes
  • improved and automated controls which allowed greater time to assess the quality of the accounting results
  • accelerated the accounting close cycle
  • provided quicker, consistent business insights
  • increased flexibility to update the system with changes in accounting policies and regulations without the typical once-a-year system update timeline.

Approach

KPMG was intimately involved in design, test, and conversion efforts to build the loan accounting sub-ledger. The success of this program was attributable to KPMG’s partnership approach:

  • Acting as a “true partner” – KPMG understood the budget challenges and was creative in helping to solve issues – it was always clear that they were in this together.
  • When contentious issues arouse, as they often do, KPMG would drive the discussion to be fact-based and facilitate collaboration across the teams; they drove discussions to the right answer versus the easy answer.
  • KPMG was always focused on what’s next – looking ahead to ensure all the “dots were joined” and the team was thinking clearly about ensuring all the stakeholders were informed and aligned.

Engaging the right team was critical to success – the right mix of mortgage professionals who understood technology and who could develop innovative solutions to program challenges:

  • By using their experience and applying it to our client’s specific environment KPMG was able to design a conversion that accounted for data quality issues, methodology changes and forced the clean up to occur in advance of the go-live.
  • The scale and complexity of the program put significant demands on testing – the response was innovative (identifying defects with the requirements before any code had been created) and a level of automation which accelerated the speed at which defects were found and resolved.

KPMG insights

Client commitment

Client commitment involves doing the right thing for the client and going beyond the boundaries of the commercial contract. At KPMG, partnership is about supporting our clients beyond what is contractually required. During any large multi-year project, budgets are re-examined and adjustments made. As a partner, KPMG worked with the client during these tough times to manage resources and still maintain the project timeline and work quality.

Innovation from challenging the status quo

Innovation derives from challenging the norms; it involves bringing external perspectives built from experience, asking the tough questions, and offering different opinions. Our client told us that testing automation had been tried and did not work in their environment. However, we needed a solution to test the tens of thousands of scenarios of a loan lifecycle – we had to make test automation a reality. A KPMG team who understood both testing and mortgages built a custom automation framework that accelerated the test cycle from weeks to days. We found defects quicker and more accurately than traditional manual efforts and delivered on our commitment to innovate, automate, and complete quality testing on time.

The right team makes all the difference

The team for this project had the experience and expertise to get the job done right and included experts in the mortgage industry, organizational transformation, and technology. But the intangibles were just as important. KPMG is a people business. Our collaborative approach to engagements puts our clients’ interests first, so we go far above and way beyond to deliver results that matter.

I have been doing finance transformations for most of my career, and have put in over 20 systems. I have never seen such a smooth go-live.
Mortgage giant controller

 

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