Blog post

Peach to offer first-of-its-kind Self-Service Portfolio Migration™—at no cost

September 13, 2022

By now, most lenders with legacy servicing tech have come to the determination that it’s time to modernize. Some of them are driven by a desire to support new asset classes. Others want to drastically improve their customer experience, or consolidate functionality currently handled by disparate service providers.

Yet in spite of their conviction, a sizable percentage of these lenders have yet to move on from their legacy servicing platform. When it comes down to it, migrating their portfolio to a new system comes with risks and costs that can often be prohibitive. As a result, many lenders find themselves handcuffed to a legacy servicing platform they don’t want.

This quagmire is a result of servicers’ failure to modernize their portfolio conversion capabilities. Unlike servicing tech itself, which has undergone a renaissance in recent years, migrations remain one of lending’s most dreaded domains. On its face, this seems like a missed opportunity—wouldn’t servicers want to make it easy for new clients to migrate their portfolios? But the reality is that creating a low-risk and low-cost mechanism for migrations requires a degree of flexibility and automation that most servicing platforms fundamentally lack.

This is one of the reasons we pioneered the Adaptive Core™, a loan management system built for radical flexibility. This has given us a unique ability to rethink portfolio migrations—and to address the problems of risk, cost and timelines.

This fall, we’ll be releasing our free Self-Service Portfolio Migration™ tool—the first ever of its kind. For lenders stuck between the costs and benefits of migration, self-service migrations will be a game-changer. 

More on our solution in a moment—first, we’ll address the three main challenges with legacy lending portfolio migrations.

Three challenges with legacy portfolio conversion methods

Challenge 1: The risk

Legacy portfolio migrations are typically conducted by a third party—either an outside vendor or your new servicing provider—working in collaboration with your internal team. The two teams migrate loans in batches, troubleshooting issues on a per-loan basis as they arise.

Because every system behaves differently in its terminology, interest accrual, routing and status mapping, there’s a lot that can go wrong. And when migrations involve manual data entry—which they almost always do—errors are unavoidable at scale.

What’s more, migration processes are notoriously brittle, and unexpected discrepancies can arise in your data even after rigorous testing. Reconciliation down to the penny is painstaking work, and seemingly simple issues like rounding can cause your new and old systems to disagree. Minor inaccuracies can compound into unintended consequences for the borrower—for example, an inaccurate payment amount can result in an overdue status in your new system. These challenges can be compounded by migration methods that transfer only a snapshot of each loan, rather than the loan’s full history, making it much more difficult to rectify discrepancies as they arise.

A worst-case scenario is for your borrowers to log in and see missing or incorrect data in their account. This can jeopardize your customer relationships and expose you to compliance risk.

Challenge 2: The timeline

Because you’re dependent on your new servicer and potentially a third party to conduct your migration, you have limited control over your timeline. If your new servicing platform hasn’t invested in maximizing efficiency and preventing errors, the migration process can require a great deal of time and effort. It’s not uncommon for migrations to take 6-12 months or even longer.

When discrepancies do arise, it can be a challenge to gather the right people on both sides to troubleshoot and remediate the root cause. Many servicers have multi-quarter (or even multi-year) backlogs, which can leave you hanging when you most need help.

Challenge 3: The cost

Servicers often charge hundreds of thousands of dollars or more for portfolio migrations, depending on the size and nature of your portfolio. The first reason for the high cost is the manual nature of the typical migration process—and the fact that lending platforms are rarely designed to optimize migration efficiency. The second reason is that you’re paying for a third party to learn your current system—an investment that is not accretive to your business in the long run. 

By contrast, your own team is already familiar with your existing system, and they’re gearing up to learn your new one. So if they were empowered to conduct the migration themselves through a well-designed self-service tool, they’d need very little additional training. With automation to drastically reduce the total time spent, your team could achieve the same result in less time. The obstacle is that no lending platform has been designed for self-service until now.

Peach’s Self-Service Portfolio Migration tool

Our Self-Service Portfolio Migration tool is a complete reimagining of portfolio migrations, giving lenders the ability to break free from their legacy tech stack without incurring unreasonable risks, costs and delays.

We’ve been planning self-service migrations for some time. They’re made possible by our Adaptive Core and by our Loan Replay™ technology, which makes it straightforward to insert events anywhere in the timeline, with recalculations happening automatically.

Self-Service Portfolio Migration empowers your own engineering team to conduct the migration to Peach. Using the same Peach APIs they’ll eventually use to interface with our system, they’ll call Peach’s typical endpoints. Once they verify that the migration is working for test users, your engineers can write simple scripts to automate the conversion process, eliminating the need for manual data entry. When the migration is complete, you’ll have access to all the benefits of the Peach platform, like our Adaptive Core, Loan Replay, Compliance Guard™, first-party collections capabilities and more. The typical migration to Peach will take just 8-12 weeks.

The idea of our self-service migration isn’t to put more work on your team—it’s actually far less work than a traditional migration thanks to automation, efficiencies and error-preventing features of our self-service tool. And we’re here to provide migration assistance if you need us. Meanwhile, you get to remain in control of the migration timeline, and you’ll have close oversight of your data, reducing the likelihood of errors.

For those lenders whose capital markets providers require a backup servicer, Self-Service Portfolio Migration offers another important benefit. Typically, lenders will contract with a backup servicer that provides both software and agents. By decoupling the two and providing solely the software component, Peach can offer passive, real-time software backup at low cost, with no agent servicer needed except in a worst-case scenario. If you’re using Peach as your primary loan management system, this means you won’t need backup servicing software—just a backup agent servicer.

For lenders interested in the benefits of a modern, best-in-class lending platform, our Self-Service Portfolio Migration for the first time opens up the possibilities of modernization without the risks and drawbacks of legacy migration methods.

Self-Service Portfolio Migration will be available for free, starting in fall of 2022. To learn more, visit our Self-Service Portfolio Migration page. You can also contact us or send an email to info@peachfinance.com.

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