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Financial Accounting Systems in the Age of Agility

In an age of skyrocketing technological capabilities and ever increasing software functionality enhancements, the mortgage banking industry is now in the age of agility, making it more vital than ever to have a financial system rooted in cutting edge technology that has been built on a solid foundation.


While routine updates and improvements are crucial, the only way to guarantee the longevity of your financial system is to choose a responsive accounting system engineered to accommodate this industry and the company's ever-increasing business demands.


How the financial software industry has changed

Since the dawn of the personal computing age back in the late 70’s & early 80’s, company upon company have emerged to market accounting software solutions. As time passed, these companies struggled to accommodate years of increasing technological innovations and maintain up-to-date solutions. Within the past decade, many of these companies have consolidated, and now only small number of those original brand names remain in public memory.


One of the largest factors in their consolidation was the cost of keeping up with the pace of change, and the rigidity of the code bases on which these solutions were built. Software companies were being forced to spend huge sums of capital for complete technological overhauls and renovations of their systems to accommodate new industry needs, user demands and ever evolving deployment strategies.


In the mortgage banking industry, we know that trends can change just as often as the weather and as such, a similar theme has played out amongst the industry's software providers. Many smaller firms were consumed as they became vulnerable by the industry's bigger, resource rich players. To stand a chance in today’s ever evolving marketplace, a solution must be built on a solid technical footing, have the backing of a balance sheet that can afford to the cost of constant evolution and be ready to embrace change, or it runs the risk of being left behind.  


Understanding the code base

In the early days of software development, applications were built from the ground up by teams of highly skilled developers, who were responsible for designing every aspect of the solution and overcoming every challenge independently.  Very few platforms existed in the general population of software tools that could provide a solid foundation, that could be molded to meet specific needs; the ones that did exist, were certainly not industry leaders.


Today, there are a number of existing platforms and tools that can be extended to create industry specific software applications. These solutions provide a solid code base of functionality and allow software companies to build solutions with smaller teams on shorter timelines. Tools such as Intacct, Microsoft Dynamics, Netsuite and Peoplesoft and the like, are all names that dominate this landscape.  


Of the tools mentioned above, by far one of the most successful code bases for business software, and the one that our solution Loan Vision leverages, is Microsoft Dynamics NAV. An easily adaptable enterprise resource planning (ERP) solution, NAV has the functionality to help small and medium sized business automate and connect their sales, purchasing, operations, accounting and inventory management functions.


There are many reasons why software developers would choose to build applications on top of a code bases like Microsoft Dynamics NAV. Understanding these reasons will make it easier to make informed decisions about your next software purchase.


The power that comes with the balance sheet

One of the most compelling reasons that software developers will choose to build software on existing code bases has to do with the financial strength of the company that wrote the original code. The strength of the company will provide a great many benefits, but the financial strength -- the balance sheet -- is arguably the most significant benefit.


In the case of Microsoft, we’re talking about a market capitalization of $500.74 billion, as of March 13, 2017. We know this is important because companies in the next tier down, big accounting software manufacturers worth $300-$400 million, have had to merge because separately they did not have the resources to keep their software packages viable.


Software maintenance is incredibly time consuming and expensive, which is why smaller companies struggle to put out updates on a regular basis. When they do provide updates, they are little more than fixes to existing code bases because they don’t have the resources to do more than that. The old phrase “putting lipstick on a pig” springs to mind.


Lenders that are still working with smaller firms have to be cognizant of the fact that if there is not a bigger firm standing behind their vendor, if the vendor succumbs to the pressures inherent in the industry, the software buyer could be left with no support and a crumbling application.


On the other hand, if your software is based on an existing code base that is maintained by a very large company with a vested interest in keeping that software up-to-date and in use across a number of industries, it becomes much easier for software manufacturers that use that base to support industry verticals. To refer to our case in point in this article, Microsoft Dynamics NAV, a global solution from a global organization, is in use across every imaginable industry, but is being customized, deployed and supported by more agile companies who have created solutions to serve the very specific needs of businesses within those industry verticals.


The power that comes with a strong base

Building a financial solution like Loan Vision, on a platform like Microsoft Dynamics NAV means that the foundation for a modern, routinely updated system is already there. This allows the vertical solution provider to focus all of their attention on industry-specific coding and updates on top of an already stable, trusted base. To use an analogy, they can spend their time putting the snow on the mountaintop and not trying to create the mountain itself. In reality, imagine a team of 1,000 people continuously enhancing the foundation of your product, attentive to every error, adjustment, and constantly increasing efficiency of the system and all your trusted industry partner needs to do is focus on your and your peers industry needs.


The largest software provider in the world, Microsoft, is continuously testing its systems for performance, efficiency, and load-handling by thousands of experienced team members responsible for extensively managing every detail. These teams routinely test the compatibility of the coding of the software to the database, in NAV’s case SQL, as well as the other components of the platform. Without utilizing a firmly established base solution, accounting software companies simply do not possess the time or money to build and maintain a solution from scratch, flexible enough to handle constant industry change.


Solution providers working with Microsoft have continuous access to the company’s technology specialists, business managers, advisory councils, and security teams. Changes in regulation are abundant and can create gaps within the accounting processes. The global Microsoft team is equipped with experts that build system improvements and adjustments to bridge these gaps while in turn continuously checking the system’s compliance to the requirements laid out by regulatory bodies.


Solutions capable of handling such changes should be undergoing monthly cumulative updates and periodic major releases. In just four years, the Microsoft Dynamics NAV solution has undergone three major version releases, which have all included major functionality and performance enhancements. While a company may advertise or create buzz around a new edition of its software, it’s important to see the difference between a software “face lift” and a truly improved product. Without an intelligent and responsive base, these accounting solutions are no more than the same product inside a different colored wrapper.


Personalization and differentiation

In a competitive industry such as mortgage banking, company differentiation makes all the difference. Individuality is key to setting businesses apart and the most successful lenders are always looking to get an edge over their competition.


Helping provide lenders the edge can sometimes require system personalization. This is a real challenge for smaller software firms that restrict all of their customers to one code base. They very often don’t have the manpower to upgrade many different customized versions of their application and will likely steer customers away from making system personalizations. Failing that, they may simply provide the same “unique” functionality to every customer.


If an accounting software firm is telling you, “This is the way it needs to be done,” or “Do that in Excel instead,” the solution isn’t competent enough to embrace your needs and doesn’t deserve the investment.


However, developers that work with an existing code base maintained by a much larger firm don’t worry about upgrading the basic functionality made available by the software. That’s handled for them by huge teams of professional software engineers working for a firm that must keep its software relevant and useful in a changing world.


This frees up development partners to be agile, making the changes customers require without the fear of multiplying their work in the future. Even with a smaller team, these software developers can keep up with customer demands and deliver a more agile product.


In conclusion

Enterprises like Microsoft are driving the technology curve as leading innovators, spending billions of dollars in research and development on their products each year. Without leveraging a top technology provider, independent software vendors will likely struggle to afford the cost of change, and fall behind as the pace of technology evolution continues to increase.


Regardless of how long an accounting software provider has been in the industry, producing a solution responsive to technological innovation is a must. Constructing a solution on a trusted name is the true foundation for designing such a product. Implementing one for your particular business will continue to be an efficient investment into the future.



About the author

Martin Kerr is co-founder and President of Bestborn Business Solutions, creator of the Mortgage Accounting Solution Loan Vision. Kerr has overseen the rapid growth of the organization into the fastest growing accounting software vendor to the independent mortgage industry. He can be reached at


This article can also be read in the June 2017 edition of National Mortgage Professional Magazine

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