1CONFIDENTIAL

LIXI 2.0

AN INDUSTRY

OPPORTUNITY

Oct 2013CONFIDENTIAL

2

� Review of LIXI 2.0

� Program Status

� Specific discussion items

� Next steps

Agenda

3CONFIDENTIAL

Review of LIXI 2.0

� What LIXI is and does

� What was the basis of the LIXI 2.0 reform program

� What the new strategy is all about

� The benefits of the approach, and the underlying value proposition

4CONFIDENTIAL

LIXI today

� Is a collaborative member-based non-profit organisation

� Is the custodian of the standards developed with the lending industry

� 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

� LIXI standards cover the breadth of transactions from lodgement through

settlement to discharge

� LIXI-based messages are now universally used across the lending process,

by essentially every bank as well as most service providers

5CONFIDENTIAL

The Basis for Reform – Members View

Fundamental 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 high

� The time, complexity and cost of implementing change is too great

� 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

6CONFIDENTIAL

The Basis for Reform – Observations

� 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’ now stifle it

� Rather than enabling efficiency, the lack of true competition in

standards-based service delivery arguably inhibits it

7CONFIDENTIAL

The Basis for Reform – Specific Aims

� Lender control of Business Rules associated with their application

� Efficient maintenance of Printed Forms

� Based on unambiguous definitions, a true Standard

� Certification to the Standard

� Review the overall architecture of LIXI standards

� Effective LIXI Change Management

8CONFIDENTIAL

Overall objectives of the approach

� 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

quickly and efficiently;

� Protect the lending industry by providing an open, standards-based

environment for commercial providers and suppliers.

9CONFIDENTIAL

LIXI 2.0 Strategy

� The LIXI Board prepared a strategy for a comprehensive rework of the

message standards to address the industry requirements

� There was strong support for the strategy across major industry

participants, from members who indicated an intent to be early adopters

� LIXI has focused on its core role as the custodian of standards

� Project covers updated core standards including the data dictionary

extensible to equipment finance, deposits, securitisation etc

10

� Review of LIXI 2.0

� Program Status

� Specific discussion items

� Next steps

Agenda

11CONFIDENTIAL

� Kicked off at the LIXI Forum in Nov 2011

� LIXI Board strategic intent in Mar 2012

� Contacted representatives from many members to ascertain level of

interest in developing the strategy and in implementation

� Ongoing engagement with major and mid-tier lenders, aggregators,

and LMI providers

� Industry engagement has been essential to the strategy

Industry Engagement

12CONFIDENTIAL

True Standards

� Define every piece of data shared across the lending industry –

the Data Dictionary and CAL 2

� Efficient change management to add new data items

� Certification to the standard

The components of LIXI 2.0

13CONFIDENTIAL

Electronic Guidebooks

� Contains all the business rules, data logic and print form templates that

are currently in manually generated and implemented guidebooks

� Automatically reconfigure broker lodgement interface

� Core requirement to deliver on the reform program

The components of LIXI 2.0

14CONFIDENTIAL

� Ensure backwards compatibility to protect LIXI members’ existing

investments

� Timing of changes and updates in the control of lenders and their

business partners

� Commercially provided management tools –

off-the-shelf or custom solutions

Implementation

15CONFIDENTIAL

LIXI 2.0 Strategic Solution Architecture

Lender

Systems

LIXI Data

Dictionary

Electronic

Guidebook

Broker Systems

CAL 2CAL 1.x

Lending policy and

document templates

Gateway

transformation

Loan

assessment

16CONFIDENTIAL

� True standards enables licensees and their service providers to easily

assemble new guidebooks, maintain existing ones from its component

terms, and distribute universally

� Change management protocol will enable LIXI to keep pace with

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

17CONFIDENTIAL

� 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

� Open standards empower competition in service delivery

The Benefits of the Solution (cont’d)

18CONFIDENTIAL

What is the current status:

� LIXI has a working draft of the Data Dictionary, CAL 2 schema, and

electronic guidebook schema

� LIXI licensing agreement draft is available from lixi.org.au/forms

pricing has been drafted

� Products and services will be competitive commercial offerings

built on LIXI standards

� Currently working on Change Management, Testing, and

Certification

19CONFIDENTIAL

Any questions or comments?

20

� Review of LIXI 2.0

� Program Status

� Specific discussion items

� Next steps

Agenda

21CONFIDENTIAL

Specific Discussion Items - Interactive

� Licensing

� Pricing

� Change Management

� Implementation and Transition

� Testing and Certification

22CONFIDENTIAL

Licensing

Changes 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

� Permits uniform conformance testing

� Lower cost of managing change, consistent quality of data

23CONFIDENTIAL

Pricing

LIXI is not for profit, prices are related to LIXI costs and licensee benefits

� CAL 2 price not dissimilar to CAL 1, with no double-dipping

� More tiers, based on volume and package

� EGB price is on top of CAL 2, charged to the guidebook owner

� No charge for developers, or for intermediary routing

Benefits

� Pricing designed to be fair and equitable. Developers encouraged to

use CAL 2 and the Data Dictionary across every interface – a universal

language of lending

24CONFIDENTIAL

Change management – for the standards

� LIXI 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

Benefits

� Maintain the universal language

� Ensure members requirements are met, on a realistic timeline

25CONFIDENTIAL

Change management – for the standards

Change Request

Submission

Evaluate

Request

Begin Full

Change

Management

Process

Define

Definition,

Metadata,

Business Rules.

WG Peer Review

Simple

Change?

Define

Definition,

Metadata,

Business Rules.

Ready to

release?

Scheduled

Release

no

yes

no

yes

26CONFIDENTIAL

Change management – for guidebooks

� Lenders 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) agree

Benefits

� Lenders have complete management control over changes to their

own guidebooks, and over the timing of distribution

27CONFIDENTIAL

Implementation

� 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 lenders

� Their initial rollout will implement lender electronic guidebooks, and

connectivity between aggregators and lenders

� A second phase will implement CAL 2 to CAL 1.x transformation and

live lodgement to an existing CAL 1.x lender

28CONFIDENTIAL

Transition

� LIXI recognises the critical nature of supporting legacy environments

and managing change during the implementation period

Lender SystemsBroker Systems

CAL 2

CAL 1.x

CAL 2

CAL 1.x

29CONFIDENTIAL

Testing 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

30

� Review of LIXI 2.0

� Program Status

� Specific discussion items

� Next steps

Agenda

31CONFIDENTIAL

Summary and Next Steps

� LIXI strategic focus – custodian of the standards, responsive to industry

� Imminent implementation of CAL 2

� Finalising licensing, pricing, and change management

� Feedback is encouraged from those who plan to adopt LIXI 2.0 in 2014

� LIXI Forum

� Working groups for Data Dictionary, CAL 2, and Technical Architecture