Fannie Mae

Client story

Ensuring liquidity with system modernization and consolidation

As a leading source of financing for mortgage lenders, having the agility to respond to market demands is critical at Fannie Mae. When aging and siloed technology became obstacles to success, the company partnered with SimCorp to put in place a system consolidation strategy that would improve time to market, reduce risk, and help ensure that they could provide liquidity to the market.

Fannie Mae’s core function is to provide liquidity to the mortgage market and help ensure that sustainable home ownership and affordable rental housing is a reality for millions of Americans. The need to modernize their infrastructure became imperative when siloed, legacy platforms were disrupting the normal pace of business. Stability concerns and manual processes were impeding employee satisfaction and the ability to innovate. Costs associated with supporting and maintaining aging technology were on the rise, eroding budget and resources from other higher value projects. Jason Birmingham, Head of Capital Markets and Finance Technology at Fannie Mae explains, “The cost for legacy technology was really becoming prohibitive. We had no budget left for strategic transformation because it was all going to just keeping the lights on.”

The tipping point for change and modernization

The drag created by siloed and disparate systems had begun affecting Fannie Mae’s agility and competitive advantage by delaying time to market of new products and causing missed business opportunities. Reconciliation of fragmented data sources and data movement was highly manual, introducing risk and a high potential for errors. Processes to ensure balances and positions tied out, in order to close the books, often took 1-2 weeks after month-end and were inhibiting the ability of decision makers to respond quickly to market changes.

Market-driven factors, such as regulatory changes and rising interest rates, were pressing as well. Jason Birmingham describes how looking toward the future prompted the move to modernization, “When we considered the amount of change that we are going to have to digest going forward, we recognized it just wasn’t going to be doable with the legacy infrastructure. Incorporating pending and future regulations would have required changes to be made across multiple systems, with considerable allocation of testing resources and budget. We needed to be able to respond much more effectively and nimbly as changes came at us from external sources.”

Fannie Mae  System modernization

Jason Birmingham, Head of Capital Markets and Finance Technology at Fannie Mae

Selecting the right partner and platform as part of a broader consolidation strategy

Fannie Mae first partnered with SimCorp in 2015. The first criteria for selection was the capability to support multi-asset accounting for security and treasury products. Fannie Mae utilizes some of the most complex fixed-income instruments in the market and had struggled to find a platform that could support them. “One of the challenges we had in looking at other platforms was that they just didn’t support accounting for complex products. With SimCorp Dimension we were able to do complex accounting across MBS, structured securities, and debt and derivatives basically out-of-the-box,” explains Jason Birmingham.

SimCorp Dimension’s robust features, along with its continued investment in R&D and roadmap for the future, aligned with Fannie Mae’s expectations for a technology partner, and broader strategy to replace their entire trading and operations platform. “SimCorp has been very transparent about the platform, their roadmap to enhance it, how they’re going to plug in new types of technology to it, moving it to the cloud, building with agile – things that were very important to us in making sure that we were making the right investment. SimCorp went above and beyond to deliver those capabilities,” says Jason Birmingham.

When it came time to deploy the solution, SimCorp Dimension integrated smoothly into Fannie Mae’s existing environment. Jason Birmingham notes, "It was easy to deploy, as easy as these system implementations can be. It plugged into our infrastructure very well and was easy to integrate. It had very little challenge in terms of integrating with other third parties and other in-house custom platforms we have. That was a big reason why we chose the platform.”

SimCorp has been very transparent about the platform, their roadmap to enhance it, how they’re going to plug in new types of technology to it, moving it to the cloud, building with agile – things that were very important to us in making sure that we were making the right investment. SimCorp went above and beyond to deliver those capabilitiesJason Birmingham, Head of Capital Markets and Finance Technology at Fannie Mae

Taking an agile approach to transformational change

Fannie Mae began their adoption of SimCorp Dimension by using agile development, founded on an iterative approach and designed to show business value early in the process. Agile solves many key problems in the traditional ‘Big Bang’ approach--which can often be long and expensive. Jason Birmingham explains, “When we started implementing SimCorp Dimension, we focused on just getting the simplest transactions for the plainest vanilla product up and running in three months. I think by changing our mindset and embracing the agile approach, we have been able to mitigate the usual challenges of these large transformational projects. Additionally, starting small and showing value immediately created greater acceptance of the project throughout the organization.”

Exceeding objectives and realizing value

Since implementing SimCorp Dimension, Fannie Mae has dramatically exceeded their objectives of reducing their system footprint, minimizing technical complexity, improving stability and expediting time to market.

Fannie Mae has been able to reduce their system footprint by 60%. They have consolidated 14 different accounting systems down to 6 with plans for further consolidation on to SimCorp Dimension. Nearly one thousand interfaces (approximately 50%) have been removed, helping to minimize technical complexity as well as latency in accessing data.

Release duration for new products is down by 66%, Jason Birmingham talks about what this important measurement means to Fannie Mae, “Release duration is a time to market metric that we look at very closely here. We’re able to move products through in 3, 4, maybe 5 months if it’s really complex now. For us, that’s a pace that enables us to pursue the business we want to pursue.”

Results of system modernization achieved by Fannie Mae

Fannie Mae client story graph

Manual processes and reliance on spreadsheets have been reduced by 80%, helping to significantly minimize operational risk. Re-engineering their business processes on top of the new technical platform has enabled them to get final data into decision maker’s hands much more quickly. When reflecting on the overall impact to Fannie Mae’s business, Jason Birmingham states, “This transformation program is one of Fannie Mae’s biggest successes. When we think about what we set out to do, which was to reduce our system footprint, reduce our technical complexity, reduce our stability issues and reduce our time to market, then not only did we meet the objectives of our business case, we exceeded them dramatically.”

Perhaps one of the greatest benefits of all has been the effect that system modernization and consolidation has had on their staff. Since implementing SimCorp Dimension, 50% of business and technology staff have been reallocated to higher value work like specialized accounting, technology builds and value-added analytics. Relationships between business units have improved substantially, fostering creativity and collaboration. “It wasn’t something that was in the business case, and it wasn’t something that we anticipated happening, but it’s very pleasing to see that the teams have now come together because some of the obstacles and roadblocks have been removed from them,” says Jason Birmingham. “Our technology transformation has not only helped to improve operational effectiveness, but enables us to better serve our customers through continued innovation.”

About Fannie Mae

Fannie Mae is a leader in providing housing finance for homebuyers and renters in the United States. Fannie Mae serve the people who house America. Together with their partners, they make sure that homeowners, homebuyers, and renters across the country have access to affordable financing opportunities.

Quick facts

AUM: USD 3.35 trillion
Headquarters: Washington, D.C., USA
Employees: 7200