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Commercial escrow goes anywhere, anytime

Sep 7, 2016 / Business Banking / Technology

With anytime/anywhere/any device access moving deeper into the banking stack, commercial escrow is also beginning to transform. At least a dozen banks, ranging in size from middle-market institutions to Tier 1 powerhouses, currently promote some type of self-service escrow management. Today, such tools range in sophistication from online submission forms to full-featured portals. Regardless, it’s a sure bet that advanced self-service escrow management will ultimately become as ubiquitous as other forms of online banking.

Capital One, which launched Escrow Express last October, exemplifies this trend. “Commercial customers are increasingly demanding digital
capabilities that simplify and mobilize account management,” says Shaleen Prakash, senior vice president of treasury management at the McLean, Va.-based institution. “And they want a single, secure point of access.” 

Unsurprisingly, developing self-service escrow can be multipurpose, as the Capital One example shows. There, three disparate service and operational models were inherited through acquisitions, explains Prakash. The new platform combines them into a unified offering. “By
addressing needs from a customer and an operational perspective, we’ve created efficiencies for both sides,” he says.

Although Escrow Express benefits from the latest software development practices, which can enable online sub-account opening and closing, many of its self-service features mirror Wells Fargo’s Client Fund Manager, which debuted in 2011. Similarities
include real-time visibility into escrow balances, the ability to transfer funds within an escrow account, or to another account, and various types of monitoring and reporting.

When Wells Fargo began working on its offering in late 2010, customers said they wanted escrow management integrated with other online tools. “They didn’t want a dedicated escrow solution,” says Chris Noe, senior vice president of treasury management at the San Francisco-headquartered bank. “So, we created self-service escrow within our Commercial Electronic Office (CEO) portal, providing customers with similar experiences for all CEO tools.”

Others following the integrated approach include regional institutions such as Waterbury, Conn.’s Webster Bank and Jersey City, N.J.’s Provident Bank. The former provides the ability to transfer client funds as well as monitoring and reporting, where the latter supplies mostly monitoring and reporting. Still, each of these institutions extends access to escrow management via their unified commercial accounts portal.

Consulting with Customers 

To engineer their escrow management offerings, both Wells Fargo and Capital One pursued some level of in-house development. Wells Fargo prefers Commercial customers are increasingly demanding digital capabilities that simplify and mobilize account management the “build” option as a matter of course, rather than acquiring a packaged solution or adopting a cloud-based technology. “More often than not, we find building our own solution gives us more control over the resulting customer experience,” Noe says.

For its part, Capital One pursued a hybrid approach. It started with a base vendor package and then performed extensive customization work in-house to match its needs. “We did an exhaustive evaluation of external options, but didn’t find a good match,” Prakash says, adding the escrow initiative began about two years in advance of the launch.

Another similarity was consulting with A-list customers as a technology development best practice. Both institutions conferred with existing escrow clients to determine customer-facing requirements and, later, to fine-tune capabilities via pre-launch pilots. At Wells Fargo, about a half-dozen clients helped keep development efforts focused. “Time and again, our pilot customers helped make sure we were headed in the right direction,” Noe says. “In particular, they stressed real-time balances rather than waiting for a day for the information to post.”

Engineering the escrow tools as new features within the CEO enabled an uneventful roll out. “Simply adding our existing accounts to the related escrow tools resulted in immediate access to Client Fund Manager’s capabilities,” Noe says.

Capital One’s development approach included three customer pilots, as well as internal user feedback sessions. The first pilot encompassed a few customers with a small number of  sub-accounts. Later, other types of clients were added. “By our third pilot, we included a blend of all sizes of customers,” recounts Prakash. “Feedback from our internal users and our customers was really critical to our success. It gave us the opportunity to learn and make enhancements along the way.”

With Capital One’s customers residing on disparate systems prior to the Escrow Express consolidation, the migration process has been significantly more involved and customized. “For example, some of our long-time customers with complex needs had escrow processes embedded into their operations,” Prakash says. “For these customers, we visited their organizations to assist with onboarding them. Other clients were fine with the self-service training materials and tutorials we provided.”

“Most importantly, we designed and pursued a detailed migration strategy that was the opposite of one-size-fits-all,” he adds. “Now that the conversions are complete, I can say we didn’t have a single complaint.”

Technology and Process Complexity

Still, every technology initiative has its snags. For Capital One, the obstacles centered around technology complexity. “Development touched core platform, general ledger, statement design, account analysis, single sign-on portal and more,” Prakash says. “It even included pulling information from our data warehouse.”

“Overcoming the complexity challenge not only required the right level of coordination between IT, operations and products; it also required highly specialized IT expertise. As we’re in the midst of a broader digital revolution, those skills are in high demand. So, for us, the key has been creating a culture of innovation and ensuring we always have a good pipeline of candidates.”

Noe describes Wells Fargo’s hurdles as more about process than technology. “Having the correct processes in place to improve back-end workflows and ensure regulatory compliance was our biggest challenge,” he explains. “This required gathering all of the key stakeholders from IT, our user experience teams and our various lines of business, plus our risk and compliance teams as well.”

As early providers of self-service escrow, both Capital One and Wells Fargo report positive feedback from existing customers and attribute the platform with helping them woo clients from other institutions. Capital One’s  platform, for example, has enabled it to morph from a regional escrow provider to a coast-to-coast player. “We just booked a client from California,” Prakash says. “Self-service escrow is definitely a competitive advantage for us.”

Ms. Gabriel is a contributing writer to BAI Banking Strategies based in Minneapolis/St. Paul, Minn.