Three years ago, the standard method for forwarding loan applications to credit grantors was to fax a handwritten application to a credit processing center. The application was entered at the processing center during normal or extended work hours with a decision returned via fax, hours or even days later.

The emergence of the Internet as a distribution channel for goods and services has increased the pressure on businesses to respond quickly to customer requests. For high value goods such as automobiles, this often means either (1) knowing the customer with whom you are doing business; (2) having the ability to evaluate the payment risk of prospective customers at the point of sale; or (3) having the ability to transfer credit riskl to an online lender.

E-commerce is demanding that credit granting institutions receive credit applications electronically and respond within minutes, 24 hours per day, seven days a week. IFX standards using XML help make this kind of immediate customer service happen, according to Dennis Warnke of Credit Online, Inc., a wholly owned subsidiary of Credit Management Solutions, Inc. (CMSI).

The Interactive Financial Exchange (IFX) Forum has announced the addition of a new working group focusing on loan applications to facilitate these goals.

This group will address issues and opportunities that lenders and businesses face in supporting credit evaluation and funding in a e-commerce environment, and is led by Warnke.

The goal is to facilitate the movement of all types of credit transactions between originators and credit grantors by defining new transaction types for the IFX message handler and defining Extensible Markup Language (XML) Document Type Definitions (DTDs) for data transport.

"The addition of a Loan Application Working Group opens the doors to faster transactions and better service, said IFX chairman Mark Tiggas of Wells Fargo. "IFX involvement in loan application standards will enable companies to significantly lower payment risk and decrease loan turnaround time ferom days to minutes."

According Warnke, a standard messaging format and XML DTD will be created. When this is implemented, it can be used to process many types of credit transactions.

The scope of the initial effort of this IFX working group will include automobile, mortgage and student lending. Subsequent efforts will focus on other loans and credit types, and documentation handling.

By defining a standard set of semantic terms, the Loan Application Working Group will enable efficient communications related to credit evaluation and funding to those who implement the IFX standard, according to Warnke.

For more information about the IFX Loan Application XML initiative and the benefits of IFX membership, visit www.ifxforum.org or contact Lee Waggoner at (703) 837-6153 or lwaggoner@disa.org.

CMSI provides credit automation software and services, including Internet-based online lending and leasing technology. The company's e-commerce subsidiary, Credit Online, Inc., credit-enables B2B transactions through its Internet gateway and its patented CreditConnection technology (www.creditconnection.com), which links credit originators such as automobile dealers and borrowers with a network of prime and nonprime lenders.