The federal government is home to the largest financial ecosystem in the world with over 175 credit programs across 20 different agencies with a portfolio worth nearly $5 trillion. But the majority of these lending programs currently operate on legacy mainframe computers and databases.

This status quo is being challenged by the passage of the Federal Loan Systems Modernization Act which will create a united shared services cloud platform to streamline federal credit program operations under the Lending.gov domain.

1. Challenges of Disparate Architecture and Mainframe Legacy Infrastructure

The current architecture of federal lending programs creates significant challenges for borrowers and agencies as programs are typically operated on bespoke information systems by each agency.

COBOL and Mainframe Legacy Infrastructure: While many agencies have transitioned operations to modern relational databases, the underlying accounting processes are still operated using COBOL coded software running on mainframe computers.

Data Silos: Each federal lending program operates with its own information system which makes it challenging for borrowers to navigate the universe of federal loans and for agencies to manage their loan portfolios in a cohesive manner.

Fraud Detection: With each program typically operating on a separate IT infrastructure there is a higher risk of identity theft and false applications getting through the system as pipelines for detecting such fraud are spread across agencies.

2. Platform Design: Creating a United Front for Borrowers and a Backend for Agencies

The new federal lending platform will operate as a single portal for borrowers to apply for loans as well as a consolidated view for agencies to administer loans.

Lending.gov Website Frontend: The new federal lending portal, Lending.gov, will feature a website frontend where borrowers can apply for loans and view their progress online.

Middleware and API Connections: The portal will connect to the respective federal agencies’ backend operations via a cloud-based microservice middleware.

Agencies Retain Program Governance: Although the new platform will offer a single point of access for borrowers, individual agencies will retain control over program governance, risk management, and credit policy.

3. Technology Upgrades: Cloud Migration and Identity Verification Enable Compliance Reporting

There are a number of technology upgrades that come with transitioning lending programs to a shared cloud services platform.

Enhanced Anti-Fraud Measures: Upgrading from disparate legacy databases to a cloud platform enables enhanced identity verification and cross-agency matching to identify fraudulent applications.

Dynamic Data Reporting: Cloud databases provide agencies with dynamic reporting capabilities as opposed to traditional Excel-based reporting.

Zero Trust Network Security Architecture: The uniformity of a cloud platform enables agencies to adopt zero-trust network security and automated compliance software to stay updated with regulatory changes.

4. Operational and Economic Benefits: Reduced Costs and Faster Program Deployment

Modernizing federal lending programs will see the federal government realize benefits from both an economic and technical efficiency standpoint.

Cost Savings: Moving federal lending programs away from legacy IT support contracts will save the government billions of dollars in operations expenditures.

Faster Program Rollouts: The uniformity of a shared cloud services platform means agencies can deploy new loan programs with ease and speed, especially in response to urgent national requirements.

Create a Framework for Consolidating Other IT Domains: By consolidating the lending domain under one IT infrastructure the government can move towards rationalizing other IT verticals under shared services platforms.

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