Fidelity National Financial Inc., which sells software and hosted IT services to mortgage and financial-service companies, is building a new Web-based IT system at a cost of tens of millions of dollars to replace its aging legacy system. The project will give Fidelity National's clients more flexibility to compete in the mortgage industry.

With low interest rates fueling mortgage demand, mortgage companies need increased automation and efficiency to keep up, says Joe Nackashi, Fidelity National's chief technology officer. At the same time, mortgage-service firms have been consolidating.

Companies typically keep core legacy IT systems running and surround them with new applications. "But that's not a model we feel is sustainable as the industry consolidates," Nackashi says. Fidelity National needs the flexibility of a modern IT system to meet the changing demands of its customers, including Wells Fargo, Washington Mutual, and Bank of America.

Most of Fidelity National's clients use its Mortgage Serving Platform apps, including collections, customer service, and loan default software, on a hosted basis running in the company's Jacksonville, Fla., data center. That frees them to develop other products and services to stay competitive. "They want to look at us as a utility, quite frankly," Nackashi says. Some license the applications and run them in-house. Hosted-service customers pay a monthly fee based on the size of their loan portfolio. Fidelity National handles the processing for more than 24 million home mortgages with a balance of $3 trillion.

Fidelity National has already installed three new IBM eServer z990 servers to replace its mainframes running Cobol-based software. The new system is being assembled using IBM's WebSphere Internet infrastructure software, DB2 database, and IBM Rational development tools. A prototype of the first application being developed for the new system, contemporary collections, is due in May and is slated for production early next year.

Other apps now running on the legacy system will be converted over the next four or five years, Nackashi says. Data-synchronization links will connect the old and new systems during the transition.