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Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Mohammad Rashid, senior director of lending and capital markets practice at Tavant Technologies, to discuss how predictive analytics and new tech strategies can help lenders meet consumer demands in the mortgage process. 

Q. What is the biggest change you see in what borrowers want now from the mortgage process?

A. Borrowers want a faster, simpler, seamless, paperless, transparent, near real-time, and more importantly, a highly personalized touch point with their lenders across all channels of interaction while getting a mortgage to buy their home.

Some claim that this paradigm shift in borrower experience is attributed in large part to the emergence of the Millennials and the gaming generation as the new wave of consumers of the housing market (75.3 million of them spending $2 trillion in home purchases in the next five years).

I believe the desire for simplicity and transparency has always been there and the change is just a matter of degree and quality given our current culture of instant gratification (e.g., one-click purchases, Alexa commands and Uber trackers).

Consequently, this has had an interesting effect on the lending community at large; they must now transform/disrupt themselves into an organization that leverages innovation and technology across all interfaces with a borrower and differentiates themselves through a truly unique customer experience product offering.  

Q. How does Tavant’s “surround and extend” strategy help lenders as they struggle to become more nimble in what they offer consumers?

A. This new borrower experience requires lenders to be nimble and agile in their interactions, but most of them are burdened with back-end legacy systems that are usually monolithic and inflexible. These legacy systems include but are not limited to loan origination systems (LOS), product and pricing engines and document management systems (DMS) to name a few.

In many cases, these lenders have invested heavily in these applications and cannot afford to change them at will. The UIs for such applications are typically static forms-based views and manifest themselves in what feels like an unending number of fields strewn across an unending number of pages.

Tavant’s “surround and extend” strategy allows such lenders to keep the core systems intact while creating an abstraction layer that allows development of advanced extended features outside of these systems. For example, we may develop a completely new and intensely intuitive consumer direct portal using more advanced web technologies such as AngularJS or ReactJS.

The borrower interaction may be driven by an algorithmic robo-mortgage advisor who walks the borrower through an intuitive loan application experience in the form of a chat or dialog, with real-time retrieval and validation of income, assets and credit occurring in parallel. Thus, offloading from the borrower the manual work of procuring and scanning these documents and immensely cutting down on the overall time to closing and funding.  

This new experience would still sit on top of the older LOS and other back-end systems due to this surround and extend approach to development.

As another example, we may develop a highly configurable/customizable, non-linear, underwriter’s workbench that melds together the conditions management of a loan with contextual views into documents related to the loan from the document management system and yet keep this new application on top of the older LOS and DMS (a “headless LOS” approach to the underwriter’s functions).  

In summary, once the abstraction layer is in place (the “surround” part), the back-end system can be transformed into essentially the system of record and not be a limiting factor in innovating solutions on top of and around the core (the "extend" part).

Q. How will Tavant’s FinConnect make the mortgage experience easier and faster for borrowers?

A. Tavant FinConnect is a product that allows for what the industry is calling a total “digital mortgage” experience. Today, borrowers would have to go on a quest to hunt down their loan application-specific documents from W-2 statements to pay stubs to credit reports to financial statements from their banks, then scan these documents into images and then upload these sets of images to the lenders they are working with.

On the flip side, the lenders are getting (sometimes poorly) scanned images that they need to eyeball and classify into specific document requests for specific conditions and extract the data fields they need from these images to make a decision on the loan. You can imagine the amount of inefficiency that is evident and embedded in the above process.

Tavant FinConnect is an integration platform that connects the internal and external systems that are typically found in a mortgage ecosystem. The platform connects the Lender’s LOS, DMS, pricing engine, CRM software and other local systems with external third parties capable of providing the borrower’s data; the credit bureaus for a Tri-Merge Credit Report, the IRS for tax transcript, ADP for W-2, Equifax for work number validation and Yodlee and FormFree for financial assets validation — just to name a few.

Given a simple authorization from the borrower to do the work of gathering these data points on his or her behalf, the resulting experience for the borrower can be “magical.”

Tavant FinConnect is also a data and services hub that allows the lender to develop value-added services and offerings on top. Examples of such applications are real-time dashboards for identifying operational efficiencies in the lender’s originations lifecycle or specific profiling algorithms using the social media connectors and housing demographics data for developing a more targeted and personalized borrower social profile.

In summary, Tavant FinConnect is a fabric of connectivity to myriad sources of data and services that simplifies the whole borrower journey through the loan application lifecycle, while providing the lender the most up-to-date, validated and consistent data points about the borrower.

Q. What role can predictive analytics play in increasing lenders’ operational efficiencies?

A. An integral part of providing this unique borrower journey through the mortgage process is for lenders to wire their workflows and design their business processes in the back-end in a way that provides the most operationally efficient pathway for a loan application; the lowest latency, the fastest response time, the shortest closing time and the most transparent view into the overall end-to-end processing.

Data analytics in its various forms, whether descriptive, predictive or prescriptive, coupled with data science techniques and machine learning algos, can help lenders identify efficiency bottlenecks, forecast traffic jams, and resolve them dynamically. Analytics techniques can help lenders develop models to compute the borrower’s propensity to purchase or refinance, predict pipeline fallout and parallelize/ trigger/route the loan-related tasks through the most optimal and appropriately-skilled workers available at that time.

Together with creative UI/UX experiences on the front-end, these data analytics techniques give the lender the differentiating edge they need to compete in today mortgage marketplace.