Roostify Co-founder and CEO Rajesh Bhat interviewed Rick Bechtel, executive vice president and head of U.S. residential lending at TD Bank, to discuss TD Bank’s decision to partner with Roostify.
Rajesh Bhat: What was the determining factor in the decision to partner externally for a digital platform versus building it internally? How did you go about finding the right partner?
Rick Bechtel: Great question. My colleagues in Canada went through the process of building an end-to-end journey from scratch. But in Canada, there are only five major banks so there is considerably less operational complexity. For example, all of our mortgages there are kept in our portfolio and not resold on the secondary market.
In the U.S., home lending is an order or two of greater magnitude, so we determined very early that if we were not going to build this, we’d need to find the right digital partner. For us, we needed to find someone who could handle both mortgage and home equity.
Bhat: TD Bank is known for the importance they place on customer experience and being Unexpectedly Human. How do you find a balance between technology and the human touch?
Bechtel: TD’s culture is massively customer-centric. In fact, our tagline is “America’s Most Convenient Bank.” There are some who could say you can digitize anything, but our approach is based on pairing expert humans with a smart technology solution so our customers can do what they need to do easily.
We are already seeing the benefit in our consumer-direct channel because our teams don’t need to worry about filling out forms, but instead are focused on advising and counseling and handling all the subtleties of all the back and forth with the customer that goes along with a home loan.
Bhat: What is the biggest customer benefit in partnering with us?
Bechtel: For us, when picking a partner, we looked for two things: someone who had done it before and someone who was good at it. Dealing with a partner that is solid enough to fill in our gaps, and who gives us confidence in its products was key. It frees us to focus on training our staff to ensure we can deliver the best service possible to our customers.
Bhat: Everyone is moving their consumer loan products digital. What results have you seen from the new digital mortgage application?
Bechtel: With many other consumer tech products, the end result can be, honestly, somewhat mediocre. For us, our digital mortgage application can’t just be good enough; it can’t drive engagement via brute force, for example. If it doesn’t work for our customers, it doesn’t work for us, either.
What was important was not just a quick and early adoption and implementation, but the joy in which this process happened.
Bhat: How do you drive such high adoption and pull through rates?
Bechtel: It’s a happy surprise because we prepare for the worst and hope for the best, and then when the rollout and adoption is 100%, we can truly claim success. Now, we’re finding that 85% of applications are completed by Day One because it’s so easy for customers to put in their information.
Therefore, we don’t need to chase after them for pay stubs or anything like that, and it’s been remarkable. I knew it’d be good, but I didn’t know it’d be that good.
Bhat: So, where do you go from here? What is the next transformative step TD Bank will take?
Bechtel: Now that we have these digital capabilities, we’ll continue to evolve and enhance our offering in response to customer demand in the residential lending space. We’ll keep prioritizing product innovation to allow for more LMI offerings, as we want to ensure that our digital lending experience is a great one for those applicants.
Bhat: What do you think the impact of HELOC moving under HMDA oversight will be?
Bechtel: With home equity lending moving under HMDA oversight, it will now require HMDA reporting obligations. Specifically, reporting demographic data on the loan applications that are fulfilled and rejected, with rejections being subjected to regulatory examination.
It is likely that home equity lending will need to move towards the first mortgage operational model. Adopting the Roostify platform will give our loan professionals and home equity customers an experience similar to that of getting a first mortgage.
Bhat: In the spirit of innovation and continuous learning — what was your biggest “aha” moment?
Bechtel: We were surprised how the adoption of this has been so quick and smooth. Loan officers are quick to point out what is wrong with current processes, but when I started getting love letters saying this is the “best thing that’s happened in my mortgage career,” that’s pretty astonishing.
Bhat: As the demand for digital lending is now shifting into the HELOC markets, how does that change operations at TD Bank?
Bechtel: That’s a good question and an important shift as many HELOC teams may not fully understand the implications of home equity lending moving under HMDA and how they now need to comply with HMDA reporting obligations.
So, what’s new is they now need to report demographic data on the loan applications they fulfill and reject. This is a big deal, considering many home equity lending applications are rejected.
Bear in mind a rejection alone will not suffice going forward, as the rejection will be subjected to regulatory scrutiny. Home equity lending will need to move towards the first mortgage operational model, and thereby adopt/enable a Roostify experience similar to what first mortgage has done.
Bhat: What do you think the future looks like for home lending?
Bechtel: As our business grows, our digital mortgage lending is quickly moving from an outhouse to a penthouse business. And this is where things are getting fun.
Technology is now becoming the front door of the bank, so it’s important to get the welcome mat right. If not, customers will vote with their feet. So, home lending needs to be digitally wired together with other services we provide. Bank operations aren’t traditionally wired together; they tend to be more siloed.
But, if you’ve got a really good front door with great plumbing behind it, you can deliver a much more seamless experience to customers.