It was fitting that the Mortgage Bankers Association chose Detroit, the launch pad of Rocket Mortgage, as the site for this year’s Technology Solutions Conference & Expo. The “liftoff” of that disruptive, imagination-capturing product has been the catalyst for a new appreciation of what technology can do for lenders and borrowers.
The power of big data and innovative thinking was featured throughout this year’s MBA Tech conference, starting with the opening general session by Billy Beane of “Moneyball” fame. Beane recounted how he was able to level the playing field against big-market, big-payroll behemoths in Major League Baseball. Beane’s story of using data and mathematics to disrupt his industry resonated with what we’re experiencing in mortgage technology right now.
The next day, Bill Emerson, the vice chairman of Quicken, built on this theme when he said that his company is in the data acquisition business, not the mortgage business. Acquiring, curating, and using data, he said, is what will speed up progress in technology and make AI possible. His clear message was that the time for the mortgage industry to invest in tech is now. Making data a more meaningful part of the mortgage business needs to happen right now as well.
The conference was a great venue to explore those themes, with sessions elevating the value of maturing technologies, fostering deeper understandings of new technologies and most importantly - creating a truly collaborative environment with Detroit as the backdrop. This year’s event was at Detroit’s Renaissance Center. Quicken and Dan Gilbert are incredible ambassadors for the city of Detroit and while the weather was cold and rainy, the event was the exact opposite. A warm, hospitable environment aimed at knowledge sharing and improving the homeownership journey.
New Format, New Products, New Acronym
The conference’s new format featured a full-day of product and solution demos by both mature tech companies and fintech startups. Many of the presenters were third-party data sources like Finicity, FormFree, Equifax, and others that offer access to the data mortgage lenders need.
FormFree, for example, announced and demoed Verification of Employment and Income services for Fannie Mae’s Day 1 Certainty (I heard some of the cool kids say “D1C”). Last year, lenders and vendors were concerned over the D1C workflow and adoption. The big story this year is that we are definitely seeing adoption progress. Lenders and vendors are both trying to make sure that D1C is well understood, is integrated into clear workflows, and can be efficiently leveraged—whether at the point of sale or within in the loan origination system.
It’s clear that this year will be a big year for D1C as lenders drive adoption in order to get the benefits of the efficiencies that accompany digital data: speed and accuracy. As always, there are many promises for how many days we can “shave” off the origination process and, in turn, realize the accompanying cost reduction. We’re starting to hear numbers like eight days here… six days there, but keep in mind, the average loan was closing in 42 days last year… and is still 42 days this year. Having said that, there is no question that the ROI of D1C is real and growing. But we should all carefully evaluate the evolving statistics over coming months.
In addition to providing a forum for lenders and vendors to “discover” each other, this event also allowed vendors to meet, create, maintain, or improve their relationships with other vendors. Technology providers are seeing the value in leveraging each other’s platforms to create seamless solutions that drive lender productivity. And while APIs are nothing new, vendors are embracing a sense of openness that will allow lenders to take advantage of diverse solutions. This is most clear with the emergence of POS vendors that are creating innovative solutions to extend functionality from an LOS to a lender’s customers. These products also depend on an ability to create meaningful connections with vendors like Ellie Mae, Black Knight, Mortgage Cadence and others.
More Balanced Program
User experience and data security were two of the main themes at this year’s conference. Understanding our audience—borrowers, loan officers, processors, underwriters, etc. —will be key in the delivery of innovative solutions. This is especially true at the point of sale where borrowers are looking to better understand the lending journey. The POS space has many competitors (including my company) that are introducing dynamic experiences to improve customer education, process transparency and security. Lenders are trying to adopt features introduced first by Rocket Mortgage, and, at the same time, tailor their solutions to meet the needs of the diverse origination landscape.
As we all press for digital collaboration we must focus, equally, on digital security. Each session highlighted the challenges facing lenders in securing their customers’ data. With more and more customers sharing personal financial data (using POS solutions), it has become critical that lenders communicate their strategies to ensure they are making every effort to secure customer data. The risks of identity theft increase every day. These issues aren’t only concerns around technical “gaps,” but also how “hackers” use social techniques to separate users from their usernames and passwords. No easy answers here, but there must be a clear dedication to trying to educate lenders and vendors of their ever-growing responsibility to protect their customers.
No MBA Tech conference would be complete without sessions on regulatory compliance, and this year’s featured thought leaders, like John Vong (ComplianceEase), Ben Wu (LoanScoreCard), and Leonard Ryan (QuestSoft). Technologists and regulatory experts have been partnering, in earnest, since the 2008 crisis to define solutions to improve loan compliance starting at loan origination through capital markets. MBA Tech reminds us all of that this collaboration not only improves loan quality, but also introduces innovation.
Finally, the event featured lenders and vendors talking about the future of artificial intelligence (AI) and blockchain. While the paths aren’t perfectly clear, the commitment to innovation in lending is a fantastic signal. All of us are trying to determine the various paths to AI, including brute force computing and signal/pattern analysis. And in lending, any AI improvements can improve loan quality and reduce time to close.
In terms of blockchain, the early efforts to innovate have been focused on how to narrowly apply this technology to a wide and complex transaction. As a result, we expect to see the value of general ledger technology in title, funding, and other areas of closing collaboration.
In closing, let me borrow an analogy from Billy Beane’s world: Digital transformation represents a whole new ballgame, and we are still in the early innings.