What nonbank lenders are automating in 2023, according to OpenBots
December 16, 2022 5:00 AM
Contributed
The current down cycle is making lenders re-evaluate their current and future tech investments and as a result, many initiatives have been set aside until the market recovers.
One exception to that, however, is investment in automation, viewed by many lenders as a means of reducing costly manual work.
Openbots, an end-to-end enterprise-grade robotic process automation platform, is one of the companies offering such services to numerous industries, including healthcare, insurance, banking and mortgage. The Edison, New Jersey-based company has raised about $20 million from private investors since its founding in 2020. And lately, they've been busy.
National Mortgage News sat down with Gabriel Skelton, director of banking, mortgage and insurance automation solutions at OpenBots, to discuss what automation products mortgage lenders are seeking, how the cyclical nature of the mortgage industry has impacted business, and why robots won't be (completely) replacing humans any time soon.
This interview has been edited and condensed.
One exception to that, however, is investment in automation, viewed by many lenders as a means of reducing costly manual work.
Openbots, an end-to-end enterprise-grade robotic process automation platform, is one of the companies offering such services to numerous industries, including healthcare, insurance, banking and mortgage. The Edison, New Jersey-based company has raised about $20 million from private investors since its founding in 2020. And lately, they've been busy.
National Mortgage News sat down with Gabriel Skelton, director of banking, mortgage and insurance automation solutions at OpenBots, to discuss what automation products mortgage lenders are seeking, how the cyclical nature of the mortgage industry has impacted business, and why robots won't be (completely) replacing humans any time soon.
This interview has been edited and condensed.
When lenders reach out to Openbots, what services are they looking for?
Lenders want services that speed up the origination process. They have all of this manual work in their loan origination system, which drags the cycle times to close a loan. They don't want to have 40-day cycle times. They want that process to go faster. Lenders also want their customers to have higher accuracy data without the need for underwriters to go back to the applicant to clarify information because of mistakes and because of more documentation. They want a more streamlined process, so that's why they come to us to automate things.
What manual work are lenders turning to you guys to solve?
The biggest bottleneck in the mortgage industry is the underwriting process. We automate things to get to underwriting faster or automate the pre-underwriting process to make the underwriters job easier, thereby speeding up the process. When applicants are dealing with loan officers, they're typically happy, but when they're dealing with underwriters, that's when things get messy. Underwriters aren't front-facing in the transaction — and they have no incentive to be since that's the job of the LO — so customer satisfaction typically dips because underwriters contact them about mistakes or clarifications in the application, which makes customers assume that something is going wrong. [We cut these interactions out] by having bots validate the data within a loan packet.
Another common automation tool is ordering services such as title work, a flood report, a fraud report, or an appraisal. Every lender needs to do that. It's one of the most linear processes in the origination process. In the appraisal ordering process, we can set up bots that can order appraisals and we can set up a rule where if the price from the first Appraisal Management Company comes back over a certain point, we can have the bot automatically order the appraisal from the backup AMC.
I would say the disclosure desk is also extremely popular. It can be bots generating and sending loan estimates. It could be validating data within a loan estimate. It could be a change of circumstance. Bots also can do disclosure tracking and alert.
United Wholesale Mortgage is a really good example of what can be achieved by using RPA. They actually have not laid off as many people as other lenders, because they have a lot of automation. People are statistically happier at mortgage lenders when there's a lot of automation because their jobs become easier. They realize the firm's investing in technology and thus, investing into them.
Another common automation tool is ordering services such as title work, a flood report, a fraud report, or an appraisal. Every lender needs to do that. It's one of the most linear processes in the origination process. In the appraisal ordering process, we can set up bots that can order appraisals and we can set up a rule where if the price from the first Appraisal Management Company comes back over a certain point, we can have the bot automatically order the appraisal from the backup AMC.
I would say the disclosure desk is also extremely popular. It can be bots generating and sending loan estimates. It could be validating data within a loan estimate. It could be a change of circumstance. Bots also can do disclosure tracking and alert.
United Wholesale Mortgage is a really good example of what can be achieved by using RPA. They actually have not laid off as many people as other lenders, because they have a lot of automation. People are statistically happier at mortgage lenders when there's a lot of automation because their jobs become easier. They realize the firm's investing in technology and thus, investing into them.
During the next refi boom, some lenders say they’ll scale with automation, instead of with people. What are your thoughts?
It has to be a mix of people and technology. When I'm talking to a lender, I never advise them that bots should take over jobs. The purpose of our bots is to support humans. You may have 10 people doing the job that maybe three people can do with the help of bots, but that doesn't mean that you should fire the seven people. That means you put them in more client-based positions, or put them up for a promotion. For example, underwriters have a very specialized skill set and they're highly paid for a reason. If you have an underwriter spending time on manual work and reconciling data, you're wasting their time and brainpower, because they have more to offer. Without automation an underwriter is taking on 100 loans, with automation they can take on 300 loans.
The general idea with RPA is doing more with less. So I think there's a misnomer in having bots take over jobs, since these are just tools that can help a business. If lenders start laying off people because of automation, it will impact employee satisfaction, because it will be viewed as 'oh no, automation is coming in and this person is getting laid off and that person is getting laid off, I should go to another lender.' Your biggest horsepower is people, not technology. Technology is just there to help people.
The general idea with RPA is doing more with less. So I think there's a misnomer in having bots take over jobs, since these are just tools that can help a business. If lenders start laying off people because of automation, it will impact employee satisfaction, because it will be viewed as 'oh no, automation is coming in and this person is getting laid off and that person is getting laid off, I should go to another lender.' Your biggest horsepower is people, not technology. Technology is just there to help people.
Are there any services that lenders have put on the back burner? How has the downturn impacted your company?
There's been a lot of changes in the mortgage industry, mainly because lenders have less budget. They are still open to speaking to us, but a lot of them are saying that they'll bring on our services in the second quarter of 2023. If you look at an average lender on LinkedIn, their employee size has drastically gone down [and so has their appetite for tech investments.]. So currently, I'm focusing on banks and insurance companies.
Merge registration automation has been less popular lately, because now there's less volume. Ordering services have been less popular too because of lower volume.
Merge registration automation has been less popular lately, because now there's less volume. Ordering services have been less popular too because of lower volume.
What tech issues do you see lenders most struggling with?
Almost every traditional lender is utilizing a loan origination system using Encompass. A point of sale system, usually Blend. A customer relationship management system or CRM can be Salesforce. Those are the core three systems they are using. Others like a pricing engine usually like something like Optimal Blue. Some of the issues I've seen are for one, there's so much manual work in each system that needs to be done. Some of these systems are massive, but they're clunky. They're slow for the people that are doing work. They take a lot of time.
Mortgage lenders typically never look at new technology. They only want to bring in technology that works with their existing technology. So [offering something like automation tools] is a tough sell. Banks are a large consumers of RPA, but most nonbanks are still catching up.
Mortgage lenders typically never look at new technology. They only want to bring in technology that works with their existing technology. So [offering something like automation tools] is a tough sell. Banks are a large consumers of RPA, but most nonbanks are still catching up.
You mentioned that the majority of banks have implemented RPA, yet nonbank lenders still have not. Why is this the case?
Lenders typically move faster than banks once they are interested in IT technology. But banks have robust due diligence, because they just deal with more sensitive information. Banks do mortgage lending, consumer lending, deposit operations, credit card processing. They just do more, whereas in the [mortgage] lending world you can really only use it in origination and servicing default terms. That's one of the reasons why they haven't invested actively into automation.
