All in on UX (unless the user is on staff)
When Quicken Loans brought the Rocket Mortgage experience to the attention of American consumers with a commercial during Super Bowl 50, it brought a new urgency to the industry's relatively weak consumer online offerings.
Since then, the industry has responded. Rocket and companies with similar products have established a new normal in user experience, or UX, for consumers through online apps, with ever more of the process becoming digitalized, and even mobile.
Once that data gets to the lender, the story changes. The people receiving and working with the information — loan officers, underwriters, processors and others — in many cases are dealing with multiple back-end systems in order to work the file. And as is the case in much of the financial services industry, the communication between those systems is less than seamless.
It's a reality much of the industry agrees has to change. But while lenders may pay lip service to the importance of optimizing their operations and technology companies may believe they have the solutions to these problems at hand, the back office is still largely an afterthought when it comes to planning and budgeting.
Silver Fin Capital is a Great Neck, N.Y.-based mortgage broker that works with a lot of different wholesale lenders. "Some of them use an off-the-shelf system, and maybe a few of them develop something of their own for one reason or another," said Andrew Weinberg, its co-founder. "They probably don't make a focus on what it looks like to the end user employee, and more importantly, what it looks like to the broker or the ultimate borrower. I think that's simply because most of the systems seem to be a patchwork of pieces together, and it's not always so easy to make other than a relatively smaller change."
One of the wholesalers that Silver Fin works with, United Wholesale Mortgage, is an exception. Even as its customers are mortgage brokers and its external experience is geared toward them, its own back-office staff faces many of the same issues those that work at consumer-facing shops have. The company has 4,000 employees working with mortgage brokers every day.
"Efficiency is critical, especially in these busy times, so we completely rebuilt our internal user experience for our loan origination system, which makes us interact with brokers better to provide better service and turn times," said UWM Chief Operating Officer Melinda Wilner.
People want to use technology that is quick and pleasing to the eye. "I get frustrated when I visit some company's website that is slow or when I have to fill out a form online that isn't intuitive," Wilner said. "So having a loan origination system that is fast and intuitive is really important because our team members work in it many hours a day. Our team member's experience in doing their work each day is really important to us."
The changes to its system help its underwriters do more loans, which ends up reducing loan turn times, aiding the broker.
"I would say we're as big on technology on the inside as we are on the outside. We are pretty well known for having great technology for brokers, but we also see value on the inside as well," said Wilner.
"Because of our obsession with closing loans fast, we saw an opportunity to rebuild our internal loan origination system and that's how EDGE came about. EDGE is more user-friendly, more intuitive, given our processes and it has a far nicer feel to our team members," Wilner said.
But despite the potential operational upside, few lenders are prioritizing back-end systems. Evidence of that can be seen in a recent survey conducted by Fannie Mae, in which lenders were asked to list their technology objectives. Topping the list — and by an increasing margin — was consumer-facing technology. Back-end process technology? It placed fifth on the list.
"Not the same strides are being made, not the same focus and not the same priority is being put on development for internal use as opposed to customer-facing applications in this space," said Kevin Fairris, chief information officer at Covius Technology Solutions.
"We see this a lot where we go into clients and they have multiple systems running across different departments that don't talk to each other, that are not integrated. There's a lot of inefficiency that is created because of this."
Even after the loan closes, many origination systems cannot easily pass data to the servicing platform, Fairris said.
"There are multiple operational teams that it takes to get the entire process, end-to-end, done. And these teams end up being empowered to basically find the path of least resistance to get their work done and they end up creating operational silos, which lead to IT silos," Fairris said. "There's duplicated data, there's no integration and so it becomes difficult to see the big picture."
The implications of this imbalance are significant, particularly in terms of the stresses imposed on personnel who wind up patching together solutions that sometimes only exacerbate the problem. And, as some industry experts noted, getting staff up to speed on new systems brings its own stresses.
"The process improvements and technology that lenders have introduced to improve the borrower experience can be difficult for their own internal staff to adopt," said Nate Johnson, senior vice president and mortgage business leader at the business process transformation technology company SLK Global Solutions.
"Loan officers, processors and underwriters are faced with a frustrating process each day at most companies. Learning new processes and technology requires extensive hours of training."
All of which reinforces lenders' tendency to focus on customer experience. In responding to that impulse, some technology executives argue that the way forward isn't to try to sell lenders on the merits of investing in back-end technology, but to press the idea that it's a mistake to draw distinctions between the two sets of systems.
"The lines are blurring between the back end and the front end in terms that we're becoming more integrated with the back end every day," said Nima Ghamsari, chief executive of Blend.
"If we can take the data that the consumer aggregates and we can make sure it's piped in the right way into the right spot on the back end, that means that by the time it gets to somebody on the back end — the consumers' assets, income, identity, credit — all those things are already verified, it takes a huge chunk of work out of the process for the lender, which reduces cost and a lot of the back-end work. So in some ways it is back-end spend, even though they are spending it on the consumer side," Ghamsari said.
Furthermore, as the industry gathers more data, that data itself could power more intelligent, real-time automation to the consumer, which can help on the back end, he said. Tighter and tighter integration between the front end and back end will allow some of the same type of data flagging seen in other fintech systems to occur, aiding the process.
An additional obstacle to progress on the problems associated with antiquated back-end technology is the sheer complexity of identifying, let alone scoping, the range of tools and systems that some lenders would need to invest in.
Fairris gave the example of one Covius client that had a list of over 100 ongoing IT projects; it only expects to get to about 20% of them this year, and as is often the case, internal operations aren't likely to wind up in that first fifth. Another client was using Google Calendar to schedule and keep track of loan closings. "And you can imagine trying to manage, 600, 700, 800 closings a month on a Google calendar. It was a nightmare," he said.
As volume goes up "these ad hoc processes really do become bottlenecks and they also become an issue from a compliance standpoint, regulatory standpoint, and for data security, Fairris said.
In the face of the complexity problem, expect many vendors to lead with messages focused on simplification. If loan officers and others are logging into four or five different systems, even using different platforms — desktop, tablet and cellphone — then identifying a way to add a communication layer to that situation offers one way to mitigate the chaos, said Matt Hansen, president of SimpleNexus.
SimpleNexus, of Lexi, Utah, provides a communications app that links the various players in the process across multiple systems.
"We're very much in tune with the lenders wanting to use the vendors they prefer. We're not trying to replace their vendors, we want to integrate with more of a purpose. We want to be a system that brings everything together," said Hansen.
SimpleNexus is rolling out an application programming interface aiming to eliminate the data-sharing pain point by providing real-time data syncing between its system and third-party technology like customer relationship management and loan origination systems.
The API will work in both directions, for example instantly relaying loan information to the lender's CRM for use in automated marketing campaigns. In turn, it updates the SimpleNexus system with organizational changes made in the lender's loan origination system or other system of record as well as syncing loan activity data for loan officers not currently integrated with the SimpleNexus digital mortgage platform.
Additionally, users can leverage webhooks — a method to alter the behavior of a web application — to trigger data sharing whenever a specific event occurs within the SimpleNexus platform. Trigger events include the creation, update or deletion of a user.
For the client stuck in Google-calendar gridlock, Covius built what was basically a reservation system — a resource management calendaring program for managing loan closings. "It created a lot of efficiencies for them; it not just makes things better internally but makes them look better to their customers because they're getting good information and they're getting it quicker, Fairris said.
Ultimately, said Blend's Ghamsari, the path forward for the industry will require not just lenders but all the links in the mortgage finance chain to commit to system and process improvement.
"We can't do all of this stuff alone. The mortgage industry is too big, there's too much complexity to say 'we're going to do all this alone.' And so figuring out where we can have better touch points and better integrations to [other] systems is possible," said Ghamsari.
Those include mortgage insurers, title companies, appraisal companies, credit reporting firms, product and pricing engine providers and others, he said.
On the bright side, said Ghamsari, things do seem better now than a year or two ago. "It's not going to be overnight," but technology "is starting to make an impact."