Mortgagebot PowerSite, called by Forrester Research Inc. “the de facto origination tool” for a long list of U.S. banks and credit unions, has received numerous awards. PowerSite is offered on an outsourced, Software-as-a-Service basis. Perennially included in Mortgage Technology’s Top 50 Service Provider list, Mortgagebot has received more MT awards than any other company, such as our Lasting Impact, Synergy and 10X Awards. Wisconsin-based Mortgagebot LLC, spun off from M&I Bank in a management-led buyout in 2001, bills itself as the nation’s leading provider of Web-based mortgage point-of-sale solutions, powering more than 6,000 mortgage websites for nearly 1,000 banks and credit unions nationwide that originate over $150 billion of mortgage applications annually. MT senior correspondent Scott Kersnar talked with Mortgagebot CEO Scott Happ about the reasons for his company’s continuing ability to grab the brass ring.
MORTGAGE TECHNOLOGY: How would you say Mortgagebot managed to get more MT awards than any other company?
SCOTT HAPP: Innovation. Without consistent innovation, no technology company can succeed in the long run. We believe that innovation, more than anything else, is the primary source of a business’s competitive advantage, and we have tried to live by that idea. I tell new employees that “innovation is our middle name” to impress upon them the importance of constantly pushing the envelope in terms of product development. As a result, we enjoy a culture of innovation. In a given year, we will typically deliver four major new releases that add substantial new features to our platform. For example, we have recently added support for mobile devices, an advanced pricing module for our loan officer point-of-sale tool, and a new document-generation system.
In my opinion, one of the keys to our success is that many of our employees come directly from the mortgage industry. That background has energized our product development strategy and has helped us better understand the challenges our clients face. I don’t think we can overstate the importance of our company’s ancestry to our success in building mortgage technology.
MORTGAGE TECHNOLOGY: What Mortgagebot achievements stand out most in your mind?
SCOTT HAPP: Our greatest achievements include the construction of an industry-leading solution, earning the business of nearly 1,000 financial institutions, and our company-wide commitment to customer care. Of course, these three are all interrelated: it is because of our solution’s strength and our team’s focus on helping our customers succeed that we have achieved an 80% market share and a large customer base. For what it is worth, I think an important driver behind these achievements has been our willingness to be different from other providers, to focus on a distinct set of capabilities, and to do these things consistently over time. Our mission statement has changed little over the past decade.
Our principal focus has always been to help financial institutions offer mortgage loans through the self-serve Internet channel, and we are fortunate to be operating in a period when most organizations understand the importance of serving customers over the Web.
MORTGAGE TECHNOLOGY: When you claim 80% market share, how do you calculate that?
SCOTT HAPP: We target any financial institution with greater than $100 million in asset that wants a transaction-capable Web presence. Out of 5,000 banks and 3,000 credit unions, about 1,200 institutions fit that description today. Our 950-plus customers add up to around 80% of those.
MORTGAGE TECHNOLOGY: We all know what challenges the mortgage industry faces today. How can technology effectively address and overcome them?
SCOTT HAPP: The mortgage industry is broad and complex, and like any industry, faces a wide range of challenges. Technology can play an important role in addressing many of these issues, although it is not always a silver bullet. At the point of sale, where we focus our attention, technology is a true game-changer. With the advent of the Internet and the emergence of intelligent applications designed to help users—both consumers and loan officers—successfully complete transactions, lenders can completely reinvent how consumers are served at the point-of-sale. For example, because the Internet enables us to simultaneously tie together all the components needed to complete a loan application, it is now possible to accomplish in 20 minutes what used to take days.
MORTGAGE TECHNOLOGY: And that owes to technology.
SCOTT HAPP: Technology provides many solutions to the problems faced by lenders, but there are organizational challenges to adopting new solutions. The biggest challenge may be the difficulty in prioritizing which solutions to adopt now and which to adopt later. Lenders are constantly faced with an array of technology solutions, all promising to address some issue. With limited resources and a business to run, lenders are forced to choose some projects and postpone others, thereby mitigating the gains technology can provide. Because lenders cannot take on every project at once, my best advice is to always implement the best technology solution available, because it will likely be something your organization will live with for a long time.
MORTGAGE TECHNOLOGY: Does the Internet truly create a level playing field for mortgage lenders?
SCOTT HAPP: I think the Internet changes the playing field. The more important issue is that success on the Internet requires different competencies, capabilities and strategies. Success on the Web requires grappling with a new set of issues.
MORTGAGE TECHNOLOGY: Such as?
SCOTT HAPP: Such as, how do I market on the Web? What sort of consumer experience do I want to deliver? What systems can best support my business goals? How do I address the fact that consumers in my market can easily shop for mortgages online? And how do I attract, engage, and convert those potential customers? Some very good news is that our clients are on track this year to accept more than 600,000 completed loan applications online.
MORTGAGE TECHNOLOGY: How long will it take before 50% of mortgage originations are substantially done online?
SCOTT HAPP: My best guess is five to seven years. Ten years ago, the percentage of online loans was near zero, and today we think about 20% of loans are done online. Recent research suggests we are at a tipping point and that in the next five years most financial institutions will deploy a fully transactional mortgage system in the self-serve channel. Because a majority of consumers already use the Internet to research and shop for loans, we think that most consumers are prepared to apply online once lenders give them the ability to do so. Sites like Mortgage Marvel and Google, which provide easily accessible rate comparisons, will also help to attract consumers to the online channel.
It is worth noting that 40% of Mortgagebot clients originate more than 25% of their loans online, suggesting that there are no natural limits to the share of loans a lender can originate online.
MORTGAGE TECHNOLOGY: You have said repeatedly that the Internet channel has to give prospective borrowers a superior experience in order to succeed. What constitutes a “superior mortgage-shopping experience”? What does it take to provide it?
SCOTT HAPP: First, a superior mortgage-shopping experience involves comparing products and pricing from several lenders. The quotes should be provided in real time and should be specific to the transaction, not simply approximations. Ideally, consumers should be able to shop with anonymity, providing personal information only after they have decided to apply with a specific lender. Second, the consumer should be given the opportunity to “buy” if they identify an attractive quote from a lender of their choosing—meaning that they should be given an opportunity to apply online.
To provide a superior consumer experience, the essential application functions that are provided off-line must be provided online. These include collecting relevant loan application data, retrieving credit scores, instant approval, presenting disclosures and collecting an application deposit. Our design philosophy is that unless all of these offline functions are offered online, why would anyone apply online?
Finally, the entire process—from shopping to application—must be designed to reduce friction and increase the likelihood that an application will be completed. We call this site optimization, and it is critical to delivering a superior user experience. Site optimization involves studying the user experience through user testing, applying site-design best practices, and testing the impact of site changes on conversion rates.
You can see an example of what I think is a superior mortgage shopping experience by visiting Mortgage Marvel (www.mortgagemarvel.com), a website we operate on behalf of our clients. Serious students of mortgage shopping sites say that the site is truly unique both in terms of providing the most accurate comparison of loan quotes from multiple lenders available on the Web, and providing highly actionable quotes. Customers who find quotes that appeal to them can apply for the loan and secure the quoted rate, all in less than 20 minutes. No other site provides the broad set of features, speed, precision and lender integration found on Mortgage Marvel.
MORTGAGE TECHNOLOGY: Even the sophisticated real estate websites that leverage high-end search engine optimization and long-tail searches? What about Trulia, Zillow, Google Base and so on?
SCOTT HAPP: We are in favor of what these folks are doing to bring more real-time data to the consumer. With Mortgage Marvel we run pages for 30,000 municipalities across the country. We are not the only one helping consumers who are looking for a mortgage rate in their specific geographical area, but we think our data is more specific and more actionable. The others don’t link to an online application.
MORTGAGE TECHNOLOGY: What technology challenges will Mortgagebot take up going forward?
SCOTT HAPP: We are tightly focused on two things: optimizing the consumer experience, and helping our lenders succeed on the Web. Our technology initiatives focus in these areas. For example, given the sudden importance of serving content on smart mobile devices, we recently rolled out PowerSite Mobile, which gives our financial institution clients the ability to deliver mortgage quotes on Blackberry, iPhone and Android devices. This new feature is in the sweet spot. It improves the user experience and helps our lenders attract more customers.
The first 10 years of this decade were about getting online; the next decade is really about differentiating yourself online. That’s where we are investing our intellectual capital and our financial capital, to help lenders differentiate themselves by building frictionless application paths, optimizing the application path, so a consumer visiting a lender’s website has no barrier to completing an application online.
Mortgagebot president and CEO Scott Happ founded the company in 1997, while working for Marshall & Ilsley Corp., where he served as president of the mortgage division, M&I Mortgage Corp.
