Transcription:
Announcer (
It is my pleasure to introduce our moderator for this panel, Shelly Leonard. She is the president of Zactives.
Shelley Leonard (
Thank you very much, Ralph. All right. So thank you guys for spending your last 30 minutes. We do realize we are the thing that stands between you and happy hour, so we're gonna try to keep this at least somewhat interesting. And we may or may not take questions depending on how much time we we get to, we may offer you questions at the bar. So, we're gonna start out, I'm gonna introduce my panelist. This is karthik Kumar with Leonard, got Bob Hart with Ice Mortgage Technology and Matt Rochester with Truest. Thank you guys for joining us today. We're really excited to talk about disruption, and, and how you think about disruption during the current cycle that we're in. So, obviously no need to describe, what's been happening in the mortgage cycle. The question is, what can we do to take advantage of this time, to innovate and to disrupt, and to really position ourselves and our customers, to win not only in this market, but as the market turns. So, Matt, I'm gonna start out with you. how quickly were you able to react to the changing market as volume started to decline earlier this year?
Matt Rochester (
So, I'd probably answer that probably slower than most. And that's really looking at it from an overall market perspective and saying, Is this really a slow down that we are in? And how much do we believe it? just like when rates are going down it's that balance. But Truest, we were balancing coming out of a merger as well at that point going through the merger, through the pandemic, through the increased volume, probably a lot of scar tissue that we needed to, fix and deal with and that type of thing. So we, we kind of took our time, in doing that. And, but we have been having those, unfortunate conversations and they continue to this day, even as we start to look into 23, 24 and beyond, What does the market look like? What do we need? and from a people perspective, so probably slower than most, but continuing to react as we watch the marketplace.
Shelley Leonard (
Yeah, I think it felt like a much more sharper downturn than potentially. It really is just based on how high the volumes were in 2020 and 21. So, it felt like a much bigger, again, impact and as we talk about it, we really try to talk about getting back to normal and how we're normalizing, from a volume perspective, versus, really declining at the state that we have been. So, what about you guys? Anything, anything different or monumental for you guys as you kind of prepared or reacted to the downturn?
Bob Hart (
I think on our side, obviously for us, being able to provide elosing I think was incredibly important for our organization. and we spent a lot of time and focus on it, and I think Covid kicked it off where it became, a reality that it was possible. And we'll talk a little bit more about this in a little bit, but I think also where volume's already your point normalizing now is the time where you don't have the excess volumes. You can start testing things out and actually utilize some of those technologies that were built or developed, either pre or during covid.
Shelley Leonard (
That's a great kind of segue. So, what are you guys looking at right now? Really, what should lenders be thinking about investing in from a technology perspective now while they maybe have the time they didn't previously?
Bob Hart (
I actually, I have a couple points on that. So, I think the first thing that customers should be doing, just based on observations, is really assessing the technology that they implemented probably over the last two or three years volume obviously was incredibly high. So, my suspicion from the things that I've seen is they may have implemented something but not actually utilize it to its full extent. And so now you see people looking at their costs and they're thinking, I'm just gonna rip this out, or rip and replace or sunset, but they don't actually know what their technology that they have can fully do. We see this particularly in, point of sale where the volume is so high, so I've gotta get something to take that up front application. And now they're assessing costs, but they don't know that that point of sale might be able to do two or three other things to create efficiency. So, I think the first thing that customers should be doing is not just looking at pure costs, but what can the technology that I invested in, actually do. And then from the partner vendor side, I think being able to understand your customer base. Have you scorecarded them, have you seen, are they using everything they can and proactively having those conversations versus reacting to somebody saying, I want to cancel my account. Right.
Shelley Leonard (
Right. So, kind of along that, as you think about that, so one is kind of looking at your current environment, assessing is it, are you using it to as fullest extent? but then, really thinking about, new opportunities to innovate. Whether that's new technologies to your point, or maybe it's just new processes Yeah. Or things related to your actual workforce, your team members. Karthik what, how are you guys thinking about it? Sure.
Karthik Kumar (
Sure, I think, broadly if you think about innovation or bringing in technology and the latest, hashtag digitization word that's around, it all depends on timing, right? You would never be able to fix a flight that's in air. You have to land it first. So I think today is the time. It's a very ripe, moment. this morning I think the panel discussion was talking about, learning from crisis. And, I totally agree. If, and to his point, you've implemented something, when would you try it out? this is the right time. look at an example outside of this industry. Netflix, when, the global financial crisis happened 2008, right? Their, DVD mail in business was just going down. They didn't know what to do. They in fact partnered with Xbox to save online streaming where to work and just worked. They just tried something new and, they saved I, at least me, through depression of through covid, without Netflix. I don't know how I've to that pandemic. But the fun fact is, we are at a time where, broadly innovation, technology innovation is about insights. I think this industry has a lot of insights. It's about problems. I should speak less about problems we have here. And then, walk around this convention hall, look at the kind of solutions that we have. The most critical and the fourth part of, a choice of technology or disposition is testing and experimenting it. There is no better time than today. You might have a little bit of CapEx left, opex left some resources. And, and, and to Bob's point, if you want to sunset it, you want to carry on with it. There's no better time to experiment now, because tomorrow morning, if rates were to drop, and I hope it does, everyone's focus is gonna be away, then it's again gonna be a four year cycle, then we are going to get into the other cycle. So timing, this is the best timing choice of technologies. You have abundance right now.
Shelley Leonard (
Yeah. I think the way I think about it too is sometimes when people, companies implement a new technology, they implement it without taking into consideration how they could actually improve their processes and so they take a technology and they implement on top of an existing process. And, and I always say, good technology doesn't fix bad processes, right? So I understand that sometimes the situation you're in when you have to get a POS implemented, right, very quickly because we go into to a pandemic. But I do think now is also the time to reassess your processes, and make sure that you're optimizing at the process level. And then leveraging the technology to automate, where you can within that process. But really taking that deep dive of what is the most efficient process, what potential, maybe we need to train our people better on our processes, maybe we implemented new processes, but we didn't effectively train because we were all work from home or remote. And maybe we need to reemphasize that training so that people, again, are utilizing the technology in the way that it's built to be utilized versus, really how, how maybe you, you've been using it historically.
Matt Rochester (
And, I think one way to do that is something we're doing a lot of is right now we've got the time we're going out and we're listening to our teammates and, asking them what is working, what isn't working, and then kind of saying, what can we fix rather easily get that done, that low hanging fruit per se. And but talking to those teammates cuz they're the ones on the front line doing it. Not us in the background. So, that's the most critical thing that we see is getting out, talking to people, people are coming back into the office, let's get 'em in a conference room, have those conversations and start to make a difference for them.
Bob Hart (
Yeah, I was just gonna say, I think the psychology is interesting because watching, lenders choose vendors during, the pandemic, it was out of necessity, right? and for new technologies, we'll call them innovative technologies, disruptive if you will. there was an apprehension cuz I'm just too busy. I can't try, I can't test. E-closing is a perfect example of that where I think I'm a young buck. I've been in the industry 15 years, but everyone's been talking about this digital mortgage that's gonna come and you had the perfect nexus moment for that to happen, right? But the volume is too significant. So I can't implement a new solution. There's too much regulation. I have to understand, state by state legislature around things like Ron. But now there's a different dynamic which is, oh, things are tough right now, I can't test. So, you kind of have to understand when is the right time to test. And so I do think that it's incumbent upon customers to realize that you, you can start to test things right now. And if you look at successful customers out there, they've been testing multiple solutions for quite some time during the pandemic and post pandemic. And, many of the lenders that I think we're on stage today that are considered very innovative, they've been testing at least three or four different paths for a while. They don't just suddenly show up on TV talking about a solution they have, they've been testing it a while. And so people I think need to recognize that. But then as partners or vendors, I think it's also incumbent upon us to educate why now is the time to test. And I think that's sometimes where everybody falls short. You're all kind of, everyone's kind of crossing paths, but not communicating about the same things that are important to everyone.
Shelley Leonard (
Yeah. I think that test, is really interesting to think about because I think when people think about it is, I think the other thing that disruption really helps you understand is that one solution may not be a fit for all. Right? And so being in a, in an environment where you can have different solutions that are purpose built for different populations, for different use cases, for different needs, is something that in today's environment can, is possible right? Through configurations, just through different types of technologies that you can leverage based on what the needs are for those consumers or for those specific lenders. And, so I think that is something that, that people need to get more comfortable with, that it does not have to be a one size fit all, that you do need to have things that obviously integrate well into your ecosystem that you can manage and maintain, in a cost efficient way, obviously to the cost factor, but being able to use it differently for different, needs and different, personas is really important. And that's something people don't actually take advantage of, of testing in order to figure that out because you have to test to figure out, oh, this worked over here, but it's not working so well over here. Yeah, let's try something different over here. You have to have that flexibility to try something and then if it's not working, try something different.
Bob Hart (
Yeah, I also think there's an opportunity to, look at your overall mortgage manufacturing cycle. And obviously e closing a point of sailor are two very popular ones to explore, but there is a lot of investment, a lot of time and energy being put into things like valuations into verifications. So it's really thinking about where are the inefficiencies in your process and then what are the vendors in that space, partners in that space doing? And then how do I test not just point of sale, Okay, now that you've landed on your point of sale, what's the next piece that I can look at? Right? And I think that point of sale and E close got really focused on even valuation to some degree during, Covid, but there's a lot of other areas that are beginning to really radically change. And what are you doing to keep your eye on that, right?
Shelley Leonard (
It's not slowing down just because the market is slowing down. Right? So Karthik, there's a lot of technology choices. You and I were just talking about this standing outside before the session. There's a lot of different technologies out there. What do you think people really are looking for, or should they be considering from looking at from a technology perspective?
Karthik Kumar (
yeah. And, I love the phrase you use, right? One, one solution wouldn't fit everyone. So, it's very important for lenders or a service provider that's even picking a new technology to see what are they trying to solve. it has to serve one objective. are you trying to, increase, your customer centricity, you're trying to manage risk, reduce, cost increase, agility. There has to be one driven objective. If you find that objective, you can chase, the choice of technology. And then second, what is, what kind of technology am I going to, leverage? So first and foremost, it's important that technology cycles gone are the days where you would say, Oh, it would take 11 months to implement this, it has to be easy, it has to be immediate, and there has to be low cost. No one's ready to, in this market give you implementation charges of couple of million dollars. No, that's not happening. You, need to have component solutions, something which is a very flexible, easy code base. And I would say microservices in, and, and this conference room and then this entire conferences is a proof that, not necessarily patchwork. They would talk to LOS's in a non-intrusive way. if microservices architecture is gonna be the future of this industry, and, the more and more, and I would say that all the components together, it will give you a perfect solution. Now the components that work for you are the ones that you have to pick and select abundant technologies available.
Shelley Leonard (
Yeah. So, let's kind of switch gears a little bit and Matt, Bob brought this up earlier, but how are you guys at Truest making sure that you're getting the most out of those previous investments that you've made, whether it's technology processes, people, investments, kind of across the board, How are you assessing, those investments and making sure that you're, that they're paying off? I guess you're getting the right ROI.
Matt Rochester (
Yeah, so it's really getting back to the basics. What, going back to what did we want to get out of it and then assessing, are we utilizing it the way we wanted to? I think we got all, got into a lot of bad habits, during the last two years with the volume that we were dealing with. And, so then it's, it's a little bit of cleanup from that perspective and then starting to get in and say, Okay, how much time are you saving out of that? And we're having those conversations with the teammates, like I mentioned earlier, just having those listening sessions, trying to hear from them, and working through that, but then as well, just kinda, working through what we thought we were going to get and driving that through. So, it's a little bit about how we've looked at that.
Shelley Leonard (
Okay. So, what about kind of thinking about your team members? one of the things we've seen in, in certain places, and, and again, this doesn't even have to be in our industry, but it can be in a restaurant, when times are slower, right? In the afternoon, it's not busy lunch schedule, things tend to get a little bit slower and your service slows down a little bit and maybe, your lunch gets delivered five minutes slower than it was during the busy lunch hour because they're not hustling as much as they are when things are really busy. And, so you may see some things slow down as, or productivity decline actually when the market gets slower. How are you guys handling that? Are you seeing that? How are you experiencing that? What are you doing?
Matt Rochester (
We're definitely seeing it. I think I would be surprised if, nobody isn't. But yeah, we're, we're definitely seeing a decrease in productivity But we've, our executive leader, Dante Wilson has taken it kind of a, we're trying to restore, with us going through the merger, there was a lot of things with that that we had to work through. Then you throw on the volume. So really we're trying to take a look of restoring our teammates and getting into that. And that's not, I mean, we're doing the celebrations, we're trying to have fun with them but it's also like I talked about getting into those details what is and isn't working. but then as along with that is restoring those habits that are better to drive that productivity. So, we're really trying to take that this time that we are slow from a process standpoint, and one, let them breathe.
Shelley Leonard (
give them a little break.
Matt Rochester (
Yes exactly. And but then as well redevelop those habits that we need them to have to be successful, and to really drive that client experience, from that perspective. So that, that's been a big focus for us. We'll, we, we'll move into the re we're doing restore. We'll get into the reignite where we want to have that passion behind our purpose. And then, as we've been talking about, we wanna reimagine how we're doing business, and now is the time to be doing that. If we don't do it now, we wait for the next market turn, We're never going to do it. And, we see that with Intrus and so we're pushing on both sides, making the investment, doing what we need to do from an automation standpoint, but then also focusing on our people to have them enjoy coming in and, enjoying working for truest.
Shelley Leonard (
I think at Zactive's we're, doing definitely some of the celebrations and, and trying to make sure that we have time for the pleasantries that maybe we didn't have time for. Yes. when volumes were so high. And really rebuilding some of those internal relationships as well as obviously having the opportunity to come to conferences and see people face to face. It's really nice to, rekindle some of those relationships as well. in addition to that we're working on, the taking this time to up skill our people, right? Cross train them, give them additional opportunities, so that they can grow their careers within the company as well as looking at some internal retooling. So, where maybe were we not, gathering the right data so we could be measuring things as well as we should have been, to either identify bottlenecks in the process or, efficiency places where we had efficiency challenges, so that we can improve as we go. So it was running really hard and we really didn't have time to measure, and so we lost some of that DNA of, measure to manage. And, so I think that's a little bit of what we're doing as well, is getting back to some of that kind of core blocking and tackling of making sure we've got the data collection in place so that then we're looking at the metrics so that we're better managing, and in hopes that the volumes will improve and we'll need that as well. Bob, Karthik, anything for you guys from a productivity standpoint that is different?
Karthik Kumar (
I think, one thing about processes, you made a mention about, antiquated processes. Many times you have to go back and challenge, why did I create this entire, today your fulfillment is an assembly line. It's, in your own opinion, it has the best of processes and best of technology that produces the loan. Now, have you gone back and revisited, you probably created a manual process 10 years ago, and then there was another update, and then there was like, something happened, trid happened, and then you added some steps to it and you've never gone back to revisit, Why am I still doing it? That's right. My LOS is taking care of it. I'm, checking this, 10 steps down the line. I have a third party service that's verifying it, but even day till date, either it's fear of compliance, you wanna be compliant or risk, but I think this is a great time to just, refresh and, and have a fresh look. I'm not even talking about radical re-engineering of your processes. Just go back and see when was the last time you ever looked at one of your post close checklists and saw that, Do I need these 20, 20, 50 points at all? Because if a system's verifying it, if data is confirming it, why should I be doing it? the LOS are giving you responses today.
Shelley Leonard (
I like that, I think that question of why rights really important, why are we doing that? And sometimes the why is because the person that trained me told me that this is a checklist I have to follow. When was the Alexa on that checklist was updated? Why hasn't it been updated? Did it get updated the last time we, implemented the newest capabilities within our, our LOS? To your point, I think we forget some of the times to ask that why question?
Matt Rochester (
Well another critical item to look at at that is to that point Karthik. That is, if you've got a QA check and you're at 0%, on your error rate, are you, are you comfortable then with that risk? I don't think we looked at that in the past couple of years. So that's another thing that we're taking a look at is saying. Gosh, we've had two years and high volume where we didn't have this issue. Let's take that off our checklist. Right? One less thing that we need to test and maybe you check it once a year just to make sure that it's not broken anymore. Right? But it's one less quality piece that you don't need to worry about.
Shelley Leonard (
That's a good point. So, I'm gonna, we have about five minutes left. I'm just gonna, do a couple things. Number one, we're gonna end a little bit early. You're welcome. number two, I'm gonna end with kind of the look to the future. Yeah. Right? So, no one can say exactly when, and we all hope it's sooner than later, but what are you doing now and what should lenders be doing now to prepare for the next cycle, right? For this to turn.
Karthik Kumar (
Right I can go first. we spoke about choice of technology, some of the, emerging trends that necessarily lenders should keep their eyes open for. like today, everyone's talking AI ML, and it's not a false claim or any such thing. And I totally respect we needed the cognitive intelligence to come into the lending life cycle. You walk there like products like true, like true, which was called Soft works. They have this excellent thing and it's totally built on cognitive intelligence. I would just say that couple of things you have to look out for is do not invest in anything that is not considering AI ML in it. Your, your processes will still go back 10 years behind. If you're not promising your signing yourself for something that's five years ahead of its time. If you do it now, you'll probably survive five years from now. It just don't go back and choose that. like there are trends like blockchain, it's way far away from this industry. It's a bit too far ahead, but if title industry, where to ever adopt that, imagine, there are 3006 counties in, US and if one of them were to just convert their entire, title plant information or their entire registered records in smart contract, imagine that county would be giving you title reports, error free with audits for probably $10. So, possibility, game changer, possibility of what technology could do. But it's for some FinTech to go ahead and discover that. So I'm just saying there are some trends you have to look out for choice of technology choice or process. If not now, when? Right.
Shelley Leonard (
Bob?
Bob Hart (
Well, I'll take the LOS hat since, I think a big part of our responsibility for our customers is to be able to listen, to prospects and then to partner with our existing partners on where they're focused. I think, we've got an amazing, group of partners that are very open with us about where they want to go, and it's incumbent upon us to see what technology we can use to enable them. And, so I think, in the last two or three years we've onboarded, almost a hundred new partners. Wow. And, our goal is to continue to create that pathway to allow our partners to use our technology to innovate. And, I think that's, that's been beneficial, for our partners, but also it allows us to extend, encompass, and extend our platform with us, without us having to make the investment in all of those individual categories. Right.
Shelley Leonard (
Getting the best of the best.
Bob Hart (
You got it.
Shelley Leonard (
Matt, what about you guys? From a lender perspective? Are you thinking about the next cycle yet?
Matt Rochester (
Yeah, we are. And, we're hoping it comes soon, but aside from that, yes, we are looking at that, but we're looking at it more of we need to be better than we were. And that comes through the technology and the processes that we're looking at and, and making that investment now. Because if we're not doing that, if you weren't doing that within the last two years to be ready for even coming out of that and you don't do it now, you're not going to do it. And so I think the time, we've gotta be making the investment at this moment, or else we're gonna be, you're just gonna continually be left behind as a lender.
Shelley Leonard (
That's great. Maybe if we, show that we're ready for the next cycle. We can, we can get it here sooner than later. We can wish it that way. So, again, we are gonna go ahead and break. We thank you guys for participating in the last session of the day and invite you to join us in the exhibit hall for refreshments. Thank you.