In our Hot Topic this week we have Troy Anderson, Director of Mortgage & Lending Solution Sales @ Finastra to discuss whether financial institutions are becoming more of a one-stop-shop for mortgages and why!
And as far as all of Finastra’s technology components whether it’s, the customer experience when they’re not even a customer yet all the way through, managing that through the core process with their solution. But as far as the LOS goes they are focusing on their mortgage bot which is end-to-end. And this is really their thoughts around, the end-to-end piece, as it stands with working for componentized platforms in the past, where you have multiple integrations, that fingers could be pointed. So as far as the five things to consider as far as the end-to-end option goes the real value. And VALUE is brought up a lot because feature functions ultimately result in some type of value. Some of them don’t, some of them might just be widgets that may demo well. And you’re like, this is great, but it really doesn’t provide that much value. And they have seen that when they have been doing demonstrations, they wouldn’t really focus on that too much, it might be cool, but it doesn’t have as much value as some of these other things. So the end-to-end process value there is basically one vendor and one support path and what that amounts to is efficiency results!
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5 Key Things To Consider For Mortgage LOS And POS With Troy Anderson
It is Monday, April 18th, 2022. I’m glad you are here with us. Someone told me, “You are too happy.” We get to talk to thousands upon thousands of mortgage professionals and people involved in the real estate finance industry in one way or another. It is such an honor. We are glad to be here with you and share this informative episode with you. This show is created by us, Mortgage Professionals. It is for mortgage professionals. We are grateful to have you as our reader. We say that each and every week. Our commitment to you each week is to bring you timely information that you can tune in anytime and anywhere.
I was listening to a book, Patrick Lencioni, you read that I refer to him all the time, and I listen to it. It is called The Motive. Everyone who is reading this, you need to get the book from Patrick Lencioni. If you have read it, go back and read it. It is such a great book. I listen to it on Audible. I listen to it at about 101.4 speed. I get through books a little bit faster and my retention is better. They say they did a study that if you talk quickly, as long as you put a pause in there once in a while, your retention rate goes up for those of us who speak faster. I don’t know if it was a fast-talking speaker like myself that did say that.
On the Hot Topic segment, we got Troy Anderson, Director of Mortgage and Lending Solutions at Finastra. This is more than a sponsor. They are doing some leading things with financial institutions. They are becoming more of a one-stop shop for mortgages. He is going to explain why when we get into the Hot Topic segment.
I don’t use Finastra. I got Ellie May or Black Knights. All are great systems, but isn’t it interesting to hear what is going on in technology? We got Allen Pollack. He dialed in. I’m excited to have Allen in the house. He will be talking to us about a report back from Las Vegas, where the tech conference took place. We will get a report from him a little bit later on.
We are grateful to have you as our reader. We are proud to be a part of IndustrySyndicate.com. Check out all the episodes there. I got a couple of calls from PR firms, one of which is a leading PR firm in New York. They said, “We are regular readers. We are not mortgage professionals, but we advise companies on where to best advertise and where to get their message out on. I look at your show and your regulars. You are funny, but you got some great gifts.” I’m going to take that anyway.
We also have some great sponsors. I want to say thank you to the Mortgage Bankers Association of America. We are grateful for our relationship with them. We say this each and every week. If you do not have the Mortgage Action Alliance App downloaded on your smartphone, do it and have your voice heard on the hill. MBA is doing the best job they can to help with what is going on. They sponsor some great conferences like the one they did, the Tech Solutions Conference and Expo in Las Vegas. We are going to get a report on that.
Also, Finastra Fusion Mortgagebot Solution banishes store, retrieve and deliver files in an electronic format in a completely paperless environment. It is going to be what Troy Anderson is going to be talking about. What are other trends there? You should pay attention to it. If you don’t use Finastra, even though you are not looking at another solution and learn what the leaders are doing. They are the number one fintech company in the world. They didn’t get there because they did stupid strategies so pay attention to what Troy had to share.
Lenders One, it is great to have them as a sponsor as well as The Mortgage Collaborative. These two co-ops are two great ways for you to connect in a more intimate setting with other lenders and vendors that bring specific solutions. They do not negate the importance of being a part of the MBA, but these two co-ops will help you connect with others. We are members of both. Others are members of both. You should pick one or the other at least, but I encourage you to be members of both of these.
Total Expert is the only purpose-built CRM and customer engagement platform to create growth and loyalty for modern lenders and financial solutions. They have a great solution when it comes to recruiting. Everyone was calling us. They were like, “Lykken, I heard you got a great recruiting program.” I do have a good recruiting program that works well, and it needs to be powered by a solid CRM. Total Expert is the one I recommend, not because they are a sponsor, but because it is good. Read the episode we do on March 14th, 2022, with Joe Welu. He did a great job talking about his vision and where things are at.
Knowledge Coop is a great way for you to connect with your community. They have launched their new product. We did a special episode on April 1st, 2022 and Ken Perry laid out that vision. Check it out when you go to our past episode. As well as Mobility MMI, Mortgage Market Intelligence, and Modex, which is also a competitor.
They are competitors, but they are a great complement to each other. If you are recruiting and looking for intelligence about who you are recruiting, you need to use both of these apps or at least one of them. You should have both of these in your pocket because each of them is complementary to each other, and they do a great job at helping identify who is going to be the right fit for you in your organization. We have a relationship with Snapdocs, working backward from the future where everything closes in a flawless experience. Their aim is to completely eradicate errors from real estate transactions. Check out the interview that we did with Briana Ings on March 28th, 2022. She got into the vision. It is amazing.
We want to say thank you to SuccessKit. They do a great job increasing your business by telling your story through the stories of your customers. We are using them for that purpose. Brent Emler and Brett Brumley are over there at Lender Toolkit do a great job with their technology, as well as FormFree. We appreciate them so much, as well as SimpleNexus. We had Lori Brewer on what is going on in SimpleNexus. You got to pay attention to this company. It is one of the up and commoners. They bought LBA Ware. They are out there being aggressive in the marketplace with a great vision. We are thrilled to have them as a sponsor. Also, DW Consulting. Debbie Wemyss and her team tell you how to set up your LinkedIn profile.
We have many sponsors, and we are grateful for all of them. A special thank you goes out to Rob, Les, Alice, Allen, Matt and Jack, my co-host for this show. Welcome to the Hot Topic segment. It is a beautiful April 18th, 2022. We are excited to have Troy Anderson, Director of Mortgage and Lending Solutions sales at Finastra. We could be discussing here what is going on with financial institutions. Are they becoming more of a one-stop shop? Yes, they are, but why? We are going to get into those talking points. Troy, it is good to have you here. I’m so glad to have you be a part of the show.
Thank you for having me. It is a pleasure to join you.
I want our readers to get to know you a little bit. Talk a little bit about your career path and what brought you to this point so our readers can get to know you.
It is a circuitous route to where I have ended up. I feel truly blessed with the opportunities that I have had throughout my career, in particular, starting with commercial lending. Out of college, I joined Bank One, which for those of you that are younger, you probably never heard of that bank, but it was a good size regional bank that ultimately is part of Chase. It is a great credit training and other things.
I did that for about nine years. The risk taker and the entrepreneur in me ended up going to work for a startup at that time. It was more of a consumer-oriented LOS. We had two small babies at that time. My wife let me do it. She went back to work on the weekends, and I took over a 50% pay cut. Ever since then, I have been in fintech. It was a great move. We ended up being able to sell that particular company and do well with that.
I have moved around throughout different fintechs focusing on commercial mortgages and the consumer. Part of that was great with my banking background and commercial lending. There are some cases where you have small clients. Small, meaning a couple of million dollars or less in total commitment and loans.
You may have a dad that runs the business and you got to do a car loan for his kids. You better make sure you do it, but you still have to document it correctly. It is the same thing for mortgages. I had to do a couple of mortgages and get some private banker people to assist me with that back in the day. That has been a while, and things have changed a lot since those days with the mortgage space. Not just from technology but the oversight and other things.
Throughout my career at the beginning, many of you guys have gone through banking school. It used to be the 3 C’s of credit, back in the golden times, as I have now referred to it. Now, it is the 5 C’s of credit, and it applies primarily to all loan types of activities. I use those to guide me through my career, even selling technology for the last several years and not being a direct lender. I didn’t miss the direct lending piece because it took a lot of writing, especially in commercial lending, and I didn’t have to take things to the committee or other things.
One of the things I’m most interested in from Finastra’s perspective is you guys have a large install base of financial institutions. It is where your influence is. There are some things that the financial institutions are doing that are interesting. They are focusing more on being a one-stop shop for mortgages. I wonder about your insights as to why that is.
There are a couple of different things, and being with a variety of different sizes of fintechs and understanding the support and implementation of other things. As far as an end-to-end solution, you may not be aware of David at this point that we can run a bank from beginning to end. All of our technology components, whether it is the customer experience when they are not even a customer yet, all the way through managing that through the core process with our Fusion Phoenix Solution. There are other companies that do that too, but we feel like we do it very well.
As far as the LOS goes, we do have multiple LOS. In this case, we are focusing on our Mortgagebots, which is an end-to-end solution. This is my thoughts around the end-to-end piece as it stands with working for componentized platforms in the past, where you had multiple integrations that fingers could be pointed and other things.
As far as the five things to consider and the end-to-end option goes, there is real value. I’m going to say value quite a few times throughout this because feature functions, most of them, ultimately result in some type of value. Some of them don’t, and some of them might be widgets that may demo well, and you were like, “This is great,” but it doesn’t provide that much value.
I have seen that when I have been doing demonstrations. I’m like, “I wouldn’t focus on that too much.” It might be cool, but it doesn’t add as much value as some of these other things.” In the end-to-end process, the value there is one vendor and one support path. What that amounts to is efficiency results. The percentages will vary. I have had clients in the past. We were not the problem with the vendor I was working for, but you get vendors that start pointing fingers. It makes it difficult to work.
We got with Mortgagebot in the end-to-end piece is the POS. We have a standalone POS that goes into the LOS. It is fully integrated third-party type integration because we are all one company. The customer experience is out there for them as well as being able to ultimately push it into that LOS. Having one vendor to visit with having one common platform to work on internally from an admin perspective is important. That goes from my several years of experience, not just the times that I have been at Finastra.
If I weren’t doing vendor selection, I would be highly focused on that because of the things that I have seen that can go wrong and cause some pretty strong tension in some cases. The other part, besides being an end-to-end solution, we and a couple of other companies have a large marketplace in FusionFabric.cloud and the marketplace is like you are going to the Apple Store. You can see the value-add vendors that plug into our POS or LOS that are providing value in a number of different ways.
We are talking about AVM services, pricing services, and allowing for a bespoke type of product that you can end up with. It allows the client on their own, in some cases, to add those components that are unique to their needs. For those of you guys that have bought software before, sometimes you buy things, and 20% of it you know you are never going to use, but you are still paying for it.
In this case, this is a situation where you could say, “This product has this, but they don’t have these other couple of things that they pointed out they have this in their marketplace. They are open APIs for our platforms.” One of the requirements, depending on the level of the vendor of who it is, they need to have the open APIs. They can be plugged in and unplugged easily when necessary.
The value around all that is a better, faster and bespoke process providing the customer with exactly what it is that they need. It should result in more low revenue and less FTE expense because they can automate some of those things from the APIs that we have available in FusionFabric.cloud. As a point here, some people have asked around these marketplaces, “Aren’t you allowing competitors into your space?” It is about coopetitions. You are cooperating with your competitors.
That is what Allen was talking about in Las Vegas. There is a lot more of that interest because it is important.
Make sure to protect what it is they need to protect on either side, but at the same time, they also realize that it helps the client win ultimately to be able to have that experience, and it makes very less frictionless vendor search, quite frankly for the client.Real estate agents protect what it is they need to protect on either side. At the same time, they also help clients to win and enjoy a good experience. Click To Tweet
Alice, do you have any questions around the second point that he made? Did you have anything as you were listening to financial institutions?
I was listening to the API connectivity. I know it is always an important piece. I love the term coopetition. I have lived that in the past. My question is, is there anything else that go-to-market and those value-added services that you are referencing that help make this effective in the future?
In the future, it is going to be as effective as it is for our phones. When you change employers, through your phone, you can get your 401(k) from your previous client, roll it over, and you can add the new payroll system that you are using at your new employer. You can do all these different things personally that are ultimately are relating to your professional life. It is a more bespoke solution. Several years ago, here is your system. You want us to interface with this thing. It is going to be a custom project. It is going to be five figures in customization, and you will have it in 6 to 9 months, versus you can have this in 1 or 2 weeks for something specific to you.
We are proactive in Finastra working with will we view to be a value add that some of the markets may not be aware of. We go out and try to proactively say, “We don’t own them or anything else.” We are partnering with them because we feel like we can add value to their solution, and they are adding value to ours, which ultimately is passed on to the client. The model works well. It is going to reduce the number of acquisitions and things, depending on if you are a niche player as far as the marketplace goes. If you are a niche player, the other people with marketplaces are going to be chasing them. I don’t know if that answers your question or not.
It did. It added some great color. Thank you.
Let’s get over to Allen. The key point number three that you want to bring up has to do with configurability. Allen?
It is great to talk with you. As we build technology and offer technology, configurability seems to be the biggest thing. From your perspective, dealing with financial institutions and everyone is going after the same thing but doing it their own secret sauce way. What is configurability and importance for you and your customer?
I have been an entrepreneur a few times over like the rest of you guys are. When I built out a LOS a few years ago, it was critical to me to have a medium-level user being able to do admin functions because it is more about admin functions versus the end user. The end user needs to be great, but from an admin perspective and to be able to keep up with changes, there need to be ways to handle integrations for a different basic type of things internally.Keep up with the changes. There are ways to handle integrations for different types of basic things internally. Click To Tweet
More important is when credit policies change or anything that can change on a regular basis. As new regulations appear, how quickly can we do that? Do we have to wait on our vendor to do it? Do we have to have an internal IT person or developer to manage that process? That is great, but you are adding more cost to the cost of your system whenever it does take those developer-type people to be a system admin reducing their profitability. What we focus on is, as much as we can, making sure that anything and everything can be configured through checkboxes, tables and other things versus actual code that is going into modifying the solution.
Jack, when it comes to a little bit about robust decisioning.
Troy, at the top of the show, as you were discussing your previous work history, you talked about. Being a financial institution guy is a manual process. That is a preparation for matriculating through the credit committee. David talked about robust decisioning. How are manual decisions impacting revenue for financial institutions, and how does your solution help?
It will help in a number of different ways, from who is interested in buying this loan ultimately at the beginning along with the various rates and closing costs being in there. Robust decisioning has been my experience that I have had in LOS over the years. If they are not doing any auto-decisioning now, you take baby steps, maybe the top 10% and bottom 10%. We look at everything else in 80%, but as you are doing that documenting, why are we not auto-approving, or why are we not auto-decisioning those within that 80% band that you start with?
A goal of being at 20 top and 20 bottom and another 60, and flipping that to where you are getting 30/30 and 40 in the middle. A funny story is this has been quite some time ago, but I had sold to a relatively large bank, a consumer LOS, and they swore up and down with fifteen people in their bank saying, “We will never do auto-decisioning.” Several years later, they were auto-decisioning 60% of the loans.
Never say never is where I’m going with this. What that does is it is less about saving money on that time, especially in the mortgage space. A manual decision can take a lot longer. It is much more than a car loan. They may make a manual decision. From what I have seen, it is not necessarily a study, but you can have some healthy credit risks that are getting manually underwritten and by that point, they may get tired of it and say, “Forget it. I’m moving on. I’m going to someone else.” They get a response in 24, 36, to 48 hours. That is great because that is going to help you get that deal, but the other thing is compliance, three times over for auto-decision.
Auto-decisioning is the ultimate inconsistency. It eliminates concerns and preparation for exams. In the case of buybacks, it should eliminate those for the type of buyback scenarios that would be affected by that credit decision. It is not AI at all. The lender is usually setting those types of things up on their own, but it is the ultimate inconsistency.
I have talked to many lenders like you guys probably have in my several years in fintech, and that is one of the main things I hear about why they are looking for a platform or to change platforms. It’s like, “We got to be consistent.” Along with that, you also have to have robust reporting. You need to be able to generate those reports that prove to the examiners, whichever governing body it is. We have talked about what we are doing and how we change these things, but here is your proof. That reporting needs to be generally very easy and configurable by a business person.
Another pickup is over on the fair lending side. Humans can look at the same set of data and make different decisions, whereas, in an auto-decisioning environment, you get more consistency with regard to decisions that we all know that translates into a risk bit for fair lending.
Allen had texted me with a question he had for you on this point that you were making a moment ago.
As I’m listening to what you are saying, Finastra is a big company, and you do so much. I was in your space for a little bit working with financial institutions and helping them bridge the gap. What is your edge? What do you think now that you are the target for a lot of financial institutions, and why should they be considering working with you? That has been on my mind, and I’m sure some of our readers are thinking the same.
I will say for people that are looking. It is a known platform. We have tremendous support. We got different support options, but more importantly, we have got 1,000-plus primarily financial institutions, not necessarily on the mortgage side. We haven’t been as focused on them which we are moving our focus toward that. I have only been on board with Finastra for several months. One of my initiatives is to get more into the mortgage lender space and mortgage brokers. We are making some headway there.
The fact that we got roughly 1,200 or so traditional FI’s utilizing the platform both from a POS as well as LOS space, we are well grounded in that space. We understand that well. We also understand that the company had been focused on mortgage lenders and mortgage brokers. We are finding with our POS and significant interest in the brokers that are out there. They are interested in it. It is easy to use.
We partner with other POSes. They don’t have to use our POS, but they got another one that is out there that standalone. We do have back-and-forth integrations with them. We are flexible, and there are other marketplaces that other vendors have. Ours is very strong, and we can add to our marketplace easily and quickly to satisfy those clients that need something.
We got one question I do want to ask you. That is one of the key points that you raised, especially with your unique position in the marketplace as the number one fintech company in the world. I’m going to stress that. What do you see as the next big thing in the lending arena as inferior as a whole?
I can answer that quickly. It is HELOC. I see more articles about HELOC for a variety of reasons. Number one, a lot of the big players have gotten out of it, or they positioned themselves out of it by still charging thousands of dollars in closing costs when you can go get one for no cost. There is pen-up equity. You guys were talking about these 5% rates. I’m like, “I will get a HELOC.” It is all about HELOC. There are some aggressive lenders out there, but we are talking to you now from the time they approve until the time they close. It all needs to be mobile and a single point of contact from a technology perspective. We need to be able to close them in as quickly as five days. That is where I see it going.
Jack, as you listened to this, any parting comments or final comments as we wrap up this?
One of the most important statements that got made during the course of this episode is that technology needs to be viewed in the framework of return on investment. Troy talked about that through automation. You got to look at those tasks that you have to complete to finish a loan. You got to look at the time and the cost from a labor standpoint to complete those tasks.
If automation can reduce the amount of valuable and costly work effort, you got a good ROI by implementing that technology. A lot of what Troy talked about along the lines of automating the decisioning process will drive a lot of cost savings that lenders are going to need over the next couple of years, David.
No one understood that more than when you were building at Texas Capital Bank back in your fully employed days was the correspondent division. I had the privilege of working with you. You always had such a vision for that, Jack. It is good stuff. Allen, last thoughts.
If I were a financial institution and I had online banking like Finastra, I would be considering pulling everything together. Troy, I’m echoing everything you have said. You guys are on their way to some greatness, and your clients are going to continue to see the benefit of that.
I’m also excited to see what you can do inside of the mortgage space now that you are helping the company focus more on the IMBs in the marketplace. We are thrilled to have heard you here. Thank you so much, Troy, for being here. I appreciate the financial sponsorship of the show and your comments. Thank you, sir. I appreciate it.
Thank you. Nice to meet you.
Next episode, we are going to continue down the theme of that. The company that Allen used to work for was Fiserv. We are going to have Christopher Brown come on and share some of the thoughts. We are looking at the financial institutions, especially when you look at where the market is heading and the bigger role that the financial institutions are going to be playing, especially with the HELOCs, as Troy was talking about.
We are going to have Christopher Brown on to talk a little bit about it from the perspective of Fiserv. Allen’s old turf. I’m excited to have them on. Let’s get over and say a big thank you as we exit out to our sponsors, Finastra, Lenders One, Mobility MMI, Modex, the MBA, Knowledge Coop, The Mortgage Collaborative, Snapdocs, SuccessKit, Lender Toolkit, Total Expert, FormFree, and SimpleNexus. Check out all of our sponsors on the Lykken On Lending website. It is good to have you with us, everybody. Have a great week. I look forward to having you back here next episode with Allen’s update on technology. I can’t wait for that, Allen. It is going to be fun. Talk to you soon.
- The Motive
- Allen Pollack – LinkedIn
- Mortgage Bankers Association
- Mortgage Action Alliance App
- Tech Solutions Conference and Expo
- Future Mortgagebot Solution
- Lenders One
- The Mortgage Collaborative
- Total Expert
- Joe Welu – Past Episode
- Knowledge Coop
- Ken Perry – Past Episode
- Mobility MMI
- Briana Ings – Past Episode
- Lender Toolkit
- Lori Brewer – Past Episode
- DW Consulting
- Troy Anderson– LinkedIn
- Debbie Wemyss – Past Episode
- Fusion Phoenix Solution