Lykken on Lending

It’s not the biggest and flashiest that remains in the game, but the most trusted, consistent, and dependable. This is what Byte Software steadfastly aims for. Driven by its mission to be the most trusted LOS on the planet, Byte Software has been serving mortgage bankers since 1985. In today’s episode, David Lykken sits down with none other than Mark Todd of Byte Software to talk us further into the amazing things they are doing to provide lenders with the freedom to do business the way they want. Mark touches on their LOS differentiation, sharing what they do for both the small and big guys in the industry that makes them stand out from other loan origination software out there. Plus, Mark talks about their one-year contracts, their partnership DNA, support systems, and more. In times when markets are erratic, we all need the accessible and easy-to-use tools we can get. Join this conversation and get to know more about Byte Software and what it can offer you in your journey to mortgage success!

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Watch the episode here

Byte Software And LOS Differentiation With Mark Todd Of Byte Software

Readers, we are in for a real treat. We’re going to be talking technology. We do a lot of that on here, but the person we’ve got as our guest, Mark Todd of Byte Software, is like my brother from another mother. I love technology. Mark, it’s good to have you joining me on the show.

It’s quite a privilege to be on the show. We appreciate you having us.

We’re thrilled to have you as a sponsor. We get to work with Bobby Palmer all the time. Bobby is here as well. I’m fascinated by your background and where you’ve been because it’s a great story. Also, Byte is a great story because it’s changed so much. It’s been around for a long time. It’s been a very low-profile type of product. I respect that in many ways because you’re not out there beating your chest and the drum on it. You consistently show up. There are a lot of folks who may not be familiar with Byte because of that low-profile approach. With Bobby being there, I know that’s going to be changing. I’m very excited. Let’s start with this. Who is Byte Software?

That’s a great question and it’s one everybody should start looking at when they look at vendors, “What is the DNA?” Our mission is to be the most trusted LOS on the planet. Not the most feature-rich, not the flashiest, not the one with the biggest booth at NBA Tech, which is no longer. That’s even more funny, but it’s to be the most trusted. That means consistent and dependable. Byte has been serving as a mortgage banker since 1985. A lot of people don’t know that. They think we came lately. We’ve been under the same parent company for many years. That’s consistency. That’s Mark and Bobby puking you. We’re going to be the most trusted LOS on the planet.

It’s easy for any of us to say who we think we are, but what every business leader learns is your market ultimately defines that for you. You don’t really have that much of a say. You either are or you are not. I’ll share a quick anecdote. About a few years ago, I reviewed a STRATMOR LOS survey. Those are the first coming out. I was using Byte at the time. I was an early adopter of the mortgage banking platform, BytePro Enterprise. I looked through this STRATMOR LOS survey. It was the only LOS that customers reported being happy with.

Long and short, I called up my contact at Byte about an hour later and asked, “How can I get on that team? I like Byte, but it seems like all of your customers really like you.” That was a foreign notion. To take that a little bit further, that was in 2015. Shortly after that, I had a customer call me up. She was like, “I have to share this story with you.” “Hit me with it.” She’s like, “I was at this NBA event. The speaker was speaking. During a speech, he said, ‘I bet all of you in this room hate your LOS, right?’” It was a rhetorical question, but the girl could not let it go. She stuck up her hand and interrupted his speech.

The guy is like, “Can I help you?” She’s like, “We love our LOS.” He’s like, “What LOS are you on?” She’s like, “I’m on Byte.” Then a girl, two rows over, jumped up and said, “We love our LOS too, and we’re also on Byte.” The takeaway is at our core, Byte is all about happy clients. That is who we are. I’ve tried to wrap my mind to where that’s coming from. It comes from a lot of things, but central to that endeavor is we exceed expectations. A lot of people have good products out there and services in the industry, and they oversell it. Their customers hate them. Who are we? We are a company that’s going to accurately represent our value proposition, and then we’re going to work hard to deliver a little bit more than that. That’s who we are.

I love that part of it. We’re going to talk later about cost, but I want to put this at the front side of this interview. One of the other reasons is you have a very short contract. You don’t hold and lock people up for a long period of time. We’re going to talk about that. You are one of the most affordable solutions. A lot of people, because of your low profile and where your roots were at initially, say, “It’s a great starter system, but does it get us to where we want to go? It’s for the small guy.” It’s about how you’ve changed or grown.

Somebody asked me, “What does Byte do for that small guy or front-end originator?” It’s hard to say it concisely. You try to explain to somebody, especially not in the business, “What is a loan origination software?” There’s so much to that. Concisely, I’d say we manage the chaos that ensues between the time that a loan officer takes a loan application and the time you sell it on the secondary market. That shows what we do.

Our clients are able to construct consistent, repeatable, chaos-proof processes that are of their own quality. If you don’t have quality at the end of it, then what good is the extra loan? If you get one more loan and sell it as a loss, you’re going the wrong way. There’s a lot of risk control in that equation: underwriting risk, compliance risk, lock management, or hedge management. We give lenders the tools to sleep well at night, knowing they have solid controls around each of those risks is what we do.

Are we for the small guy? We get that response. It’s true. I want to own that. From 1985 to the 2000s, our legacy, BytePro Standard Product is what it was called. It focused on origination. It was a little flat file system. Although we came out with an updated BytePro Enterprise platform in the late 2000s, that was targeted more at full-service mortgage banking. We continued to offer that Legacy BytePro Standard product until it was retired.

As a matter of fact, people are using it when you take it from cold hands and you can have my BytePro Standard back. A lot of folks have worked with BytePro Standard in the past, that may be the only impression they’ve ever had of our software, but there’s a whole other platform out there in BytePro Enterprise that is more of a database-oriented sequel back in, all the bells and whistles.

When I first took this job at Byte, I called my dad. He’s an old mortgage guy. I was like, “I took this job at Byte Software.” He’s like, “I know everything Byte back in the day, this and that.” I’m shaking my head. It’s not my father’s Oldsmobile. It’s a very different product. We have discontinued the old BytePro Standard aimed at small broker shops. I would exude that Byte’s not just for the small guy. Our new BytePro Enterprise, a small guy can take that product and he can survive on that too. We also have lenders doing thousands of loans each month on the BytePro Platform.

If you see CMG, Gateway First, AtlanticPay, Radius, and Northpoint, some of those shops were on Byte when they were doing a couple of hundred loans per month. We’ve had the privilege of watching them grow and win market share on our platform. Most shops in that journey would have jumped onto 1 or 2 other platforms that they outgrew. It’s generally true. Most LOSs are typically geared towards either small shops or very large shops. Byte is the Goldilocks in that regard. I have proven cases over time of lenders that have made that transition from small to big. Byte can work for the small shot and can scale up in a big way. What’s important to think about is scaling down.

Especially from a cost endpoint, you want to be able to have the full functionality that you have and that’s what you guys do have now as an enterprise-class LOS system. You have the full range of everything that’s out there. The most important part of this market is the ability to contract as the market is doing.

I used to do a lot of consulting and I would tell lenders, “To use platform A, that’s going to get you to buy until you get to volume X.” If you want to get to volume Y, then you need to get on platform B. There’s a lot of shuffling. It works in reverse as well. You can end up with an LOS that’s maintenance-intensive and becomes an albatross or a boat anchor for you, especially if you’re stuck in a long-term contract that was based on 2021 production numbers. You’re stuck in that for the next 3 or 4 years or more even. Propelling your business can suddenly become an albatross for you.

That’s going on in many places. AtlanticPay is a client of mine. They use it. Radius Financial was a client of mine. I still consider them my clients. We’re very close. Northpoint Bank has been my client for years. When you say they love your system, they all rave about this system. There are many aspects of it, especially when it comes to the part of the scalability moving up and down. Everyone’s business is off 50%, 60%, and in some cases, 70%-plus. They have got to have a vendor work with them. How did you guys get there? Most people are looking like, “We’d like to have you go up, but we’re not going to let you go down.”

I don’t necessarily have a perfect answer for that because I’ve only been here since 2015. A lot of it is baked into the DNA. This is my best guess. Maybe it’s because our DNA started with that small guy. To use features, we love our customers. We love having great support, but it’s better if our customers are using the system and don’t need the support. We learned very early on to put a lot of focus and energy into making that experience intuitive. You don’t have to be a programmer or write code to take advantage of 98% of what our system is capable of doing.

We make it very simple to use and administrate. When I first got into Byte, the first time I looked at it personally, I was like, “Isn’t this cute? Fisher-Price is my first LOS. You put the red square in the square. You put the green triangle on the triangle.” It’s easy. As you start digging in, you’re like, “There are a lot of sophisticated features here.” You said, “I bet you can’t do this.” You stumble across and you can do that, “I can add my own custom screens and fields. I can write validation rules. I can write automation. I have to be Bill Gates to do those things.”

It’s a sleeper LOS that looks benign, very simple and the simplicity almost lulls you into a false sense that the program itself is simple. It’s not. There’s a ton of sophistication behind that. That allows small lenders to take advantage of a lot of the features that are there. The point I would make is a lot of people have LOSs that have some great features. They don’t even know the features. They don’t even try to administrate it because they’re lost. What good does the feature unless it’s easy to use?

There are other reasons we can scale those larger companies, meeting them where they’re at and API capabilities. They may want to create their own custom applications. We’ve responded with those types of tools that keep them in the game. We’re never going to be on the exact same roadmap, but they are. They can take control of their own destiny. You’ll pursue their own customizations and applications.

Byte Software: We’re never going to be on the exact same roadmap they are. They can take control of their own destiny, pursue their customizations, and present their own custom applications.

One of the things that I love about your roots is that you worked with small or little guys. When they are starting, you grow with them. Now, we’re in a case where a lot of companies are having to go back to being sometimes small. I love the fact that that’s in your DNA. There’s a sense of partnership with your customers. The clients that I have that are using that is how they refer to you.

They don’t use the word DNA. I like that word. I want you to expand on that, but they’re talking about the partnership they sense they have with Byte, which gets to the one-year contract. It’s a vote of confidence. I go, “My consulting gigs are month-to-month because if I’m not adding value, then I can exit out. I love that.” Talk about this. In your contract, what’s behind it?

I inherited the one your agreement deal when I got here. That’s the first thing that I asked. I’m like, “What? We’re only doing a one-year agreement?” I had that as a customer and asked the same question of Joe Herb, the president here. He also wrote all the code originally around our BytePro Enterprise platform. I asked him like, “Why are you only doing a one-year agreement?” He’s like, “I’ve never needed to do anything longer than one year.” That’s a powerful statement.

That’s because we’re all about happy clients. If a client’s not happy with what we’re doing, we wouldn’t want them to be tied down in a bad marriage. It wouldn’t be good for either of us. It does create a sense of partnership. Let me say this. I have agreed to longer price lockdowns to benefit the client, but I’ve never tied a customer down for longer than a year. The way I look at it is that Byte and I have to continue to earn the lender’s business year in and out. If I’m a lender, I want all my vendors to share that prerogative.

I love your DNA. I love the fact that you have a contract for one year. That speaks of such a play from a place of confidence. You don’t worry about losing clients when you treat them right. When it comes to customer service, how are you able to bring that culture about where you know them, they know you and you have people standing up in an audience at a conference saying, “We love our LOS. We’re not like anyone else.”

It’s two-fold. You have to have a good product. They’re not going to love you just because you’re nice and you pick up the phone and know their name, but something I hear across the board from our customers is that our technical support is a huge differentiator for us. They go, “How can that be?” I’m like, “It’s simple. We answer the phone. You have US-based support. You talk to real people.” To expound on that, the average tenure of a Byte employee is under ten years. That’s our average. We have people that have been here going on 30, 20, or 15 years.

When our customers call the support desk, not only are they expecting that we’re going to pick up the phone, but they are pretty much expecting that they’re going to get somebody that they already know. That person already knows them. That’s something our customers give us feedback on consistently. They like about us. They are like, “I know Michael Heflin on the support desk. I know Chad Franzen. I hope Courtney gets this ticket because I know she’s good with this stuff.” That’s awesome because there’s a relationship.

There’s a partnership there like, “We’re only here for one year. We got to continue to earn that business.” Support is one way we do it. We have modern infrastructure. You can go to our community site. You can self-service your tickets. You can get 24/7 help there, watch videos, and look with artificial intelligence that’ll help you query. Look at your support case and give you suggested answers, but there are times you need a human in this business. When you need a human, you’re going to have a human to talk to.

Byte Software: There are times you need a human in this business, and when you need a human, you’re going to have a human to talk to.

People love doing business with people they know and like. Communication is the other thing. When I’m talking to my clients who are using your system, they feel like they know you. They like you. You’re not this big behemoth, yet you covered the full gamut. You start your roots of the small. You still could take care of them, but the enterprise-class LOS solution that you have, we need to drive that point home in my mind because a lot of people say, “Yes, but that big one that merged with that other big one.” You can’t hold a stick to them, can you? What I want to achieve out of this interview more than anything else is you can go further.

I mentioned how easy Byte is to administrate. It’s very powerful. You can do a lot with it. When you get to a more advanced, let’s say, a lender that’s doing a few thousand loans a month, I don’t want to be arrogant or egotistical about what we’re doing. Those guys are smart. They have a vision for what they want to do. My main job is to give them the tools they need and get out of their way. I don’t want to make that sound lazy, but you have other LOS that are trying to protect their position or their next strategic initiative.

Byte Software: Give them the tools they need and get out of their way.

I’m looking for ways to make sure that my clients are successful. That means hooking them up with a vendor that I didn’t have on my radar. I’m going to try to meet my customers where they’re at. I want to try to enable them to do that. We make the program highly configurable so they have a lot of control within the program to do what they want. We also have what I consider to be the industry’s most robust set of APIs. That’s what my vendors and my clients tell me. I’m not a technical wizard. All I know is we expose more to them and allow them to do more with our API rather than adulterated, where other LOSs may only give you a narrow set of APIs.

“Here, you can do a lock request here. You can do it this and that.” We pretty much open it up to anything a user can do. Let me take that a little bit further. When you get to a larger lender, they don’t want to puke out what everybody else is doing. They want to create their own personality and customer experience. They don’t want you to get off the shelf. Normally, that’s a tough proposition, “What? You’re going to make your own POS? You’re going to integrate credit, DU, and LP? You’re going to stay on top of those integrations. Now you’re a technology company, not a lender.”

Our API is not just poking data into the system and not just working with documents, but you can call up our services. You can call up our DU two lines of code, this type of submission, this user and it will run to you. It will put all the results back into Byte with a reference number. When a user goes into Byte, everything’s there as it should be. You don’t have to write a DU integration. You call up our two lines of code. DU, LP, credit, and appraisal orders.

These guys make changes. We’re making those changes. You’re not going to maintain that. You’re still calling up the same two lines of code, appraisal order, and this type of appraisal and you’re on your way. Giving somebody those kinds of tools to tap into for automation or building their own custom apps is where I say, “Give them the tools they need. Get out of their way.” That’s what they love about us. We’re there to support them.

I’ll try to make as much happen on my own. It’s more expeditious that I do so, but when I get stuck, I want to be able to pick up the phone and come back to talking to people you know, love, and trust. We’re looking at this market and we’re looking forward. It seems like the markets are getting more erratic. In other words, they used to be smooth and nice oscillations. We have growth and contraction growth. That wavelength has gotten compressed.

Now we spike up the $4 trillion to $1.3 trillion or $1.7 trillion or whatever this year’s LOS. We have a look at it forward. We see all the Baby Boomers who want to buy homes. It’s conceivable. We could spike up well over the $4 trillion mark. These peaks and valleys are exhausting to the industry. How does Byte respond to this? I don’t see that going away. Those trends are going to be addressed. How is it that Byte is responding to that?

We talked about how Byte is very scalable going up and down. Inherently, if you are a secondary guy with Byte, you’re somewhat hedged in that regard. I’m hedged with a system that I can maintain as a smaller guy. I can pair it back. If I get huge and my marketing guy wants to create a specific consumer experience, then I can hire the team to create my own consumer portal. A big focus for us is being best of breed and integrating with various thought leaders in the business. The elephant in the room is that it’s on everybody’s mind these days or AI, for instance, “Do I have a group of AI specialists back here?” No.

If I did, would they be the best or would they have the best product? I don’t know. There are several companies out there doing some pretty amazing things. Each of them is picking their little niche. My customers are using those, but I’m not in the horse-picking business. I don’t want to pick a specific horse in that race. I have no idea. I have a crystal ball. If I shacked up with one of those guys and said, “Let’s make these native Byte features, what if somebody else is the leader tomorrow?”

I’m stuck in a 10-year agreement and the customers are stuck in 5-year agreements. I want my customers to not be tied down. If something better comes along, I want to make sure they have access to it. Our focus is on identifying the vendors that our customers see value in and making sure, “Does our API do everything that you need to do? You need something to track a new image as it has arrived and hasn’t been processed yet. Let’s work together to help you figure out how to track that image until your AI engine grabs and processes it.” It’s a collaboration.

That’s always the key to success, especially when times get hard. No man is an island. We’re keeping a little independence and sticking to our knitting, where we think the most value is creating. The whole nature of Byte is that it’s a backbone. You can plug things into it. You don’t have to reboil the ocean or convert platforms. You can plug other things into that same backbone in your same quality controls, checkpoints, and swim lanes are all applied.

If you want to ditch that POS guy and put in this other POS guy that has a bunch of AI features in it, it’s okay. You get the same set of controls. We’re going to do the same checkpoints when that loan comes in. You don’t have to reinvent that wheel. It’s about collaboration. I hope that’s not like a non-answer, but where we create value for our customers and we help them create value for our mutual clients with vendors that have compelling products.

That’s a smart approach because there’s a lot of innovation happening. AI seems to be worth much of that is set it up. It is exciting. What you’re saying is we’re sharing them all. We’re going to find the one that works best and we’re going to be able to be flexible and have the APIs such that our customers can select the one they choose to be the best and work with them. You’re at the core system that helps them. I love everything about this interview.

We’ve spoken to several of our customers. I’ve tried to pull them. I’m like, “What are you doing with AI? Who are you looking at?” Lenders are snowflakes. They’re all supposedly doing the exact same thing but down the microscopic level, they’re all attacking AI a little bit differently. I’ll share that in terms of where the industry is going, AI is going to be the biggest factor. We’re not going to outrun it before we retire. It’s here. It’s making waves. It’s early, but the people I see who are being successful with it are not trying to boil the ocean.

I’m going to automate everything. There’s a failed project. Pick one thing. Find an AI vendor that can solve it. Solve that one compelling thing. How do you eat an elephant? One bite at a time. No pun intended on the bite thing there. The people I see succeeding with AI and making a difference to their bottom line are not trying to boil the ocean. They’re taking one little problem, the corresponding lender, and taking 300 sheets of paper on every submission.

It’d be nice if somebody labeled those docs and stuck them in the system. Start with that. You move the needle forward with that. We’ve had customers that are having great success in those. We have people that are trying to completely automate the underwriting process. From what we see, our APIs allow these vendors to interact seamlessly with Byte and deliver the efficiencies that our customers are looking for.

As we wrap up the interview, many of the things that you’ve talked about like when your contract stands out, and notably, in my mind, the fact that you guys are a fully robust enterprise LOS system. Another point is that we want to dispel a rumor that Bytes is for small guys. You’ve done a great job. Is there anything you want to leave for our readers as we close out the interview?

Probably the biggest headwind we have in our selling proposition is we are specifically trying to match our customers with the best vendors that fit their business. That’s not always a Byte native service. If being with Optimal Blue, Lender Price, or PollyEx is going to move your business forward as a pricing engine, we want you to be able to enjoy that pricing engine. If you don’t like our closing doc service and you want to plug in a DocMagic, DocuTech, or IDS, we want you to move your business forward.

Other LOSs are all in one. You might save some time and research there, but you’re going to pay for their services and your agreement. When you go get another doc vendor, pricing engine, or POS, you’re going to pay for them twice. If you’re looking for an all-in-one and there’s a better all-in-one, are you going to want to convert the whole thing over to the new all-in-one? We’re a component, best-of-free system, which is good for you because you get to have the best for your business. What’s different about us is that we don’t include those ancillary services in our pricing model.

If you want to use our closing docs, you can pay for our closing docs. If you want to use our TPO portal or consumer report, you can use it, but it’s not going to be in your price. If you use something else, you’re only going to pay for what you need. That’s from Liberty Mutual, “Only pay for what you need.” It’s very similar to our model. If you’re a customer that’s on an all-in and you’re also paying for pricing and docs, then you’re going to save even more money on the Byte platform.

Keeping the customer in mind, which is why people hold up their hands and stand up at a conference and say, “We love our Byte LOS solution.”

One more note on that topic. A lot of people, especially If you’re a project manager at a bank and you don’t even know mortgage, you’re like, “I got this project at a bank. I’m supposed to pick LOS,” those choices can be daunting. What favors in all-in-one is like, “It’s an easy button. Give it to me like the picture. I’ll take it like that,” like the car comes off the lot. I’ll take it like that and everything works.

We know those choices can be daunting, but that’s part of the value that Byte can provide. When you talk with our sales team, we’re going to learn a little about your business. We’re going to dig in as deep as we need to. We’re going to try to filter down and help you identify those choices between your needs, your business model, and your budget. We can demystify all that for you. If you give us a shot and a little bit of time educating us about your business, we’d love to help you be the next happy client at Byte.

How could people reach you and learn more about the system?

Go to our site at www.ByteSoftware.com. For further information, there’s a request for a demo link. We’d love to be of service.

I encourage readers to check out. If you’re looking to reduce cost and everyone is these days, you have to look at your LOS vendor and go, “Are we kidding about what we need for the money we’re paying?” You’ve got to check out Byte. Mark, thank you so much for being here. I appreciate it. All this continuous success, I expect you guys are going to be growing a lot, especially in this market.

I’m banking on it.

Important Links

• Byte Software
• https://www.LinkedIn.com/In/MarkTodd/

About Mark Todd

As a true mortgage industry lifer, Mark Todd began his mortgage career as a teenager working for his father’s broker shop. Since then, Mark has spent more than two decades developing operational and technology infrastructure for several notable lenders, supporting the growth of retail, wholesale, and correspondent lending channels. Mark has also spent over a decade working at leading mortgage technology providers with a focus on product strategy.

Since joining Byte Software in 2015, Mark has helped Byte expand its Enterprise-Class LOS service offering, providing lenders with the freedom to do business the way they want. Mark’s passion for implementing scalable technology at Byte has earned the trust of some of the most forward-thinking independent mortgage bankers.