Lykken on Lending

The more industries progress, the more we look into technology to offer solutions that will keep up with the changing times. In today’s episode, Saroop Bharwani joins David Lykken to share a tool developed by his company that aims to improve the lending experience. Saroop is the co-founder and CEO of Senso.ai, an AI-powered solution that utilizes data from your existing customer base and predictive intelligence to come up with proactive insights. How do they do it? Tune in to learn how their tool serves borrowers, lenders, and even realtors and empowers consumers to make smarter home finance decisions.

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Leveraging Technology To Optimize The Lending Experience With Saroop Bharwani

It’s good to have you here with us. We’re always looking at technology. I don’t know about you, but I sometimes get technology fatigue. I get hit with so many, “This is the new, latest technology.” Is it just a distraction? I was attending the Total Expert Costumer Conference Accelerate 2022. It was a great conference. I noticed Sue Woodard, one of my dear friends and a big influence on our industry, sitting down and talking to Saroop.

She saw me walking by and goes, “Dave, I’ve got to interrupt you. I want to introduce you to this gentleman, Saroop, who has a really interesting piece of technology.” When someone like Sue who is an influencer and works for a tech company and pulls me aside and says, “You need to look at it,” I pay attention. Saroop, I’m excited to have you here on the show to share with us little insights into why you got Sue and me excited. It’s good to have you here.

Thank you for having me, David. It’s a pleasure. I’ve got to say that Sue has become a dear friend. She’s an incredible influence on the industry. She’s an incredible adviser. Total Expert was complementary to us. We’re forging a relationship with them. Joe’s leadership is helping drive this industry forward. Thanks for having me excited about the conversation.

We go out all the time trying to bring you information that will help you with your business. We’re always looking at technology. We keep saying, “Is technology the end-all be-all?” The answer is probably no, but certainly technology can help. That’s why we have invited Saroop Bharwani on here. He is the Cofounder and CEO of Senso.ai. It’s good to have you here. Tell us a little bit about yourself and a little bit of your background. Your last name sounds like it has a Middle Eastern background. Are you from the Middle East? How long have you been here, and how did you get into the mortgage tech?

I was born in Toronto, Canada. My parents are from India. They immigrated here way before I was born, but I grew up in Toronto. I’m doing most of my business in the US market now, but it’s good to be based in my hometown.

It’s good to have you here with us. What you have developed is pretty exciting. Tell us about the genesis. What brought you to this concept? If you could explain it briefly, what does your company do?

I’ll start with my background and my team’s background. We all come from the same place. We’re all one unit. Everything we’ve built up in our careers and our lives brought us to Senso and what we do now. My team and I come from a background in tech. We’re very ingrained in the Toronto tech ecosystem. Seeing this ecosystem grow, we’ve started a number of companies.

We’ve also had the pleasure of consulting with large banks in the Canadian market. If anyone is familiar with the Canadian market, there are six big banks in the Canadian market that originate most of the mortgages in the market. Most of the banks in Canada service their mortgages. They have particular processes in place, which helped with things like retention and cross-selling products elegantly to their consumer base.

Our experience has been working with technology, data and analytics, and building digital experiences within these banks that helped engage existing members of the bank or credit unions, and cross-sell and retain them by providing value to them on an ongoing basis by leveraging digital channels. That’s our expertise. In 2017, my cofounder and I, who have a technology background in data and analytics and digital experiences in the mortgage space, decided to start Senso as a company.

When we looked and did research into the US market, we realized that we could take a lot of our learnings in the Canadian market and translate that to solving things like recapture and capture rates in the US market. That’s what we’re excited about. We’ve developed a capability around this. We use all sorts of data to predict customer behavior. We provide existing clients of a servicer or an originator with insights that help them retain customers and provide them value on an ongoing basis. That is the focus of Senso.

Technology: We provide existing clients of a servicer or an originator with insights that help them retain customers and provide them value on an ongoing basis. That is the focus of Senso.

You had to start this with a perspective on the current state of the market. You could almost say what it is the problem you’re solving, but if we’re going to talk about the problem you’re solving, let’s talk about the state of the market from your perspective, which is the foundation of what you’re building here.

We talk about large financial institutions, whether it’s servicers, originators, bank credit unions, or independent mortgage banks. The focus of the market up until this point has been on net new acquisitions, “Let’s go out there and find new clients and originate net new mortgages.” The second side of that is your existing customer base. They’re those that you have already originated with and you have relationships with. The latter has been ignored, and we see that in the metrics.

We see recapture rates for purchase money transactions in this purchase market under 20%. We’re seeing capture rates across banks and credit unions under 10%. That’s the ability to leverage the relationships you have, and ensure that they do business with you next time. There are all sorts of reasons why recapture and capture rates are low across the industry. The key question is to identify the problem first. I could then talk about solutions around how we solve that now.

I’ve seen a demo of this product. I’m so impressed, which is why you’re here. I’ve invited you to come on and talk about it. You do solve a lot of solutions. What is the importance of engaging your existing customer base proactively that leads up to the next purchase, especially as they’re looking at that? A lot of people struggle on that repeat business, and you nailed it. When you talked about a 10%, that’s abysmal.

Digging into the current state is important before talking about how to be proactive. The current state is existing servicers or anyone who has a relationship with an existing customer that has transacted with them before. They have the ability to contact this customer. The simple answer is that they’re reaching out to them too late in the workflow or in the process.

By too late, it means when you’re in the market as a consumer in the market for your next home loan, let’s say it’s a purchase transaction, and you start dreaming of your next home. In most cases, the first person you’re likely to seek advice from is your realtor or clicking on Zillow. The problem is that if you’re engaged with a realtor or Zillow before getting pre-approved or pre-qualified by your existing financial institution that you have a relationship with, you’re most likely to get referred away to a competing originator.

We’re seeing Rocket Mortgage come into these cities and be that originator of choice because that experience is elegant. If financial institutions with an existing customer base were to focus on reaching out to their customers ahead of time, identifying who to reach out to with the resources they have, and providing value to them throughout the entire homeownership journey, what we’ve proven to do is providing an impact on increasing capture and recapture rates across the market. Hopefully, that provides a bit of perspective on the why.

It’s important to understand what the problem is and try to get as many insights into it. Is it true that technology is in fact the solution when it comes to this aspect of it?

I believe it is. We’ve proven that it provides impact. Most of these independent mortgage banks, servicers, or banks with a large sum of consumers, these people are going along in their lives and identifying where to leverage their resources has been enabled through predictive technology. It’s a technology that over the last decade has taken a step up in its ability to identify who’s going to be in the market, but does that in a way where it provides internal teams with the lead time necessary to get in front of them before being poached away.

This enables organizations to do many things. It enables organizations to interact with that customer, provide value to that customer in advice-based recommendations, and collaborate with realtor partners versus realtor partners being the ones that poach them away. Technology, with a combination of identification and artificial intelligence as well as digital engagement tools to ensure you have scale across your existing customer base are technology solutions that provide impact in this area.

Technology: Technology with a combination of identification and artificial intelligence as well as digital engagement tools to ensure you have scale across your existing customer base is both technology solutions that provide impact in this area.

Tell us how you go about engaging the existing customer base. What is it that you saw was the advantage or the missing piece, and how have you gone about meeting that need?

I always like to start with the consumer perspective first. All the consumers in the market either want to buy a home at some point, want to transition from one home to the next home, or want to leverage their equity to buy a second home, or whatever the case may be, there are a few things that we desire. We want our banks to reach out to us proactively and make it easy for us to understand the journey of transitioning or purchasing.

The advice-based recommendations could be a combination of digital insights and loan officer insights. This is something that cannot fully be solved through technology. The loan officer is a huge piece of this because in a journey like purchasing a home or taking equity out of your home, having the loan officer at the center of this to provide that emotional guidance throughout this massive undertaking is essential.

Having the technology to automate some of the insights that enable these advice recommendations to be in the hands of all of these consumers on a weekly or monthly basis to keep them a pulse on when to make decisions and how to make decisions ultimately augments the loan officer’s job and provides them scale. It provides them the ability to reach out, keep in tune, and keep a pulse of their existing customer base on an ongoing basis so that they can reach out at the right time with the right message to provide both sides with value. That’s the how.

Senso provides that technology augmentation. These are tools to enable the ultimate home buyer or the homeowner with insights to be able to keep a pulse on how much they can afford on a weekly basis, what areas they should be looking at, and how much equity they can take out of their home. We provide these tools out of the box. They’re completely branded with the institution we’re working with.

The predictive insights are the thing that enables these organizations to have the lead time necessary to get in front of them with these insights ahead of time. That’s the how. We provide this end-to-end solution that equips these organizations to engage proactively, and make that loan officer look like the star of the organization.

Give us some insights into how top lenders and servicers are approaching the problem now, and any recommendations for success you might have.

I touched on this a little bit. The organizations that have data and insights that help them inform who to reach out to, when to reach out to them, and enable them to nurture them on an ongoing basis and keep a pulse on how to retarget them at the right time with advice-based recommendations are ultimately more equipped than the ones not using those. I like to think that these are new market standards coming to market. Every organization is going to need to have this to be competitive in this market, especially in a market where business is scarce.

Throughout the last few years, business was plentiful. There weren’t enough loan officers and underwriters to originate all this business. With the way interest rates are, ultimately being strategic in terms of how to engage your prospects and who to reach out to within your base to increase those capture and recapture rates is essential in this market.

We call organizations that have the insights necessary to understand what’s happening prior to an application being filled out the top-of-the-funnel engagement. That gap in the market is something that has to be filled. It’s essential because you have to have visibility in terms of what your customers are doing prior to them even speaking with you, especially if you have an existing relationship with them.

That’s the thing that we see with organizations that are data-driven and have that data-driven culture in them are winning. They’re being the ones to capture those customers when they need that service and the borrower wins as well. They get insights and advice-based recommendations from their existing bank, servicer, IMB, or whomever it is versus having to switch, which is a painful experience. People do it because they’re not getting that from their existing institution, in most cases.

Talk about data-driven. I want to get more clarity. When you say data-driven, what do you mean by that?

I come from a technology background, and most of my team comes from a technology background. What comes second nature to us is leveraging data from a user experience. We develop a digital experience. We’re leveraging data about how individuals are behaving to help provide them with better service. In turn, it increases engagement and recaptures and captures. That’s how the big technology companies do it.

When you think about banking or the mortgage industry in itself, that muscle wasn’t something that was embedded in there. This industry uses data. It has always used data, but the ability to leverage real-time data to capture that information on a daily basis, pivot, and adapt to your customer base is something that culturally is a different muscle.

Technology: This industry uses data. But the ability to leverage real-time data to capture that information on a daily basis, pivot, and adapt to your customer base is, culturally, a different muscle.

Organizations that have their hands on that data to understand their cohorts and make decisions are ultimately the ones that are winning. That cultural shift within the organization shifts more from a traditional way of managing a customer base to something that more big technology companies like Meta, Amazon, or Uber have adopted. It’s the reason why, in many cases, they’re winning consumer preference.

I’m going to start talking about the realtor experience and how viable that is in the market. We’re watching companies like Quicken. There is a part of the story of Quicken that amazes many people and frustrates many people. They’re getting relationships established with the consumer before they even start working with a realtor. Give us your perspective on what technology is doing to enable that connection with the consumer beforehand, and how that impacts the whole relationship with the realtor.

We’re taking a step back and looking at the forest from the trees. If you think about the ideal consumer experience, when you’re clicking around on a realtor site and looking at listings, wouldn’t it be awesome if you had an embedded mortgage in that experience? That’s something that we are working towards and the industries are working towards if I were to paint a vision. If you think about that realtor, they’re the center of the decision-making a consumer embarks on when they’re in the market for their next home purchase. They drive where that customer goes through either by relationships or incentives.

The thing is that could be a lender’s biggest enemy or it could be their biggest means of success. Every organization out there needs to think about how to collaborate with that realtor. Provide the realtor value because that consumer is going to work with a realtor and a loan officer. How do you equip the realtor with value via the loan officer or via the marketing team at these organizations to get more qualified leads? Be definitive, “This is what this particular individual can afford,” show them listings they can afford, and provide them visibility into that.

One of the realtor pain points is that they’re showing properties to people that frankly, they can’t afford. That’s time for a realtor where they could be doing business elsewhere. That’s where the lender plays an essential role. If you can equip that realtor with visibility in terms of what areas they’re interested in, what type of listings would they want to see in their affordability? It makes the realtor’s job easy.

If it makes the realtor’s job easy, they want to continue to work with that lender and that loan officer. That’s what I see as a gap in the experience. Organizations like Quicken Loans are starting to figure that out, but every organization is going to need this. Everybody wins. How do you create a win-win situation in this for the consumer, realtor, and loan officer? That’s what we’re talking about here.

To respect Quicken, we keep bringing them up. Everyone brings them up because they have been a bit of an industry leader. You make a great point. They have just started. This is not game over. Quicken owns it. They do a good job where they do a good job, but there’s still so much opportunity. Let’s talk about how your system empowers loan officers on the sales funnel side of things in a data-driven manner.

I’m going to start off with a statement I use quite often. The Senso solution enables organizations to go beyond the rate. What do I mean by that? Rates are a commodity. A lot of the time, individuals will shop on rates. They’ll say, “Let me go down the street.” Maybe their realtor will say to them, “You can get a better rate here.” A lot of people are deciding where to go based on this rate or commodity. Everybody is tweaking on a daily basis based on all these factors.

What I try to educate organizations we work with is how you can go beyond the rate. How do you provide value to every one of your existing customers on a weekly or monthly basis so they decide they want to do business with you? That is the ability to engage at scale. That’s where digital is essential. It’s the ability to identify who requires service and equip the right people on your front lines with the recommendations required to provide value to that customer.

Senso offers a full suite of tools enabling organizations to provide their customers and their prospects at scale with insights like their weekly buying power. It’s these nurturing campaigns that provide you with why your weekly buying power change based on interest rate changes or areas you’re interested in, their home value if you are an existing homeowner, and insights into who to reach out to.

We’re making it easy for loan officers to understand which of their customers require service. We’re reaching out with these advice-based recommendations that aren’t pre-approved. It’s not, “Let’s start your pre-approval process.” It’s a layer on top of that which says, “Let me help you make decisions. Let me connect you with a realtor partner. We can have a collaborative discussion on how to help you.” That’s what the consumer wants. If you provide them with that type of service, they’re more likely to do business with you.

From your experience working in the US markets and looking at what we’re facing as far as headwinds and an overall experience, give us your perspective. What do you think the next five years will look like?

There’s a macro way to look at this, and then there’s the day-to-day user journey and product. I like to separate those two. We’re at a moment in time where interest rates are rising, business is scarce, and borrowers are uncertain because there’s a lack of inventory and affordability problem. If you look at the next two years, that’s going to continue to persist if I were to predict. I’m not a macroeconomist, but we’re in this market for maybe 18 to 24 months. At some point, interest rates are going to come down again. The cycles of the market are going to continue.

I try to separate that from the borrower journey, what home buyers and homeowners are going to always want, and what’s inevitably going to happen. With what I touched on before with regards to the realtor and mortgage LO collaboration and creating that in one tight experience, what I believe is possible through data is an embedded experience. From a consumer perspective, you can look and track a listing, and you can instantly understand whether you’ve been pre-approved for that listing. That consolidated experience is coming. We’re certainly working towards that. Our roadmap works towards that.

Imagine what type of insights you could get if you knew your pre-approval or what you were pre-approved for in advance before even starting to dream about your next home. The experiences would be amazing. Everybody in the life cycle would win. The lender that’s embedded in that listing would win because they’re tied to that particular listing. The realtor has a proactive pre-approval waiting for that customer embedded within the experience. They know where to guide the user and what to show them.

Technology: Imagine what type of insights you could get if you knew your pre-approval or what you were pre-approved for in advance before even starting to dream about your next home. The experiences would be amazing. Everybody in the life cycle would win

That is where the industry is going from a product perspective. It’s ingraining that with the rest of your financial life. Since the home is so central to your financial picture and your financial life, many other life stage moments and financial products can be embedded into that. The correlation of buying a home, buying a car, taking money out of your home, or consolidating your debt are all tied to these particular experiences around the home. That’s a vacuum of where the market is going to go.

You said that interest rates may be falling. I hope you’re right, but we are watching a lot of volatility in the market. Let’s take a hypothetical transaction. A borrower has gone through the process. Interest rates have been falling. They’re qualified for the home that they’re looking at, but then the Feds come out and make some announcement. Some data comes out and there is a spike in interest rates. They are outside of their lock period. The interest rate that borrower’s going to get is that they are no longer qualified for that home at that moment where the market’s at. How does your system work with that situation?

I’m happy to answer. I am optimistic about rates coming down in the future, but we’ll see what happens. Our system informs both the prospective borrower and the bank of the impact interest rate changes have on their buying power. If they’re ingrained in the process and something changes where they can’t afford a particular home they’re looking at anymore, I want to emphasize that’s the importance of having this particular metric and your buying power available to both sides on an ongoing basis.

The loan officer and potentially the realtor involved can set expectations with the customer, “This is the advice we’re offering you. You have this picture of what your buying power is. It is changing based on interest rates. You have transparency around that, and so do we. We’re monitoring it. We want to set expectations that this is a volatile market. The Fed’s meeting is in a week, and it could have an impact on you affording this home.” We can’t control what the Fed does, but what we can control is how we leverage data to provide advice to that prospective borrower to set expectations.

Technology: We can’t control what the Fed does, but what we can control is how we leverage data to provide advice to that prospective borrower to set expectations.

The data allows you to set expectations in a more effective way so that the borrower through this intense experience doesn’t get disappointed or discouraged. That’s what our solution enables loan officers to do. I want to emphasize that the loan officer is essential in this. There’s only so much technology can do. We’re just surfacing data to inform and provide transparency.

I believe you’ve piqued the interest of our audience. How can they reach you to learn more and possibly get set up a demonstration of your product?

You could visit our website at www.Senso.ai. You can email me at Saroop@Senso.ai. We’re also on social channels. You can follow me on LinkedIn or Twitter. @GoSenso is our profile.

Readers, I encourage you to go out and check it out. Get on a call. I’ll be honest with you. When I first met Saroop, I was like, “Is this another technology product?” When I got on and did the demonstration, my eyes opened up to what is possible with this. This is a great piece of technology. You have great insights. I’m thrilled to have had you as a guest. Thank you, Saroop.

Thank you for having me. I appreciate those words.

Important Links

• Senso.ai
• Saroop@Senso.ai
• LinkedIn – Saroop Bharwani
• @GoSenso – Twitter
• Quicken Loans

About Saroop Bharwani

Saroop is a serial entrepreneur with a background in building high-performing digital and data & analytics teams for many of the top 100 banks. Prior to Senso, Saroop consulted with numerous banks on their innovation strategy which uncovered unique insights about how to improve recapture and capture rates broadly across the industry.