Lykken on Lending

In our Hot Topic this week we have Cathleen Schreiner Gates on the program to discuss how SimpleNexus was recently acquired by nCino, a publicly-traded company and worldwide leader in cloud banking and what opportunities are created by the combination of these companies, and how do lenders stand to gain.

Want to know more about Cathleen Schreiner Gates?

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“What does LEADERSHIP mean to you?” with Cathleen Schreiner Gates

It’s good to have you here with us. We are at the Finastra Forums of the Americas here in Austin, Texas. This event was supposed to be live, but because of the resurgence of COVID, they decided to make it virtual. This thing is one massive production. It’s so impressive. Kudos to Finastra for the job they are doing at one of the most massive virtual events that are global. It’s amazing when you work with the number one FinTech company and the resources they have and how they go about it. That’s where we are at and that’s why I might sound a little bit different than normal.

This is Monday, January 24th, 2022. It’s so good to have you with us. This show is created by mortgage professionals. It is for mortgage professionals and we are so grateful to have you as our audience. Our commitment is to bring you timely information that you can read anytime and anywhere, however you can. We are glad that most of you have internet and you can read this.

On our Hot Topic segment, we got caught up with Cathleen Schreiner Gates. She is the new CEO at SimpleNexus. I got to tell you, they were acquired by nCino, a publicly-traded company and a worldwide leader in cloud banking. We are going to hear about the opportunities that this acquisition and the other acquisitions that SimpleNexus made. One of which was LBA Ware, Lori Brewer’s company, Lori is a good friend. I’m very excited about the product and services she’s been creating over the years.

SimpleNexus liked this so much that they bought it and then they no more completed that acquisition and then nCino came in and bought SimpleNexus. It’s very exciting to hear all about that. We are also going to have her on the show. Be sure to go check on that. Also, we are proud to be part of the Industry syndicate. Check out IndustrySyndicate.com and all the episodes that are available and published through Industry Syndicate. We are pleased with our partnership with them.

I am also thrilled to have the following sponsors with us. The Mortgage Bankers Association of America. I love what they do. I have already talked about Finastra. Their Fusion Mortgagebot Solution is a combination of the mortgage bots POS and the mortgage bot LOS. They do a great job of creating a path to borrower satisfaction. If you are an institution looking for a new LOS or POS, check out Fusion Mortgagebot at Finastra.com.

We are here in Austin at this amazingly produced event. I got to be on with Tony Thompson. That was so much fun. Tony and I were on a panel together. I got to tell you, you got to check out what NAMMBA is doing. What Tony’s doing this amazing. It’s fun to get caught up with them and the progress they have made with that organization. Everyone needs to check out what they are doing. Get ahold of Tony Thompson.

Lenders One, I am glad to be partnered with them, along with The Mortgage Collaborative. Both of these organizations do a great job of getting lenders and vendors together in a more intimate way, through which you can connect and find out what’s going on with your peers and the vendors they use. I’m impressed with that.

I had gotten caught up with Rich Swerbinsky. Rich is a good friend and I appreciate him and his leadership at The Mortgage Collaborative. They are having some explosive growth as is Lenders One. There’s a real need for these organizations, but that does not mean you should be a member of the MBA. Neither one of those organizations may raise your need to become a member of the MBA.

Let’s also say a big thank you to Insellerate. Josh Friend over at Insellerate does a great job of helping you connect with the borrowers with an enhanced borrow engagement and experience. The Knowledge Coop with Ken Perry is up at the IMB Conference. I saw a picture of him, Kathie Thomas, and David. They are doing well and having fun up at IMB.

The Mobility MMI as well as Modex. Both of these platforms do a great job of helping you connect with the best loan officers that you want to go recruit in the marketplace. Also, giving you insight into what’s going on, who’s buying and selling? Which real estate firms are the best? Which ones are hot and which ones are not? Every market is hot. Check out these two firms. They are great.

Snapdocs helps lenders overcome obstacles. Adopting eMortgage technology. Snapdocs is now offering eMortgage Quick Start Program. Check it out. We had Vishal Rana on the show in September. Read that episode. Also, SuccessKit. I am so impressed with what we are getting from Julian Lumpkin and the group there at SuccessKit helping you tell your story. If you are a loan officer or company and you want to get one of your customers to come on and talk about what a great experience they had working with you, get ahold of Julian at SuccessKit.

Also, Lender Toolkit. I’m very pleased to have them on. We have several new sponsors coming on. I can’t wait to talk about them. We getting the contract signed. Our list of sponsors continues to grow and we are very grateful. I’m also so grateful that we have Alice, Allen, Matt, Rob, Les, and now Jack who contributed to this show each and every week.

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Our special guest for this episode is Cathleen Schreiner Gates. Jack and I caught up with her. Learn from all that she has for us, especially her take on leadership. It is pretty refreshing. Without further ado, let’s get into the interview with Cathleen Schreiner Gates.

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I’m excited to have to join us on the show, Cathleen Schreiner Gates. She is the new CEO of SimpleNexus building on the success and vision that the cofounders Matt Hansen and Ben Miller had when they founded and brought SimpleNexus to this level. They are going to be continuing in the company. Cathleen is a very experienced executive and we are excited to have her join us. Cathleen, it’s good to have you here with us.

Thanks, David. It’s great to be here.

As a result of your role at Ellie Mae, a lot of people know who you are, but just in case there are some that are reading this who have not had the privilege of meeting you, tell us a little bit about yourself and your background.

I came into the mortgage industry many years ago. A lot of folks that I probably have more tenure in the mortgage space than I do. Once you come in, you never leave. My background is in enterprise software. Disruptive software solutions that help businesses advance. My background in SaaS enterprise software is what was intriguing to Jonathan Corr at Ellie Mae because Ellie Mae was about to take off like a rocket ship.

Many mortgage FinTech companies hadn’t scaled that much. It was still a fairly new idea. I came in to look at the go-to-market strategies for Ellie Mae and help scale. It’s been an amazing experience in mortgage because I was surprised at the innovation I encountered. I was thinking mortgage was an old industry. Many people have this stereotypical view of mortgages and are someone who always loved innovation and technology for competitive advantage. I love engaging with independent mortgage bankers, these very entrepreneurial shops. The vision everyone had was to help people get into homes. I thought it was rewarding. My background is in technology and software.

You hit on a really good point. What hooked me in this industry when I first got out of college and started in mortgage lending was helping people get into homes. Helping underserved people was one of the most rewarding things I had ever done. I had a chance to reconnect with you in San Diego at the SimpleNexus reception and I was introduced to you by your admired head of marketing and that’s David Bolin. I love David and his brilliance.

We were standing there and while we were standing there to meet you, one group after another came up and gave you a hug and told you how much they missed working with you and the leadership. I want to get some insights into what it is about your style of management and your leadership that brought so many people that poured out their hearts to you and so genuinely authentically expressed their gratitude for having the opportunity to work with you. What is it that you do and how do you go about it?

The more leadership experience you get, the more you realize how much you don’t know. It’s about talent management. I firmly believe that I don’t have all the answers and that the people I work with have the answers if you can empower them. For me, it’s listening and learning from people that are potentially closer to the issues we are trying to resolve and have a point of view.

If they feel empowered to bring that to the table and they feel that it’s a safe environment to have idea exchange, you get the best because you are tapping into that brain trust. You don’t have to have all the answers. I think that’s probably my area of focus. People feel like they are making a contribution and the more they contribute, the better they feel and then they contribute more. You then end up with this massive wave of talent that you are working with and it’s amazing.

Some of the people that pulled up to you, I know, and they are very successful, but how they honored you because of your leadership. Joining me on the microphone with this interview is Jack Nunnery. Jack, as you listened to leadership and Cathleen talk about this, do you have anything you want to add?

Yes. Cathleen, listening to what you said, I have always thought it’s so important to create an atmosphere where people feel comfortable sharing their ideas or their knowledge. I agree with you that listening and learning from knowledgeable qualified people makes the organization better but first, to accomplish that, you have got to create an atmosphere where people feel comfortable sharing. It certainly appears that you were able to do that.

I had no choice, right? Coming into an industry that’s new to me, I was full of questions and initially, folks were a little tentative. You come in as a senior leader and it’s like, “Why is she asking all these questions?” The old phrase is, “You have one mouth in two ears.” You can only say what you want, but if you are listening you can learn. I learned a lot very quickly from a lot of experienced folks but I think there’s also an element of you can’t be afraid to make tough decisions.

Folks do look for someone who’s going to take a position and not be afraid to say, “We are going to go in this direction. If we thought about this incorrectly, we are going to regroup.” It’s because people do want someone who’s going to take a point of view and execute it so that their ideas become something real. I think that’s another element of it.

Cloud Banking: People do want someone who’s going to take a point of view and execute so that their ideas actually become something real.

Talking about taking an idea and executing it, SimpleNexus was acquired by nCino, a publicly-traded company that is worldwide and a leader in cloud banking. When I read that, I was thinking a lot of our readers are not going to understand what cloud banking is. Could you explain that and enlighten our readers that may not be familiar with the term cloud banking?

It was a term that was coined years ago. It’s the way the software is delivered. It’s delivered via the cloud. Cloud banking is using all the internet capabilities that give you extensibility, scalability, and the latest technology tools available. Think of Amazon and think of what we can do with Amazon, but bring that to the banking world. There are a lot of legacy banking systems out there, and I think it was time for someone to come in and disrupt them.

That’s what nCino did. They took advantage of all the cloud tools for technology and apply that to the banking world. We started with the back office, all lending systems, and the mid-back office. What we get to do is come in there and look at that mid-back office operational environment that nCino is providing to banks and look at the front end. We are known for the technologies to empower people on their mobile devices. We are also cloud-native, as SimpleNexus is, but we are mobile-first. nCino is cloud-native and then the complement of mobile in the cloud is what’s going to be powerful.

Looking at the acquisition, what opportunities are created for the mortgage business by the combination of nCino and SimpleNexus?

There are several exciting things. First off, nCino’s banking and credit unions. That’s where they are playing. We know they all have to do mortgage lending. We bring that mortgage competency right into the base that is nCino’s target market. We bring additional TAM into their opportunity. For the independent mortgage banks where nCino doesn’t need to provide any solutions because they are singularly focused on the mortgage, we hope to tap into some of the technologies nCino’s been deploying. Things like OCR, Optical Character Recognition, artificial intelligence, document recognition, and risk profile analysis.

There are some other technologies there that can tap into and help us with independent mortgage banks. We have an expanded opportunity to go into the banks and credit unions. We are in there. We just haven’t been in there as much as nCino and it gets to tap into our ability to bring that front so their banks and credit unions can dial up their mortgage check stack by leveraging what we can bring.

The synergy should be pretty powerful. There’s also this idea of the homeownership journey that we have brought to market. Imagine you are a credit union member and you want to do a mortgage, but you want to extend that into some additional lending capabilities to go out and buy your furniture. That’s what nCino can bring to the mix.

Their broad vision is pretty exciting and I’m excited about what this does.

Cathleen said something at the beginning of the show that tweaked my interest because it aligned with my perceptions of the mortgage industry. I assume you were talking about technology. You said it was an old industry and I couldn’t agree with you more. How does SimpleNexus help an independent mortgage banker become more efficient and better in this segment by bringing fresh, relevant technology to the table? Because we are, from a technology standpoint, an old industry. David, we tried back in 2000 to move into a digitized world and while it worked, it didn’t because we reverted right back. How does SimpleNexus bring fresh and relevant technology into the mortgage space?

My comment was a general perception of those that were outside the mortgage industry. As an outsider coming in a few years ago, I think of it as a very traditional industry, not necessarily one that embraced technology. That was somewhat true when I first came in the door, but there was a hunger to automate and drive the costs out of the manufacturer of the loan. It’s because we all watched the manufacturer of the loan increase year over year. That’s tied to a lot of people, a lot of eyeballs staring at documents.

Now, you have got the Millennial bubble or you have got this bubble of potential borrowers that’s bigger than anyone we have ever seen. It’s the biggest bubble ever. They are not going to transact in an old model. They are going to be on their iPhones. They are mobile. The loan officers coming into the industry are going to be mobile. What SimpleNexus focuses on is this technology as an enabler to connect a borrower with their loan officers, with their realtors all in the device, and now with their settlement agents.

Also, the loan officer assistants and the processors, but all on a device that is somebody’s primary way to transact their lives. It’s bringing that technology in, but doing it in a very secure environment. It’s making sure all of the regulatory, boxes have been checked and making sure personal information is secure. That is a complex technology formula to figure out. Lenders shouldn’t have to worry about it.

Especially in this purchase market, how am I going to get the borrower? How am I going to stand out and connect with the potential borrowers because we are going to purchase this? With the combination of a lot of good technologists with a lot of good practitioners, we have over 1,000 years of mortgage practitioner expertise sitting inside SimpleNexus. They are saying, “No. Think about it this way. Not that way.” Also, translating to the developers that are saying, “Now, I know how to realize this vision.”

You made a comment about how you have all this experience sitting around the table and you are adding to that experience. SimpleNexus acquired LBA Ware, Lori Brewer’s company. I’m such a fan of Lori and her brilliance and what she’s building. They are a firm that has brought forth products such as incentive compensation management, as well as a much-valued quarterly loan compensation report. I can understand why anyone would want to acquire Lori’s company, LBA Ware, but what were some of the motivations that you had in doing so?

We are already a partner of LBA Ware. There were already connections happening between the loan officer using our mobile capabilities or we are also on the web, mobile and web. Connecting with them to see how their compensation was working for a loan. We thought we could dial that up enormously by bringing that data right into their device versus linking it. It’s about bringing as much capability to the LO in their hands as we can. The compensation part was a no-brainer, but the super intriguing thing for us is if you think about $500 billion of loans passing through our platform annually. Think of the data and the idea of what we could do with managing and marrying the data we capture with the data Lori has to capture for compensation.

She has to touch and look at every loan and what analytics we can bring to branch managers to heads of production about where they are going to get the most return for their investment, what loan programs, what branches, and going after what targets and so on. We are excited about the mortgage analytics capabilities that we can start to develop because LimeGear is a relatively newer platform for Lori.

One of the concerns that may arise and some people say that Lori was acquired, but they produce this valuable report. Let’s reassure the audience from you, Cathleen, that you are going to continue to report on industry compensation trends. That is something that you will be continuing to do.

Yes and more. Lori’s ideas are flowing nonstop, but yes. She will continue to be a presence at industry events. She will be speaking at our conference. She’s a thought leader and she’s as engaged as ever in continuing to do that work.

She, like you, is an excellent leader. Her people love her. I think there’s a lot of common ground from a technology complement and also how she is going to be able to come alongside you in a leadership capacity.

Cathleen, the pace of innovation at SimpleNexus is extremely impressive. Amidst all the acquisition news and market events, you introduced two new products to the market, Nexus Pay and Nexus Bilingual. Can you tell us about those solutions?

It’s delightful to talk about. David, you mentioned Matt Hansen had started SimpleNexus and I had the privilege of coming in to look more at the go-to-market strategies. Matt was like, “Do you mean I can maybe go back and think about some product ideas that I have been noodling on forever?” Matt went on point and created this vision of Nexus Bilingual.

The idea was there were these huge demographics that lenders were trying to tap into and couldn’t reach. We started with what I will call Spanish inquiry. The Hispanic marketplace was being left behind. When you look at how quickly we were evolving in the mobile world, I use the word inquiry by design. It is not a full application. Once you trigger the six fields and you have got RESPA concerns, you have got to either stay in that language.

The idea is to capture by having Spanish-speaking loan officers able to engage with Spanish borrowers at an inquiry level and then have the back office take over the rest in English. Matt Hansen, who does not speak Spanish, brought that technology to market. Yes, we worked with some lenders that had some insights for us and we turned quickly as we like to do to get something to market very quickly. That’s been very exciting.

Ben Miller, the Cofounder, focuses on large strategic partnerships. These are large organizations like Progressive or Global Payments that say, “If we could get access to the borrower at the point of their loan application, their loan manufacturer process, that would be much more exciting to us than trying to, after the fact or after the mortgage process is completed trying to figure things out.”

The Global Payments idea is one of integrated finance. The idea is that you have got to order credit or you are going to order an appraisal. What happens now? Your lender might say, “I’m going to send you an email. Click on a link in that email. Go to this place. Pay us for that appraisal. Bring it back.” Somebody’s saying, “I’m not going to click on some link from some email that they don’t realize, nor should they.” What about integrating that process right into the flow of the application? That’s what we are doing with Global Payments. Integrated is a big initiative. We will see more and more of that.

We did do an adequate job of giving Ben and Matt a shout-out at the beginning of this because the fact that you guys acquired it, you joined them. You saw their vision. They are brilliant. Having started a software company literally in my garage and having it grow into something significant, I think there’s an important step with every entrepreneur is realizing. “Maybe I’m at the end of my rope on my ability to continue to bring this to the next level.

Their ability to continue to innovate never stops. That is what got them to where they are now. Kudos to Ben and Matt for what they have done and for bringing you in. nCino saw the value as well. Let’s talk about the roadmap and some of the things that you are looking at as challenges that the industry is facing that SimpleNexus is going to see as an opportunity. What’s on the roadmap? What can we anticipate?

There aren’t going to be these great reveals. What we started doing is saying, “We are going to take the same approach to the closing process that we have to the point of sale to the front end.” There’s so much work to be done there. We are on a journey. We started with Hybrid. Now, we have released RON. eVaults and eNotes are coming. The idea is we are going to continue to put that single sign-on experience in play.

Cloud Banking: The idea is we’re going to continue to put that single sign-on experience in play.

Imagine that the borrower, when they start their application, they are never going to leave that environment. They are going to close on that environment as well. They are going to close on the iPhone or on the web, however they want to do it through a single sign-on. They are not like, “Now, we are going to close. We want you to go over here and talk to these people and go do this.”

There’s so much work to be done. We are going to continue to finish all the work that we can in the closing process and have a complete eClose experience. There are lots of things we are going to be looking at and continue to look at. Technologies that allow document management to happen more, facilitate document recognition through OCR and AR. There’s a lot of that type of work, but initially, we still feel we have a lot of work to do on the journey. We are going to continue to add pieces to the journey and add things to the platform. We have a significant leadership position in eClose and we want to continue to deliver on the promise.

Every time we are advising a mortgage client about technology acquisition and who to partner with, I tell them it’s about the capital, vision, and leadership. nCino and SimpleNexus, check all those boxes. I’m excited about the future and where this is going. Let’s talk about your fourth annual User Conference. It’s at one of my favorite places. It’s a ski resort. It’s the Snowbird in Utah, right?

Yeah. It’s right outside Salt Lake City. It’s quite easy to get to. A world-class ski resort within 40 minutes of Salt Lake City Airport. We are having it live and in person this 2022, again. In 2021, we went virtual. This 2022 we are coming back to Snowbird. It will start on February 28th and through the first three days of March. We are going to focus on what lenders are going to be challenged with this 2022.

We have Ivy Zelman is coming in to talk about the housing process. We have Marina Walsh again from MBA. We have folks from Fannie and Freddie and MISMO coming in. The idea is we are going to create this environment of allowing folks to hear from thought leaders and understand how that’s going to inform their strategies in this upcoming purchase market. Lots of our lenders are going to speak on panels. It’s a great networking event. People come to exchange and reconnect with each other. We will have lots of lender panels and these great thought leaders talking about the industry. We are pretty excited.

The fact that you got Ivy coming in, I love Ivy. Her thought leadership is amazing.

Going back a little bit to what I was saying about Lori Brewer and the analytics and data we have available, imagine spending time with Ivy and saying, “What are the things we can all do together?” We are excited to bring her right into our conference. I think we are going to also have Fabio who we had in 2021 make spaghetti. We are going to have a little fun too, but I think he will focus on dessert if this works out. I hope I’m not letting the cat out of the bag before we have nailed it down, but we are going to do something fun as well.

That’s exciting. Jack, I’m glad to have you joining the interview. Any parting comments here as we get ready to wrap this up?

Everything I have heard sounds very exciting. We are moving into a purchase market and not only for the next twelve months. We are going to be in a purchase-driven market for a minimum of three years. What I heard that excited me is moving so much of what we do to mobile platforms. I think you hit the nail right on the head when you were talking about the borrower connecting to the loan officer, connecting to the realtor, and everybody connecting and working on a platform that resides in a mobile environment. We have got to get smarter in how to create an optimal client experience for the purchase borrower. What I have heard now says you have got that goal right in front of you and you are going to solve it, Cathleen.

We will share some stats at our conference we do every year but we look at, for example, how many referrals to loan officers come from realtors on the app because the app on the mobile phone goes viral. It’s a viral app. It’s also branded to every lender. The lenders design their experience for the borrower, but we track how often these referrals are coming in. We know that if a loan officer gets a referral from the realtor through the app, they have a 20% to 30% higher probability to close that loan. These are warm referrals and this is unique to our platform. No one else does this.

I think a lot of the lenders are saying, “Look, the action is on the mobile device.” Can we keep the loan officers out of the loan origination system please and let them interact with the borrowers? The more that we can let them operate with the borrowers and the realtors and the realtors are tracking, “How’s that going? You guys got this done very quickly. You had a great experience. I’m going to work with you guys again.”

We all know that for these independent mortgage banks, that’s where a lot of the business comes from. We are on this mission to allow these loan officers to operate anywhere. I heard a story from one of our lenders where they were driving in the car and they got a referral on their app. By the time they got to their destination, the pre-qual letter had gone out. They did everything through the app and the borrower’s like, “I’m going to work with you.” That’s what we are excited about. I think this year, more than ever, it’s going to be important.

Cloud Banking: We’re on this mission to allow loan officers to operate anywhere.

Especially as you look at the Millennial and Gen Z crowd, the single biggest group of new first-time home buyers ever in the market. That’s how they have been raised. Since the day they were born, they have been operating on devices and it’s mobile. Cathleen, I’m excited about the vision. I’m so excited about what you are doing. I’m excited about your second career in mortgage banking. You bring so much energy and I encourage people to get to know you personally and professionally, and we are looking forward to working together. Thank you for also becoming a sponsor of our show. I’m very grateful to have you and your contributions throughout 2023.

Thank you so much for having me. This has been exciting.

Special thank you to our sponsors, Finastra, Lenders One, Insellerate, Mobility MMI, Modex, The MBA, Knowledge Coop, the Mortgage Collaborative, Snapdocs, SuccessKit, and Lenders toolkit. I’m so grateful to have all of these as sponsors. We appreciate you being here. We look forward to having you back here next time. Have a great week everyone. Thank you.

Important Links

• Finastra Forums
• SimpleNexus
• IndustrySyndicate.com
• Mortgage Bankers Association of America
• Finastra.com
• Lenders One
• The Mortgage Collaborative
• Insellerate
• Knowledge Coop
• Mobility MMI
• Modex
• Snapdocs
• eMortgage Quick Start Program
• SuccessKit
• Lender Toolkit
• nCino
• Nexus Pay
• NAMMBA
• Vishal Rana – Past episode
• Cathleen Schreiner Gates