This blog post is part of a series of publications on fintechs and mortgage lenders that Reggora has developed in collaboration with a number of premier industry thought leaders. Download the Mortgage Lender’s Guide to Working with Fintechs for free here.
It has been hard to ignore the growing prominence of fintechs within the mortgage industry over the past decade. For nearly every workflow or software—from LOSs to title insurance—there seems to be a new technology solution available. As this trend continues, all mortgage lenders need to ask themselves if it's time to embrace fintech partnerships in the journey towards the fully digital mortgage.
The advantages to working with fintechs are not always apparent, but choosing to implement a third party solution as opposed to arduously building out internal software has a number of benefits. Namely, fintech solutions often use business intelligence software, artificial intelligence, or other modern tools to streamline age-old, inefficient workflows that lenders have become used to completing manually.
For lenders that are new to fintech partnerships, the process of partnering with fintechs involves four high level steps: internal discovery, finding the right fintech, implementation and adoption, and finally, evaluation.
The Internal Discovery Process
Before making the decision to work with a fintech, it is vital to take stock of your institution’s pain points. Identifying the most costly and labor intensive processes within your existing workflows will allow you to then determine how an automated solution will provide a clear, quantifiable return on investment.
In other words, before looking outwards for a tech solution, it's key for you to understand your own internal efficiencies, evaluate the various pain points, and areas that are primed for innovation. Once you are able to do this, then you can strategically look for fintechs that meet your needs.
Finding the Right Fintech
There are some key strategies in learning about the fintech market. First, you can look to your competitors to see what fintechs they are employing within their workflows. Second, you should follow leading mortgage technology publications, which will often lead to more opportunities like webinars and local fintech events. Finally, mortgage conferences are vital to learning about the different technologies out there and determining which ones seem to have the best knowledge and expertise.
Importantly, you shouldn’t shy away from the newer technologies on the market. Often, younger and smaller fintechs use cutting edge technology, can respond to user issues faster, and have developed unique products and services. Kevin Peranio of PRMG says, “if a company gets multiple rounds of seed money, that is always a good sign,” and adds that “the onboarding process and the scalability of the tech vendor” is another important factor.
Implementation and Adoption
Once you have found a fintech that meets your needs, it’s natural to be deterred by concerns of a fragmented implementation or adoption experience. As a result, Sherry Graziano, SVP at SunTrust (now Truist) suggests that “having an adoption strategy before moving forward with new technology is absolutely critical.”
Additionally, organization-wide buy-in is vital in this endeavor. Here Sherry adds that lenders should bring all of their “internal stakeholders along for the journey so that they are aligned on the adoption strategy from the very beginning.” While tech investments are typically made at the top, the impact of these changes can often be felt to a greater degree further down the chain.
From the offset, it is prudent to work with the fintech to establish a timetable for implementation, key delivery dates, and request a checklist of all the required documentation and deliverables. Once a fintech solution is implemented and integrated, it is also important to undergo extensive testing of the product in a user accepted environment. This allows stakeholders to test out the new technology with low risk, and also helps to identify any issues or required fixes before the product is officially rolled out.
Once the implementation and adoption process is over, Jason Sorochinsky, VP at Digital Federal Credit Union explains that “best practices show that organizations should perform an evaluation of its performance once new technology is installed and deployed onto a live production environment.”
This involves carefully documenting what’s working and what’s not, as well as determining where pain points still exist after implementation is completed, and then sharing that information with your fintech partner. As opposed to legacy technologies, fintechs have the advantage of being nimble and innovative, and can usually respond to your needs or feature requests with ease.
Partnerships between fintechs and mortgage lenders will be the key to realizing the fully digital mortgage experience. If lenders clearly identify their pain points, thoroughly vet the numerous fintech solutions available, and work collaboratively with the fintech through implementation and adoption, then they are likely to find that fintechs can serve as valuable partners throughout the entire loan process.
Want to read and hear more insights from industry thought leaders? Download the complete Mortgage Lender’s Guide to Working with Fintechs (it’s free!)
Related blog posts
How to Achieve AIR Compliance using Reggora
Learn about Fannie Mae and Freddie Mac's recent clarification to their appraiser independence requirements, and how to stay compliant with Reggora's technology.
One Simple Way for Mortgage Branch Managers to Improve P&L
Branch managers consistently look for ways to improve their branch's profitability. Fortunately, there’s a simple way to reduce operating costs that branch managers often overlook: appraisal fees. In this comprehensive guide, we'll dive into the three places you lose revenue from these fees - supported by STRATMOR Group's 2023 data - and show you how simple it is to stop the bleeding.