The ever-shifting landscape of technology has leaked into mortgage originations. With new technologies being introduced every day in other industries, what can our industry do to catch up? We spoke with Dom Marchetti, CTO of loanDepot [1], on what direction the industry may head.
Marchetti told us about the technologies his company was using to update the industry, such as their end-to-end application, mello™.
What are you bringing to the table with mello™?
mello™ is loanDepot’s new digital mortgage platform including the customer facing platform. It serves borrowers, sales, operations, and the entire ecosystem of realtors, builders and the title industry on a single platform that allows us to continuously improve and iterate the experience.
Our release of mello™ is a culmination of years effort. Our primary area of focus is consumer experience. We are investing in bringing lending and mortgage current with consumers’ expectation of how they want to interact using technology and how we can remove the friction from that process. That means at the point of origination, how do we provide clarity? How do we make sure that what we’re doing is transparent and is available in real time and on mobile? This is what most consumers prefer these days in every other industry, except for mortgage and more largely in consumer lending.
mello™ is the digital lending platform that allows loanDepot to simplify the user experience by providing an interface that obscures all of the complexity of all the underlying systems, third party systems and processes that exist in mortgage. mello™ changes the way that consumers think about and interact with credit.
How are you utilizing new technologies in the mortgage Industry?
I’ve been in finance and mortgage technology for just over 20 years. When I first got into the industry, consumers faxed in their paperwork, then with the internet, the digital age started to hit mortgage in the late 1990s. With digital, consumers submitted these same documents to the same people using the same processes in an electronic fashion. Although we have seen many pointed solutions, processes and technology incrementally improve the process, it remains largely unchanged, there’s been very little real innovation in that entire time period.
As an industry we have traditionally been very adept at dealing with market pressure. We have had to become good at dealing with regulatory pressure as a result of the fallout from 2007/2008. If you consider the last 10 years, regulatory requirements have increased substantially. The oversight and overhead associated with regulatory has increased the cost of loan origination tremendously. The focus really has been to address new pressures and additional requirements despite incremental improvements in technology. However, that’s offset by the regulatory change. And, really as an industry, there hasn’t really been true innovation and disruption. Some companies have chipped away at the existing process, creating a little efficiency there or saving a little efficiency here. Technology improvement has been largely flat.
Today we are experiencing for the first time ever, what we refer to as technology pressure. Consumers expect to interact with lenders in the same fashion that they conduct business with every other area of their lives. They expect transparency, real time decisions, a mobile interface and the ability to get support in the middle of the process. We are seeing consumers demand that we operate, and that we interact with them in a way that they’re very comfortable and that’s consistent in every single other industry except for the lagging mortgage industry. So, really our edict, is to innovate, to change the way consumers interact with credit, change the way they think about it. And, that is to be very contemporary, consistent with every other part of their life.
What other kind of technologies aren't being implemented in the mortgage industry that can be brought in? What do think can be implemented to streamline the mortgage application process?
There are numerous foundational technologies that have existed in the mortgage industry and other related industries for a long time that have limited implementation. In the early 2000s, we saw the first digital mortgage. Since then there has been incremental improvements but limited adoption. E-Sign is another example of technology that has existed for the last fifteen years, also with limited adoption. With the regulatory changes brought on by TRID, they are becoming a little bit more main stream. Technical change requires business drivers, effective change management and a platform to enable adoption.
Next generation technologies are comprised of technologies that exist in other industries that we can apply to consumer lending and emerging technologies that are just on the horizon or beyond. With the appropriate platform, these innovations create an opportunity for real disruption. The emergence of technology enablers such as robotic process automation bring incremental improvements. Machine learning and assisted intelligence bring the next level tools that set the stage for real innovation along with new non-traditional data sources. At loanDepot, we have been able to effectively incorporate existing enhancements that have allowed the company to scale to the top tier of our industry
In my opinion that is why Amazon is successful. It’s not just that they have a great website or distribution process. It’s the fact that they can continuously improve that process and do thousands of releases per month. And that’s really what mello™ allows us to do, is it provides a platform upon which we can implement continuous change. Under the façade of that interface, we’re able to plug in new data sources and new ideas that allow us to constantly improve and get more predictive as we learn from that experience and as consumers provide feedback.
We now have mortgages that can be applied for entirely on your phone, so what is the next logical step?
I'm more excited today than I've ever been to be in this industry, particularly with the changes that we're bringing to market, and the flexibility that we're bringing the release of the mello™ platform. The timing for true innovation has never been better with the availability of information, the demands of the consumer, the willingness of industry stakeholders including the GSE’s, and the opportunity for the companies that can effectively execute a technology strategy. We will improve consumer experience and interact with them on their terms, on the device of their choosing. We will leverage data, technology and automation to be more predictive to meet consumers’ needs. Most importantly, loanDepot will stay very close to consumers and is positioned to leverage new technologies to improve the way that consumers interact with credit in the future.
Editor's Note: loanDepot will hold a live stream covering mello™ on April 12 at 12 p.m. EST, led by Anthony Hsieh, CEO and chairman of loanDepot. Watch the stream here [2].