How Close Are We to a Single Consumer Experience Across Origination and Servicing? — ICE EXPERIENCE PANEL RECAP
We’re closer to a single consumer experience across originations and servicing than you might think, as it turns out. Sagent’s CEO, Dan Sogorka, set out to answer this question and more in a recent panel at ICE Experience 2022 in Las Vegas. Dan was joined by Shawn Stone (EVP/ CRO, Mr. Cooper), Parvesh Sahi (SVP, ICE Mortgage Technology), and Julian Hebron (Founder, The Basis Point) at ICE Experience to talk through consumer, servicer, and fintech perspectives on how to deliver a singular experience from push-button originations to always-engaged servicing and back to new push-button originations.
In case you missed ICE Experience ‘22 in Las Vegas (or in case you wanted a refresher), we wanted to provide a quick recap of the panel because there were some serious nuggets of wisdom to be found in this session. Read on for three quick highlights from these industry leaders on how to close the originations to servicing loop.*
1. How do you define “customer for life”?
At the center of closing the originations to servicing loop lies the question, how do you keep a customer for life? And to get at that, our panelists first set out to answer what it means to win a ‘customer for life’.
Shawn Stone (EVP/CRO, Mr. Cooper): “Our goal is to be the one-stop shop for our customers to meet them where they want to be met — and to do that successfully and to retain customers for life. In every process and in every inflection point for the customer, you want to deliver a simple, frictionless, personalized experience. For us, from a servicing perspective, that means helping 3.6 million customers through good times and awful, difficult times with self-service options for our customers to opt-in — like the nearly 500,000 customers that we helped through forbearance mods when the pandemic started. And obviously, it’s important to be there with data-driven solutions and personalized options on the origination side — rate term refinance, cash-out refinance, home purchase, etc. And we also offer ancillary products, insurance, warranty, multifamily, and other services. If you’re obsessed with the customer and you work backward from the customer point-of-view in all the experiences to reduce friction, good things can happen. That’s how we approach it at 10,000 feet.”
If you’re obsessed with the customer and you work backward from the customer point-of-view in all the experiences to reduce friction, good things can happen.
— Shawn Stone, EVP/CRO, Mr. Cooper
Parvesh Sahi (SVP, ICE Mortgage Technology): “I think there are two sides of the equation. Obviously, we’re all focused on the consumer. The originator sits on both sides, the very first experience that the consumer has engaged with a purchase or a refi. And then obviously, after servicing, there are some opportunities there as well.”
“When it’s the consumer’s very first experience, it better be a good experience, otherwise they’re probably not going to come back to that originator. They are seeking a rate; they’re trying to get the best rate that they can get from purchase or refi. But if they don’t have transparency throughout the process, it starts to become a little bit clunky for them and they don’t really know where they’re going. The originator plays an important role in meeting them where they are from an education standpoint — creating that transparency, and then making sure that you can deliver on that level on the servicing side. And once they are in the servicing world, you need to make sure the left hand talks to the right hand. And there are a lot of opportunities that we’re all uncovering in terms of the goals of recapture to create that circular experience back into the origination side. We can work towards having the lender not just be connected from origination and servicing but then servicing back into origination.”
Dan Sogorka (CEO, Sagent): ”Our thesis at Sagent is that as an industry, we’ve left a lot on the table relative to the customer. We spent a lot of money in the past decade on the origination side with tools and techniques to engage customers and make that origination piece happen with less friction. On the servicing side, for the last 30 years, it has been about mailing out a paper statement and making your payment. But times have changed. Like many of you, like everybody else out there, we’ve all spent the last few years looking at real estate on our phones and our house, and engaging with it more electronically and digitally. And we believe that for our customers, there’s a lot to be gained by engaging with them more digitally and trying to add value to them so they feel like their servicer knows where they are in their life and understands what could be beneficial to them in terms of additional products, services, and education about their home.”
“Think about all the home equity that’s been created in the last couple of years. People don’t inherently understand that unless you can educate them and tell them what they can do with that? And so we really feel like we can change people’s lives financially, if we have the right tools in place to do that. And, frankly, there hasn’t been investment in the servicing space like there has been in origination, and we’re certainly changing that at Sagent and working with partners like Mr. Cooper and ICE so we can add a lot of value.”
2. Why Is a Single Lifetime Consumer Experience So Important?
We know low retention has been a persistent problem, especially since 2018. Retention rates are around 33% for All Refis, 38% for Rate/Term, and 30% for Cash-Out. Are the separate originations and servicing experiences the main contributor to low industry retention?
Shawn Stone: “I think, fundamentally, the first step in the process is very confusing if you’re working backwards from the customer perspective. You start off obviously with the originator, often then to interim service by an interim servicer, then sold off to multiple MSR owners, potentially once, potentially multiple times. So you think about working backwards from the customer perspective again, providing that simple, frictionless personalized experience there. And the customer can get lost in translation there in a pretty significant way, and the lender that originated that loan upfront, they’re potentially two steps removed from that process as well. So ultimately, that end-to-end seamless experience is the holy grail.”
Parvesh Sahi: “If you’re not able to meet the consumer where they are in their journey, they may have received a really low rate, and if you start to reintroduce another rate for a refi that really doesn’t resonate with the borrower, then that’s kind of a recipe for disaster. I think that Shawn was alluding to it earlier, that it’s really all about understanding who your consumer is and starting to take action on what products will actually resonate with them.”
“And so in a world where we all know that people are enjoying incredibly low refi rates, if you’re able to take that data and introduce a product, like a HELOC or second or something along those lines, that really brings them back into the fold, and that recapture’s going to be good. And I think where we see a lot of fallout is essentially where folks are not doing that because you’re not taking the time upfront to have a strategy and a plan around how you’re actually going to understand what your message is, and curate that message to be specific to that consumer. I think sometimes people are doing broad-brush campaigns and then you have some trouble with your own customer base on the servicing side starting to wane off because someone else is coming in with a much more curated message that resonates with them a little bit more. Those are the things that we’re starting to see where some people, some lenders and servicers, are doing those personalized hits, and if you’re not, you’re going to be a little bit of a disadvantage.”
It’s really all about understanding who your consumer is and starting to take action on what products will actually resonate with them.
— Parvesh Sahi, SVP, ICE Mortgage Technology
Dan Sogorka: “And to add to that, clearly there’s a wide disparity between winners and the losers in this space. I mean, you have people like Mr. Cooper and others with the 60%+ retention, and if the average is 30%, then you have a lot of people that are 10 or 15%. A lot of it comes down to technology tools, and historically, we haven’t done a great job at leveraging data the way other consumer industries do, so number one, we’re in the early days of that. And number two, clearly the data would say there’s a lack of brand loyalty from the consumer’s perspective. If all you’re getting is a paper bill, and then you set it up for auto payment, and you don’t even get the bill anymore, then you don’t even see the servicer. You don’t know who this person is you’re paying, and they clearly don’t know you. There are so many new things we can do to enable our customers to have access to data, to have access to the right tools to be able to get it to their employees and their consumers in a way that is positive, in a way that builds brand loyalty and engagement and adds value. It seems like that would be table stakes, but the fact is that a lot of the industry is on really old technology that doesn’t even enable the sharing of the data. It’s actually harder than you think, and it takes work, and it takes people — like the three of us working together — to say, ‘I have the data, it’s way over here. I want to get it to you here and then you can show it to X, Y, or Z person there. And it’s real-time.’ That takes a lot of work based on where the systems lie historically.”
3. How Do We Execute on a Singular Consumer Experience Across Origination and Servicing?
As we get into the execution section, important context to remember is that Sagent recently announced a landmark deal with Mr. Cooper under which Sagent will buy certain intellectual property rights related to Mr. Cooper’s proprietary, cloud-based technology platform for mortgage servicing, and Mr. Cooper will receive an equity stake in Sagent. Dan and Shawn dig into this partnership below.
Dan Sogorka: “Sagent and Mr. Cooper are aligned as organizations around a vision for the future that is extremely customer-centric, and we share a common view of the architecture that we knew it was going to take from a technology perspective to deliver on that and to keep going into the future. So, Mr. Cooper is, obviously, a leader in the space, and we loved their consumer-facing servicing technology. We saw the world the same way, we were intellectually honest about where we actually are, and we think we’re going to bring a lot of value to the industry as we promised.”
Shawn Stone: “We’re super, super excited to be partners with Dan and his team. We’ve owned our technology, our IP, for 25 plus years, and it’s really allowed us to grow our business from the ground floor 25 years ago to 3.5 million customers today, helping our customers in good times or bad times. We had almost half a million customers just in the last year and a half that we’ve helped out through a pandemic forbearance modification, and, you know, we’re partnering by selling our IP and becoming an equity partner with Dan and his team because they’re super good and there’s a great leadership team and great capital partners with Warburg Pincus and Fiserv. We’re excited to work together here and we think there’s a compelling value proposition for the industry going forward.”
This business is gonna get intense. You need to be bold and ambitious, and this is the year to do it. And if you do nothing, in 2023, you’re going to feel like you’re in 1985. The status quo is not going to be good enough. Your customers are going to demand a different experience very quickly. And when leaders start delivering, there’s going to be a wider disparity between the winners and the losers in the space.
— Dan Sogorka, CEO, Sagent
Dan Sogorka: “Yeah, I mean, this business is gonna get intense. You need to have a plan, and you need to have the right partners, like, today. And I think if you do that, and you can be bold and ambitious about where you want to get to with the right team that can execute and get you there over time — well, this is the year to do it because a lot is changing. And if you do nothing, in 2023, you’re gonna feel like you’re in 1985, in one of those periods where things are going to move very, very fast. And you see big players making big moves, like Shawn said, they have had their own technology for 25 years. They didn’t just wake up one day and say, “Oh, let’s partner with Sagent.” This is a big movement on their part because things are changing, and I would just encourage you to understand that the status quo is not going to be good enough. Your customers are going to demand a different experience very quickly. And when leaders start delivering, there’s going to be a wider disparity between the winners and the losers in the space.”
*Editor’s Note: Panelist answers have been edited for clarity and brevity. While they are mostly direct quotes, there are some instances where we have had to paraphrase the panelists’ answers to capture the speakers’ intended meaning.
To learn more about how Sagent and Mr. Cooper are changing the game in 2022, click here.
For more on how Sagent is helping close the originations to servicing loop, check out more from Dan here.