This article originally appeared here in National Mortgage News.
The 2022 mortgage cycle turn is a gut punch for some, but just the latest round for long-gamers. The difference this time is home owning and buying consumers expect to run their lives and finances from their phones.
Delivering this in our highly regulated space is very complex, and requires deep mortgage operations plus fintech expertise. Which raises a key question: are mortgage experts or pure technologists best suited to today’s challenges? Or, potentially better, do you have to be a pro at both to survive this era?
Below we answer those questions as a warmup for my Digital Mortgage Conference panel on this topic.
From Mortgage Operator to Fintech Leader
I’m one of those “seasoned” – aka battle-readied! – mortgage servicing operators who’s been through a few full economic cycles and seen up close how both good and hard times play out for homeowners, mortgage lenders and servicers, regulators, investors, and all other players in the ecosystem. Now, in terms of this cycle, I have the honor of leading the “humans where necessary charge” at a fintech company, instead of a mortgage servicer. It’s now more important than ever to let the tech lead in mortgage, where the humans are not, or should not, be needed.
Ultimately, software should power all parts of mortgage & mortgage servicing whether it’s during good times like we’ve had with record low rates, low delinquencies, and record home equity – or the tougher times we’ll have again with hardships, foreclosures, and scaling default management.
But humans are still at the core of every action for servicers, homeowners, regulators, and investors—they are holding the processes together where the tech should have kept up; the right team of hybrid operator and rule-following technologists just need to get together to do the work.
So as the servicing innovation era has converged with the market cycle turning, I chose to bring my mortgage operational experience over to the fintech side where expertise is needed more than ever – to lead real innovation and evolution in mortgage servicing technology.
Right now, this is the hybrid era where mortgage servicing operations and fintech experience come together.
More on that in a moment. But first, let’s look at what mortgage operators and technology pros each bring to the table.
As a Mortgage Ops Expert, How Techy Are You?
Many of us hope that when searching for tomorrow’s fintech software experts; they come from the mortgage operations trenches. We want them to know us, and see us, and feel our battle scars.
These people know the pain caused by the lack of a solution.
They know why a software solution should exist and how to build it for scale, compliance, and use by the actual humans who need help and assistance – whether those humans are servicing operators or homeowners.
Servicing operators deserve better than some trendy fintech crew coming in with non-mortgage resumes telling you how you’re doing it wrong. As a fintech org that is modernizing servicing for homeowners, we don’t cookie-cut our prospect process, we come in with a strategy and invest in humans – who invest in themselves – and get the work done. We want to be your partner, not your vendor.
A common tech-world narrative says less industry expertise makes you a better disruptor unchained to previous ways of doing things.
There’s some truth here, but brash statements like “we’re disrupting your space which is totally broken” sounds more naive than visionary in mortgage servicing where software is needed to manage every action that every servicer, homeowner, and investor takes on $13.3 trillion in outstanding mortgage balances.
That’s why we’ve spent this year at Sagent building a world-class team of mortgage-operators-turned-fintech-product-pros to be the bridge supporting this evolution of servicing technology needs.
Below are a few core themes that drove this process. We hope these are helpful for all you mortgage experts pondering fintech as your next career chapter:
- Know your ecosystem. As a mortgage pro, we are seeing that you must become more and more comfortable with tech, particularly if you plan to pivot to fintech. You must know what tech stacks are available, and why. Maybe more important you should know why great tech is hard to come by — especially in mortgage infrastructure. At the same time, you need to stay abreast of the ever-evolving shiny-like-a-penny solutions to figure out what is valuable, what is there for a moment, and how it all fits together for lender/servicer processes, compliance, and user experience.
- Stay nimble. Mortgage is about process, and great mortgage process people can become rigid. Great software is about solving today’s processes while allowing for immediate adaptability to tomorrow’s changes. Always be willing to be wrong and always embrace that there will be a better (or more automated) way.
- Humans Where Necessary. Humans where necessary ortgage servicing is not only the goal, but trust me, it is the future of the complex mortgage fintech world. Mortgage servicing is the ripest universe for tech, because it is one of the most regulated systems in this country. Achieving this mission requires your tech partner to have the skills to deliver technology, but the experience to deliver partnership in change and operational efficiency.
How can your mortgage expertise help create this future?
As a Tech Pro, How Deep Are Your Mortgage Skills?
OK, now let’s look at how to get more tech pros deep into mortgage fintech. What if you’re a purebred software pro coming to mortgage from another industry? As noted above, we do believe there’s some truth to the concept of new industry entrants adding fresh perspectives.
Jack Dorsey got a lot of credit coming in to build Square as a financial services outsider, and now that’s one of the biggest consumer finance and small business finance platforms out there.
But that’s the exception, not the rule, at least in mortgage servicing where you’re handling every financial detail for the largest assets of both consumers and the world’s largest investors.
Plus it’s the most highly regulated industry on the planet where policy enforcement stance is “unprepared is unacceptable.” There are more rules about what servicers can and can’t do with a mortgage than there are about what you can and can’t put into your body.
So, it takes a special kind of technologist to come from outside mortgage and build tech that solves existing problems for homeowners and operators without creating new ones – and without missing on any of the endlessly changing Federal and state compliance regs.
And we need these special technologists in our industry. So here are a couple tidbits we hope are helpful for all you tech experts pondering fintech – and specifically mortgage fintech – as your next career chapter:
- ‘Lead The Evolution’ is more important than ‘Disruption’ or ‘Simplicity’. You don’t just rip out infrastructure powering a $13 trillion machine running millions of processes per day. You must rebuild the plane while it’s flying, and what better challenge is there for technologists?!
- Don’t go at it alone. Find some seasoned mortgage folks that are interested in the change that you seek, or that you can deliver. It’s these sorts of symbiotic / catalytic relationships that we’ve seen the best, most trusted, in mortgage technology born.
- Humans Where Necessary Servicing means just that. Mortgage & mortgage servicing are, at their core, people businesses built on relationships. But tech, and consumer expectations, and the on-demand need of receiving information “right now” is the world we live in. Humans Where Necessary Servicing means that we let the tech lead where the humans are not required, or where it is just plain safer in an industry that requires the speed, precision, and consistency that ours does; it enables financial service institutions to invest in and focus on their strategy for connecting with their client base, actually creating a shot at that “customer for life.”
Getting this human help and assistance right is as much about understanding the mortgage process as it is about the technology that powers it.
The Hybrid Future in Housing & Fintech
Now let’s come back to the question we started with: Are mortgage experts or pure technologists best suited to today’s challenges?
Although skewing slightly toward mortgage experts can be intriguing (and potentially an easier path), we believe that moving forward, mortgage and tech experience will come together in a hybrid future.
Earlier eras of innovation in retail and entertainment made consumers expect easy everything. As we work to exceed those expectations in housing finance, it requires deep mortgage AND tech experience.
So, I hope this piece helps as you exceed your own career expectations in the coming year. And if you’re at the Digital Mortgage Conference in Vegas this month, I hope you’ll come see my panel on this topic.