In a recent fireside chat at Housing Finance Strategies’ #HousingDC23 conference, Faith Schwartz had an engaging conversation with our CEO Dan Sogorka about Sagent’s evolution into a mortgage servicing fintech leader and our vision to fundamentally change the dynamics of America’s housing ecosystem.
In case you missed it, I’ve broken down some key highlights from their conversation:
Sagent & Mr. Cooper Struck a Deal in 2022. What Next?
Kicking it off, Faith inquired about Sagent’s partnership with Mr. Cooper to hear the latest about this ongoing collaborative relationship.
”The Sagent partnership with Mr. Cooper has been great. Love the team. Love the people,” Dan said.
“We’ve added approximately 300 employees to Sagent from Cooper. So we completed that transition. We launched our India office with people who have been at Cooper now. And now we have our own Sagent division in India, so that’s been pretty transformational to our ability to move quickly on the things we want to do.”
“And we’re very far along with collaborating on our cloud strategy — where Mr. Cooper will be the first customer — but will be quickly taken out to market for the rest of the industry. Thank you to all the Mr. Cooper folks. It’s been so great to have them on board. Everybody’s worked really hard.”
Sagent Vision for the Future of Mortgage Servicing
Dan went on to give some context about Sagent’s role as a driving force powering some of America’s biggest bank and non-bank lenders — and the millions of consumers they serve.
Sagent’s primary focus is on delivering a modern, end-to-end tech stack for mortgage servicing, ensuring a seamless experience for both servicers and homeowners. Faith asked about the cloud and Sagent’s push for a cloud-native paradigm shift in the industry.
“Our core LoanServ product is in what’s called the IBM Z Cloud. But really, it’s still a mainframe product, right? So it’s the most modern, fastest kind of real-time platform that’s still in a mainframe paradigm.”
“There was a saying in this industry along the lines of, ‘It’s just servicing, you don’t really have to worry about it too much. Who cares if it’s on a mainframe? Who cares if it’s in a data center?’”
“But the reality is, over the last couple of years, we have made changes very quickly. Especially once COVID hit, we have all these new programs, and quick changes aren’t really an inherent advantage of a mainframe ecosystem. Just think about all the things that you could build today that would be faster than the things that you built in the 1960s. “
“What we’re talking about now is really moving to the cloud and getting out the mainframe paradigm, regardless of whether it’s on-prem or in an IBM Z Cloud, and really going through cloud-native modern software across the whole stack. So that’s a very different software paradigm than the one the majority of the industry is in today.”
I think we’re on the verge of some massive changes in mortgage technology. And if my customers are in the lead now, imagine where they’re going to be as we roll out these kind of true paradigm shifts.
The Benefits of a Cloud-Native Approach
As for how a cloud-native paradigm shift would transform things like cost-containment and agile, continuous improvements in tech, Dan had this to say:
We really believe that the biggest changes and benefits from this kind of paradigm change are cost, efficiency, diversity of the labor force, ability to make changes very quickly, and the ability to take advantage of all kinds of the built-in benefits that are in the cloud.
”Right now, frankly, things like AI, machine learning, and large language models just can’t work in a paradigm where everything’s stuck in a mainframe. You have this very real problem getting data to where you want it to be.”
“The cloud means much more transparency, much more real-time data. You can move things around more quickly and identify problems more quickly. You can understand where a consumer is along their journey in real time, versus just finding things out later as the backend systems process.”
“A lot of new tech companies were created still in this whole paradigm of siloed — yet really workflow-centric — software, where anytime you want to do anything that’s kind of cool for the consumer, it’s really, really hard to do.”
“Once we break this paradigm down and get everything into modern cloud core cloud software, you’re going to be able to take advantage of all the great things that you could do on your phone in other areas.”
Real-Time Innovation for Real-Time Policymaking
Faith noted that everyone is working hard to do what’s right for consumers, and how potential regulatory shifts ahead are aligned with that.
When asked what he sees ahead on the policymaking front, Dan explained:
First and foremost, the ability to change and test quickly is going to go hand-in-glove with what policymakers want to see. They want to spend a lot of time and be thoughtful, and then, once they decide what they want to do, they don’t want to wait a year for everybody to get their ducks in a row.
“And that all makes sense. I think it’s a two-way street. If we’re going to ask them to engage with us, we’re going to engage with them.”
We kind of owe it to everybody — and ultimately, the consumer — to move quickly at the speed at which 2023 and 2024 require.
“So I think that’s point one, and point two, we’re seeing a very different posture from policymakers today, right? They want to drive technology, they’re actively coming in with fresh eyes and saying, ‘What’s wrong here? And how can we fix it right across multiple agencies?’ So I think it’s been really refreshing to see the interaction over the last 18 to 24 months.”
Driving Innovation in Servicing Tech in 2024
Dan believes that the mortgage industry is on the brink of significant changes, driven by technological advancements. And Sagent’s commitment to modernizing our tech stack and partnering with innovative companies positions us as a leader and pacesetter in the industry.
”At Sagent, the way we look at it is we don’t have to do everything. We want to be great. We want to be absolutely stellar at what we do. But in this ecosystem, you need partners that are great at what exactly you plug in, and I see it as my job to not only find who the good partners are, but then enable them to have a low-friction way to make our customers’ and our consumers’ lives better.”
As for what comes next for Sagent looking into 2024, Dan told Faith:
“We continue to grow the business, which is great. We’ve got really supportive investors and partners.”
And we’re aligned on the vision: a fully modern, end-to-end tech stack for mortgage servicing, and we’re delivering that next year. And we’re super, super excited about it.
To see the full session, watch it on-demand here.