The winning strategy for originators is going to be one that fully embraces digital
Inflooens CEO Amit Ghole and Melody Wright, SVP of Product and Strategy, joined a recent episode of the Principal to talk about why companies need to invest in technology, even when business is slow. They say the right investments can help avoid the need to scale up during good times and slash staff when originations drop.
The interview was conducted by Mike Savino, Mortgage News Network (MNN) director of multimedia. (Editor’s note: Melody Wright has left Inflooens since this interview was conducted.)
MNN: So I guess just to start things off, we’ll start with you Amit and just — to the point of investing in tech. I always like to throw this out there: we keep seeing originations down; originators are struggling. Why should they be investing in tech when they’re trying to think about where every dollar is going right now?
Amit Ghole: Well, like you said, the circumstances are what they are and it’s really about everyone’s ability to survive, if not thrive in this existing environment. And coming out of this circumstance when policies do change, when there is another wave of refinance — being in a position to be able to scale seamlessly, that is why an investment in the right technology makes absolute sense right now.
MNN: Melody, what advice would you have for originators on, on where to start? Where to get the best, uh, bang for their buck?
Melody Wright: I think they have to start with a strategy, right? And I think that unfortunately what’s happened recently is we came off these two years of incredible momentum where everyone could not keep up. You’re hiring, throwing bodies at a problem, just trying to close those loans, to record that gain on sale. And everybody was just moving so fast that they couldn’t really see the forest from the trees. And of course, there was no time to implement technology, etc. And so we’re at a moment where we have stopped, that all that acceleration has stopped in a way that has really kind of — the market is a little surprised by how quickly it happened. I think that you have to have a strategy which includes a tool that will ensure that you don’t need to act the way that this industry acts during boom and bust cycles. Meaning that we rapidly scale up and then we slash and burn because we can’t hold the expense.
That’s not how it should be. I’m a survivor of the great financial crisis. I was at GMAC in 2007 when we did our first big layoff in December of 2007, another big layoff in March of 2008. And that was hugely impactful to me that it … should not be this way. Essentially, you have to have a strategy and a plan because you know that this is how origination works. And so to me, understand what you need and what you need is you have to increase efficiency, increase sales and lower costs. And so once you have that strategy, you have to find the right technology to do that. And I would say that’s a technology that’s gonna provide transparency and accountability.
“You have to constantly be retooling your artificial intelligence. It’s a machine, just like you take your car to get an oil change.”
– Melody Wright, SVP of Product and Strategy, Inflooens
MNN: You brought up the point that when times are booming, it’s easy to just say, ‘I gotta make hay while the sun is shining. And then as soon as things contract, like right now, I gotta make phone calls, I gotta do this, I gotta do that. I gotta find my next loan. Where’s it gonna come from?’ So if you’ve been doing that and you really don’t have a strategy, where do you start? Where are some easy low-lying fruits where you can sort of see a quick payoff that, ‘Wow, this is making my life easier?’
Wright: Well, honestly, I think you start at the beginning of the pipeline. If you’re gonna start somewhere, start at the beginning and understand what is getting in your way of getting those opportunities in the first place. What are you doing with your leads, right? What are you doing with your referral partners? How are you utilizing them? Are you using analytics to make sure that you’re getting those leads in the door, number one. But you’re retaining those leads and you’re making sure they don’t fall out because you forgot to call them. You forgot — and by the way, you did a Google ad and it didn’t get uploaded in your CRM properly. Now you really don’t even know if you’ve lost leads.
So, I would just start from the beginning. Or start from the place where you have the biggest pain point. That’s always good advice. What’s the biggest pain point right now? People think that that’s sales. And so I think that probably is a great place to start.
MNN: Amit. Start with the biggest pain points. It sounds like really you can find tech to help you do anything you’re doing right now in the mortgage industry.
Ghole: That’s right. And then I would start by saying that, piggybacking on what Melody said about the two things that are most important right now in the given situation is, ‘Hey, do I have enough dollars coming in to feed the rest of the organization and myself?’ So we’ve got a tremendous focus on sales. How can I sustain or even grow sales?
One of the things that we’ve been doing at the company is aggressively following all the mortgage coaches and the sales approach, the philosophy being that you have this referral network. And if you can leverage text and analytics to really go after relationships that you would require to come out thriving in this environment — well, how do I go about doing that? Our technology offers those capabilities, modeling after again, teachings of the best in class mortgage coaches.
Then the next stage that I have to address is, how do I — I have so many fixed costs in the organizations. I drive them down through automation and then, as much as possible, find ways to eliminate repeatable processes. So bringing — when you bring these two very, very powerful and needed aspects of your operations together and apply technology to solve for those, those technology products come out as winners as well as lenders who adopt the right technology environment.
Wright: We’re seeing companies that, you know, like Finance of America, that are shuttering. You’re basically going in and you’re trying to grab volume by grabbing people. But the thing is, even when you grab those people, if they don’t have the right tools, they’re not gonna be successful in this market. And one of the things that we’re doing is we’re really trying to solve for the people that’ll be using these tools. Because what we’re finding is that a lot of our kind of younger millennials and Gen Zers interacting in that kind of get to know you kind of sales conversation, that just is not intuitive. And so a lot of the folks that are in the market right now actually don’t even know what’s the first step to establishing these relationships, cultivating leads, etc. And so through our CRM or their CRM component, this is something we’re solving with our lead and referral management and our kind of get to know your referral partners within the application. We have a lot of tools that help you do that.
MNN: And certainly they’re much more familiar with using tech to solve problems just like that. Amit, you’ve talked about the importance of transparency. But talk to me about that in this space. Because I always envision tech companies, companies that are dealing with algorithms and AI, they’re very protective of their products. So talk to me about what transparency means when you’re talking about technology and how do you accomplish it?
Ghole: One of the core philosophies when we started the company is we promised to ourselves and our employees and our customers is the very first thing that we are going to do differently from the rest is we are going to eliminate the silos. Innovation has been taking place, but innovation has been taking place in silos. And the approach has been that ‘hey, I solve for a problem’ and then throw the problem over the fence. Right now it becomes somebody else’s problem. We took time to bring people and processes together and we take pride in doing that. You know, a good example is we’ve got a large customer whom we are deploying. They came to us with a specific problem of solving for their processing department’s workflow automation.
When we gave them a demonstration and made them realize, ‘hey, your processes can actually look at very, very transparently and even engage leads as they’re coming in through the sales funnel. So that when they do go into processing, you absolutely are sitting on top of all the things that you would need for when they’re in processing and vice versa for the loan officers to know what’s going on in processing. For everyone to know and not be surprised with the results and conditions that come out of the underwriting process. And guess what? As the origination is coming along, exposing that level of transparency to your borrowers — wow, never, ever achieved before. We’re very excited to be offering the industry with all this, these tools and technology and provide a whole new experience.
Wright: And Mike, one thing I can tell you, when I was managing processors back, we kind of act — one of the companies I was working for, we acted kind of like a staff OG. And I was managing processors that went to work at different companies. And I cannot tell you the amount of time spent, between loan officers and loan processors arguing over something that somebody just couldn’t find an email. We call it, ‘email Joe’ because there was just no one system to capture these data, the timelines, whether the requirements were there. And so there were just these fights of blame and shame that when you have a system that tells you everything you need to know that’s keeping track of your notes can keep track of your phone calls, etc, it’s all there for everyone — you just are going to gain exponential efficiency.
The very first thing that we are going to do differently from the rest is we are going to eliminate the silos. Innovation has been taking place, but innovation has been taking place in silos.
– Inflooens CEO Amit Ghole
MNN: The thing that I wanted to ask and is just the conversation around bias in technology. And it’s not exclusive to this industry, it’s in general with artificial intelligence. Because I don’t think people can appreciate when you’re building algorithms, if you are using, for example, bad data and you’re baking it in, those biases will just perpetuate. And we’ve seen in this industry, experts pointing that out in that if you’re using bad tech, you can certainly be responsible for that. How do you account for this? And how do you advise people in this industry to watch out for that as they’re expanding their tech?
Wright: In this process, to me, you always have to look at that and make sure that you have some sort of governance committee that’s reviewing these things. Always … you have to constantly be looking at, have your risk management teams looking at ‘OK, what could I be missing here through this automation?’ And, I don’t think we’re even — we’re certainly not advocating at this point to take the human out of underwriting.
But we need to give them the tools to arrive at these decisions faster, but also alert them like, we have a big roadmap. We won’t go into that here, but these are the types of things we want to incorporate is that you have some sort of scoring along the way. Risk-based scoring that says, ‘Hey, listen, this is all great and this is falling out for X, Y, Z, but you need to re-review this because this is high risk because of maybe the neighborhood, wherever it is, you have to do that extra review.’ And you have to constantly be retooling your AI. It’s a machine, just like you take your car to get an oil change. You always have to be looking at your models, checking them, understanding them, and looking for that bias to make sure it doesn’t happen.
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This article was originally published in the NMP Magazine March 2023 issue.