Tech Companies Need Hugs, Too

When push comes to shove and mortgage companies start zipping their wallets, mortgage fintech is often left in the dust

Sarah Wolak
Sarah Wolak
Tech Companies Need Hugs, Too

“When a tech is built, it’s built to suit what’s happening today in the current market

“While the hypothesis might support that it can create equal value in a down market, that’s not always the case,” Young explained. “The soft [return on investment] is what caused a lot of lenders to slash their budgets down to the core of what they need.”

Young also says that even though there has been a strategic drawback in tech services, it’s not necessarily bad.

“What I’m seeing with the people I’m working with is a big advantage at being able to look at issues with hindsight, because now they can look at it with an extremely opposite market from what we had before and understand what they did and didn’t do,” she said. “Things that are bad [at] the moment always end up being good long term.”

Gaurav Nagla, product manager at Blend, says that even though they’ve had to resort to layoffs, it doesn’t mean that the company isn’t making itself an asset to the mortgage industry.

“We’re seeing financial institutions take advantage of the current low-volume environment to implement and adopt product features that they couldn’t do during high-volume times,” Nagla said. “Tech companies that demonstrate the value they create not only for the mortgage lenders but also for other players can position their services as ongoing assets to their customers.”


Tight Market, Tighter Budget

As Nagla puts it, tech companies aren’t immune to the business challenges and effects of the global market. Because of that, Nagla says that “revenue is impacted for every player in the ecosystem, and tech companies are experiencing the same as they are an integral part of the [mortgage] ecosystem.”

Now that tech companies are competing for every dollar, Nagla explains that Blend is trying to focus on marketing itself as a solution to a mortgage company’s pain points.

“The right mortgage tech company is not a vendor for a mortgage lender, rather they are an integral partner with a shared goal,” he said. “By focusing on the specific needs of individual lenders and integrating with their tech platforms to power innovative solutions, they can continue to differentiate themselves and strengthen partnerships with lenders.”

Curt Tegeler, CEO, WebMax

Companies like WebMax, a digital mortgage solutions company, say that they’ve been able to weather the storm in a downturn. Kelcey T. Brown, WebMax’s chief strategy officer, says that right now, attrition is a large trend as mortgage companies start to look at and slash their budgets.

“The first things they usually cut are website services or point-of-sale platforms,” Brown said. “But on the other hand of that, some companies make the choice to engage more with technology companies because they understand that by leveraging the technology [for automation], they can save money internally.”

Brown says that WebMax offers multiple products and one of them, enterprise website solutions, is usually what gets dialed back the most during a downturn. “Companies are deciding that maybe they don’t need websites for every user,” he explained. “So they’ll drop their 100 licenses down to 40. But we’re still there in the background because everyone needs a website. It’s just fewer licenses and less business.”

Curt Tegeler, CEO of WebMax, says that customers are simply asking for relief. “We’ve seen customers that we’ve had for 10-15 years asking for extra time for their payments,” he said. “And we’ve had other customers get acquired by other companies, but they’ve been helping us get our foot in the door by recommending our services. It’s a time where tech is helping each other out.”

Competition is involved, too. Tegeler says that all tech companies are competing for mortgage companies’ limited budgets. “We’re putting our name out there and making sure to highlight our product differentiators,” he said. “And now we’re advertising that it’s a good time to check out our company: we can meet their budgets, we can defer payments. … We’re smaller and nimble.”

Brown and Tegeler also acknowledged the loan officer pool shrinking as a factor contributing to a tight market and tighter budgets. “Companies have lower production than they did a year ago. It costs money to hold on to a loan officer, and many officers are leaving on their own,” Tegeler said. “We’re all affected by [the market]. It’s the same sandbox we’re playing in.”

Tegeler acknowledged that WebMax, too, has scaled down to fit the needs of the current market.

“We’ve had to decrease our physical space, our marketing dollars, the amount of conventions and conferences we’re going to, how much we’re going to spend at said conferences. .. We’re looking at everything,” he said. “And we haven’t been bashful in calling up our vendors and asking for help and relief. We’re a young company, we were a start-up in 2015, and we have partners who have been kind enough to help us. Anybody that tells you that they’re insulated from the market, it’s not true.”

Downtime Productivity

In a down market, both Brown and Tegeler say that it’s a good time to sit back and re-evaluate your company’s needs and workflow. Young agreed. She said that she’s seeing many tech companies tinker around with what will bring them the most productivity. “I think that technology that offers flexibility at the loan level is what will be successful,” Young said. “Speed is important. … I think we’ll see individualized component services where we’ll see a lot of emergence. I think people – lenders – will be rethinking workflow and bring it back to the manufacturing process to where it makes sense to get individual components managed more efficiently.”

And in the downtime, customers’ satisfaction and needs are still at the forefront. “Ultimately, we will get caught up,” Tegeler said. “We try to leverage the relationships that we have now at the grassroots level. We’re trying to follow our loan officers and hope that they recommend us to their new lenders. We also try to focus on customer retention – what are their needs? Even though the market is tight, we’re still trying to differentiate ourselves from the competition.”

Young added, “Efficiency has been a big buzzword, but it’s all true that we need to do things better, right, and fast so we can truly use our time well.”

Sarah Wolak
Sarah Wolak,
Staff Writer
This article was originally published in the Mortgage Banker Magazine July 2023 issue.
Published on
Jul 05, 2023
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