Craig Riddell of LoanLogics on Digital Technologies
Craig Riddell is Executive Vice President and Chief Business Officer with LoanLogics, Trevose, Pa. He is responsible for establishing and developing ongoing relationships with LoanLogics’ largest enterprise clientele, as well as leading the company’s Sales, Marketing and Account Management functions.
Riddell has more than 20 years’ experience with mortgage and title companies. Previously, he served as head of Client Solutions for Aklero Risk Analytics, one of the merged entities that formed LoanLogics. He has managed successful operations at every stage of the residential mortgage lifecycle and has brought deep industry domain knowledge as well as marketing creativity and organizational leadership to these roles. HousingWire honored him in 2016 with its Vanguard Award.
MBA NEWSLINK: Is it a given that all mortgage origination technology is on the cloud now? As an advocate for cloud computing, what are the differences between cloud-native, cloud-enabled and cloud hybrid technology infrastructures?
CRAIG RIDDELL, LOANLOGICS: It’s probably true that all mortgage origination technology leverages the cloud in some way, but there are major differences. For example, most origination technology is “cloud enabled,” which means it is software that is hosted in the cloud and delivered through web browsers as a Software-as-a-Service. However, cloud enabled software still requires maintenance and upgrades that are tied to the provider’s IT infrastructure, which can mean it may take weeks or even months to develop and deploy new updates and features.
“Cloud-native” software, on the other hand, is built entirely in the cloud using best of breed capabilities and database technologies that are provided by a cloud service provider like Amazon or Microsoft. This eliminates the time and cost software providers need to spend on these types of tools, and it allows software developers to create and deploy their own application code much faster and less expensively than software that is simply cloud enabled. Cloud native software can also scale quickly, which is particularly helpful in the mortgage industry as software applications must meet lender demand during sudden swings in volume. And it gives lenders access to new features and functionality because they can be released more frequently.
Right now, most origination technology is created and delivered through a “cloud hybrid” infrastructure, which includes both cloud enabled and cloud native components. For example, you could have a legacy software application that runs on the cloud with its web or database services migrated to a cloud native environment. For many lenders using legacy applications, this creates a sort of “best of both worlds” scenario.
NEWSLINK: How does leveraging and sharing data specifically translate into helping mortgage lenders in their day-to-day operations and in their overall business operations? How can it be used most effectively to achieve success?
RIDDELL: As in every industry, data is king in the mortgage business. The problem is most lenders are still not able to gather data from borrowers in a digital format; much of it must be manually created from looking at paper documents and PDFs and keying in information. This comes at an incredible expense of time and manpower and causes frequent errors in the origination process as well.
Recently, however, automation has advanced to include sophisticated rules and algorithms as well as machine learning and artificial intelligence, which can be trained to perform many of the tasks currently done by loan production staff. For instance, real time document processing and post-close QC automation technologies can now take information submitted by borrowers and automatically classify documents, extract data and run audit rules and do it much faster and more accurately than humans can. This is a great example of “digital labor,” which is defined as technology that generates value by taking time-consuming, tedious work that used to be performed by people and automating it.
In nearly every project in which we are engaged there is a moment when customers ask, “what else could be done with this data while you have access to the images?” Mortgage lenders are just starting to deeply embrace this concept, but it’s about to change everything in our industry at rapid speeds now that it has made real traction.
NEWSLINK: Digital technologies are being implemented by mortgage lenders, but what should they be considering regarding change management, training and how to create a more integrated technology stack?
RIDDELL: The key to successfully implementing digital technologies is understanding how, specifically, technology can be used to automate the heavy lifting in loan production while freeing up staff to focus on more strategic work. In practice, this can be challenging due to the number of systems lenders use and lack of integration. Through collaboration with their technology partners and by integrating their different systems or taking advantage of application programming interfaces, or APIs, information can flow more freely.
Lenders first need to know what data integrations will be required, how to define that data, and what flexibility they have to move data from one system to another. They’ll also need to consider what file formats to use and how to ensure that the transfer of files with sensitive data is done securely.
But it also requires an organization-wide commitment to adopting a digital workforce that enhances the entire organization. Lenders need to be transparent with their teams about why they are investing in technology and then be ready to train staff and change processes to optimize results once a digital workforce is deployed or expanded. All of this needs to be carefully mapped out and a process must be created for measuring the results. Oftentimes our primary competitor is change itself and not alternative products.
NEWSLINK: Regulatory change is always inevitable in the mortgage industry. Keeping the COVID-19 factor in mind, what recent and future regulatory changes do you anticipate for the mortgage industry and what technology priorities should lenders have when adjusting to them?
RIDDELL: Regardless of past, present or future regulatory requirements, as well as investor requirements, proactively guarding against data defects is critical. With all the automation that exists, quality checks should be done more frequently and, where possible, in-line with production.
The COVID-19 pandemic has demonstrated how one event can change everything on a dime. Now is the time to inspect the quality of your loan pipeline and the accuracy of loan file data. How much have you been able to eliminate manual processes and replace them with automation? Human error and time-consuming manual work can impact borrower satisfaction, cause delays in the process and lead to lock extensions that can squeeze margins. Discrepancies can also lead to poor decision-making and impact loan salability.
While it’s impossible to predict the future with everything changing so quickly, regulatory changes make it absolutely necessary for lenders to embrace digital technology today. The only way lenders will be able to stay compliant and keep costs down is by implementing technology that is flexible, scalable, and automates as many processes and tasks as possible. In fact, once lenders can digitize more of their work, their ability to respond and address any industry changes becomes much easier.
NEWSLINK: Do you believe that COVID-19 has brought a sea change for digital technology use in mortgage originations and, if so, what additional changes are necessary?
RIDDELL: The extent of the “sea change” remains to be seen, but I think it’s more obvious than ever that digital technology is our industry’s future. The pandemic has forced everyone into adopting remote, digital processes whether they were ready to or not. That’s significant, and there will be no turning back.
That being said, there’s no doubt the organizations that survive this crisis – whether they are originators, servicers or investors – will be those that have maximized digital technologies to lower costs and maintain high loan quality. Whether it be the chaos brought about via the pandemic, generational shifts in customer expectations, or growing acceptance of technology as well as management of profit margins, the time is upon us to make the material changes in the business that have been on conference room walls for years. Ultimately, I believe this will usher in a new digital era for our industry and, amid all this chaos, I believe it will be a silver lining going forward.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at firstname.lastname@example.org; or Michael Tucker, editorial manager, at email@example.com.)