Michael McFadden of OptiFunder: CFOs Embrace Tech for Strategic Advantages to their Organizations

Michael McFadden is a former mortgage banker and CFO, now fintech entrepreneur. He founded OptiFunder in 2019 and created the industry’s only Warehouse Management System, which streamlines processes, reduces costs and provides agility for integrated Independent mortgage bankers and warehouse lenders. His vision of utilizing technology to streamline processes and more deeply integrate relationships is transforming funding through loan sale for the independent mortgage banking sector.

Michael McFadden

CFOs across industries are embracing technology to gain control, reduce costs and streamline operations, structuring for success amid a turbulent environment. In fact, CFO-focused technology is some of the most exciting and disruptive tech in our industry. But what makes technology effective for finance leaders? Key conclusions from the 19th annual MIT Sloan CFO Summit included:

  • The right data – internal and external—is crucial
  • Finance needs an ownership stake in the data model
  • Automation and AI help optimize financial processes
  • Progress is ongoing

Improved data access and utilization can drive strategic financial management, efficiency and success of the entire organization. KPI/data management challenges were the reason I left my role as a mortgage banker, CFO to start a FinTech company. Let’s explore how the summit’s conclusions above apply to mortgage CFOs.

The Right Data 

The right approach brings internal and external data streams together securely and in real-time for automated data exchange and analysis. For example, KPIs for the short-term capital that fuels IMBs business have been hard to access, laggy and siloed, hindering analytics. To create organizational efficiencies, the CFO needs to bring the data streams from their lender partners and their investors together with their own LOS data, then use software-enabled automated and optimized decisioning, processes and analytics.

Finance Driving Data Modeling

Managing cost of capital comes down to making optimal funding decisions and minimizing dwell time. It requires real-time data streams from multiple sources and factors active individual components matched with insights gleaned from dynamic data sets from the origination pipeline, warehouse lender and investor. It’s also crucial to consider lender relationships and market factors. Technology that facilitates product flexibility aides fluid market –and even M&A—transitions.

AI/ML and RPA Automation Optimize Financial Processes

Fully digital funding and loan sale as part of the true digital mortgage are here, and are improving financial decisions and processes. AI and Machine Learning enable optimization of funding to deliver the result that achieves the desired strategic outcome such as minimizing interest expense, maximizing ROE, or achieving certain funding allocation targets. Additionally, data integration and powerful Robotic Process Automation and other automation tools perform repetitive tasks. Processes for Funding through loan sale are being automated, reducing human resources and human errors while accelerating transactions to reduce dwell time. The takeaway:  Technology is now streamlining processes so that people are moved from doing the work to simply monitoring it. Embrace the latest technology for the maximum benefit.

It’s an ongoing process
When automating KPIs, CFOs should accept it’s a process and seek a solution that can evolve with your needs. Other helpful considerations:  Most importantly, prioritize data security with best-in-class architecture and safeguards. Partner with tech companies committed to innovation so that the technology you implement continues to utilize the latest technology tools to solve new challenges as they arise. Choose a scalable solution so that you can implement it in phases (if needed) in order to quickly realize savings and efficiencies. (Scalability should also apply to volume and market changes.) Lastly, the best solutions offer customization and are user-friendly–reasonable implementation timelines and full utilization enhance ROI.

Power of a Third-Party Solution

Some companies want to develop their own technology, but that can divert IT and financial resources to the detriment of customer experience. Complex technology solutions come to market following years of focused development by leading data scientists, architects and developers. The cost of a third-party solution is shared by its entire customer base. Likewise, the cost for training and support resources and future feature enhancements are amortized over all users.

In summary, though the conditions contributing to current market challenges may be unique, the cyclical nature of the industry certainly isn’t.  Today’s mortgage banking CFO can—and should–source and utilize sophisticated technology to gain strategic advantage for the entire organization. Resulting efficiencies reduce expenses and enhance agility which strengthens the company’s position and enables it to capitalize on opportunities. 

(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 msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)