In the mortgage lending space right now, there is nothing as hot as point-of-sale (POS) platforms. Right up there with the Winter Olympics and record breaking, baby-naming Instagram posts, POS platforms and the elusive digital mortgage are undoubtedly hot news right now. From Blend to Roostify to MortgageHippo, et al., anyone who has attended a recent industry conference can attest to the obnoxiously long booth lines. I’m convinced someone is handing out free drinks. With all the media coverage, industry chatter and representation at conferences, I feel compelled to set a few things straight about where things stand with the POS providers as it relates to the average mortgage lender.
- First, they do have some really cool tech. In most cases, the POS technology they offer exceeds what most loan origination systems (LOS) can provide. Along with an excellent interface for the borrower, these solutions boast a simplified, dynamic application with easy borrower registration, intuitive status updates and co-browse features which are nice, even if it doesn’t fully support all your real-estate products and can’t offer an automated Pre-Qual letter. The real rub here is who will dictate the “best practice” and define processes where POS and LOS functionality overlap? This takes time to work out, so it won’t work to simply slam in a new system and hope it leads to a happy borrower. Vendors on both sides of the fence tend to dodge questions surrounding the hand-off and process variances between the LOS and POS.
- Second, despite the perceived popularity, if these systems are so cool, then why isn’t everyone using them? I think there’s a couple reasons for this. First, the cost floor for these products is pretty high. Unless you’re consistently booking upwards of 100-200 loans per month (depending on the provider) these products are going to bust the budget. This alone excludes roughly 2/3rds of the community banks and credit unions in the country who are originating mortgage loans. The second reason for the lack of traction thus far is vendors are still establishing their partnerships and integrations. There are certainly some in place and other active deals are still in flight. While it’s necessary for these partnerships to continue developing, the cost must come down for these vendors to reach the mortgage lending masses.
- Lastly, and let’s not be subtle about this point – these providers are getting arrogant. Astronomical booth lines and a few well-deserved, large clients along with some hefty funding for these providers is seriously affecting their approach to the market. If one doesn’t find their current costs to FI’s alone as a statement of arrogance, which some do, their approach towards vendors leaves a lot to be desired as well. When the POS vendors are dictating to the LOS providers what “they” (the LOS vendors) need to do to be able to work with “them” (POS vendors), which is happening, the tail is starting to wag the dog. To be clear, the POS is the plug-in to the LOS, not the other way around. Unfortunately, we’re at a point where the cost of these POS solutions can rival what some pay for their LOS.
I get it, digital lending is the future and the ability to effectively capture and engage the borrower throughout the entire process is critical and these POS providers are doing it better than anyone. But, the momentum of banks and credit union’s moving to these platforms is not as strong as everyone believes. The booth lines might be really long, but it’s not indicative of the number of community bank and credit unions signing up. At least not yet. If these providers can reach critical mass with integrations to the popular LO systems out there and bring their prices down from the stratosphere, momentum in these products will undoubtedly get a lift.
If nothing else, the POS vendors along with this little thing called Rocket Mortgage, are forcing LOS vendors to develop better solutions for their systems faster than they likely would have otherwise. Improvements here are a key focus for the LOS vendors right now, and rightfully so. The real question is whether the LOS functionality can match what the POS vendors bring to the table. For many mortgage lenders it is a ‘wait-and-see’ game right now.
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