Last week I had the privilege of co-presenting at the annual Ellie Mae Experience 2018 conference with one of my colleagues Steve Williams, Partner at Cornerstone Advisors. It was quite the event. As always, it was hosted at the Wynn Resort in Las Vegas, which is a top-notch conference venue and hotel. It was good to mingle with Ellie Mae clients, overindulge at the chicken & waffle breakfast with some Cornerstone clients (you know who you are) and get an update on the state of everything Ellie Mae.
To say that Ellie Mae is currently in the middle of an incredibly intense development effort is an understatement. The scope of their development efforts, and aggressive road-map are as deep as they are broad with the goal of making significant functionality and performance improvements across a number of their products such as point of sale (POS), closing portal, loan officer portal, etc. as well as infrastructure enhancements.
Walking the halls and talking to various mortgage lenders, clients and vendors, there were some recurring themes:
Not surprisingly, digital lending and primarily the POS solutions were the hot topic at the conference, which mirrors our daily conversations with clients. Everyone is trying to figure out whether they can get a viable POS product from their vendor, if they need to look at a best of breed product (e.g., Blend, Roostify, Mortgage Hippo, et al.) or if they should consider building their own. We have clients in all three camps. Larger mortgage shops have the “luxury” of deciding which product suits them best and clearly identify trade-offs with each option. Smaller mortgage shops are almost completely stuck with using what their LOS vendor can provide. Building custom is typically out of the question and the best of breed providers previously mentioned have too high of a price tag for some of the smaller guys. I spoke to several lenders last week who feel they are getting left behind. Candidly, they are the ones most dependent on the successful rollout of a product like Ellie Mae’s new POS, Consumer Connect.
In all reality, Consumer Connect was arguably one of the most highly anticipated topics of the conference and many were still left wondering whether it would be a viable solution. For smaller mortgage shops who are looking to get in the POS game it will provide some much-needed functionality, but the larger, more progressive lenders are the ones trying to decide if they will need to look elsewhere. For many of the clients I spoke to, the jury is still out.
Another theme that came up considerably was profitability, or efficiency with the end goal of improving profitability. Encompass clients were scouring the conference looking for system improvements that would lead to further efficiencies since everyone is struggling with the same profitability concerns and for good reason, homing in on Loan Officer compensation. Looking across the metrics from our annual Cornerstone Reports for both Banks and Credit Unions, Loan Officer compensation has increased 50-60% over the past 5-6 years. Said another way, we are paying Loan Officers roughly 50% more than what they were being paid 5-6 years ago for the exact same level of production (in dollars).
Likely due to the timing of the conference and latest headlines about Amazon regarding their potential entry into the mortgage industry, this topic was top-of-mind. Thoughts ranged anywhere from this being a game changer due to their proven innovation on one end, to getting completely shrugged off by others. In either case, it will be interesting to see if they are able to navigate the red tape and compliance requirements of the mortgage industry and bring something to market. Not that I’m putting it past them but getting a mortgage loan in a customer’s hands is a far cry from providing next day delivery on a consumer’s latest impulse buy.
So, this year, in place of bringing back some winnings from Vegas, I’m returning with the usual lingering smell of casino smoke in my clothes along with some insight on Ellie Mae and some of the issues and challenges their clients are facing. It will be interesting to see what they can deliver, and their clients will be rooting for them.
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Related Video: Steve Williams talks shop with thousands of mortgage bankers. Top of mind: digital experience and cost to originate.
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