“We need some radical change and some companies to challenge the status quo”
Traditional mortgage companies that are still dependent on “siloed technology” might as well be using prehistoric tools, according to fintech expert Souren Sarkar.
Sarkar, the founder and CEO of mortgage tech provider Nexval, explained what siloed technology is and how it impacts lenders and servicers.
“Technology was supposed to liberate us from the shackles of human processes, paper systems and other filings and all those things that we did that really held us back,” Sarkar said in an MPA TV interview. “What has happened now is some of these software technologies, especially in industries like the mortgage industry, or you can see maybe the travel industry, are running on legacy systems that were built in the 70s or the 80s, which is essentially kind of a Jurassic period. I mean, if you think of the progression of technology, that’s a really long time, 40 years.
“But because we are in an industry where, especially on the servicing side of mortgage technology, you’re talking of a minimum 15-to-30-year transaction here in the US or at least an average loan, even if it’s refinanced. I think the number is about seven years. So, there are always loans in progress and flight, just like many flights out there. And it’s very hard, it’s very hard to change kind of these technologies and the providers of these technologies.”
Another example are mortgage banks that have no incentive to improve their technology to the extent that it meets the current standards, according to Sarkar.
“So, they’re running off these legacy databases and application platforms that sound very ancient to the rest of the world,” Sarkar added. “Now, with, for example, a loan transfer, it’s so much easier to do it within these siloed systems that, in spite of hating it, people still use it. So it is really one of the downsides in the industry, and we need some radical change and some companies that look at this from the ground up to challenge the status quo on these legacy industries.”
You can watch Sarkar talk about how mortgage companies can break free from legacy platforms in the MPA TV episode, “How to overcome the ‘if it ain’t broke don’t fix it’ mentality in mortgage.”
As published on Mortgage Professional America, October 6, 2022.