THROW THE BABY OUT WITH THE BATH WATER (PART 2: BUY VS BUILD)

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How often is the topic of build versus buy in originations coming up — for large lenders, medium lenders, even adventurous FinTech-oriented small lenders? And what do you think is driving this today?

defi SOLUTIONS Speakers:
Charles Sutherland, Chief Strategy Officer
Scott Hendriks, Dir. Product Strategy and Product Management
Christian Wilcoxson, Solutions Engineer

This presentation is a part of AFSA’s Business Partner webinar series, which allows industry experts to share timely educational topics directly with AFSA members. Charles facilitates a “fireside chat” between Christian (playing the role of the client advocate) and Scott (speaking as the vendor technology provider community at large). This transcript has been edited for clarity and brevity.

Christian: So build versus buy, it’s always been a common theme in originations. We’re seeing it more and more no matter the size of the lending organization, or really what their background is. It comes up in almost every conversation. Even if you’re not talking about building a full platform, there’s always this question and this reoccurring theme of at least building around the platform that they are currently utilizing. And I think where a lot of that is really coming from is the change in where these lending applications are coming in from.

So you’ve had your traditional indirect channels for years, but web applications have come into play. There’s a multitude of pass-through and lead-generation programs out there now. It’s really starting to expand the scope on when and how their programs are interacted with, what’s constituting an application, and really how often core platform changes may need to be made to accommodate these new lines of business, instead of just going in and updating their lending programs like they may have done in the past.

Because of this, we’re seeing more and more systems with our lenders where they’re seeking out systems that they or a preferred partner of theirs can build around and expand upon, and really utilize the core components that they purchase, while still growing and reacting to the market.

Scott: I agree with Christian. Lenders want to be able to create a borrower experience, but have that dovetail with the expectation of their user base and how they manage their unique risk profiles, and their buy box, and the things that they’re looking to put out there is really their program. I think what we’re seeing is that it is going more down market.

Whereas that tended to be reserved for the largest lenders that had huge IT shops and huge budgets, and there was no charge back to the business. And it was just, “We’re going to go spin up 100 people and go build something and deliver it in a year or two.”

The technology itself has evolved now to the point where those conversations are less about that kind of scope and duration, and more about, “Let’s identify the things that we need in order to make ourselves unique, meet our competitive advantage, and be able to portray that in the market.” A big part of that comes down to efficiency. And as we look at how we deliver platforms, it’s becoming less monolithic.

You’re seeing more technology that can be integrated with each other. So lenders are able to buy pieces and parts and put something together that gets them to that point of being able to deliver that experience, but not necessarily by having to start everything from the ground up. It’s not as binary as it has been. It’s people recognizing now that there’s options as opposed to being a yes or a no.

For more of this conversation:

Part 3: Meaningful Lender Differentiation (Versus 3/5/10 years ago)

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