THROW THE BABY OUT WITH THE BATH WATER (PART 6: IS THIS A NEW DAWN? | HOW ARE ORIGINATIONS VENDORS RESPONDING)

Charlie Lewis defi BLOG, defi ORIGINATIONS, General News, Series-Baby

How are originations vendors responding this time around?

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.

Charles: Do you think that we’ve really entered a moment where the power and the business operation size of the lender kind of dictate what they want to do and is growing from IT flexibility? Or are we just kidding ourselves and it sounds good — cloud-based, workflow-based, API-based, all the great terms enabling this — but it’s still not there yet. Do you really think it’s the start of a new dawn?

Scott: If I put a pure technology hat on, I know that the underlying technology or cloud versus data center certainly that has some impact on it. But if you asked a businessperson, why do they want to be in the cloud versus a data center? My suspicion is you’re probably not going to get an answer that you would expect.

I think if you asked technology people, they’re going to talk about scalability and they’re going to talk about uptime and blue, green, and all the things that we love to throw around when we talk about cloud technology versus data center.

There’s certainly an efficiency and a cost perspective of that that’s advantageous, but I think it’s more, honestly, the approach of how things were architected and the fact that technology has recognized that it’s much better, from a long-term health perspective, to be able to change out the wheels and the motor while the car is running down the road….to throw the car analogy in there.

Honestly, I think technology is finally recognizing that that’s ultimately what the business needs.

When it comes down to pure thought process, it depends a lot on the organization. For some of them still, IT runs the show. I mean, IT runs the VMO. They decide who the solutions are going to be. They decide ultimately what technology the business will be using.

But I think there’s more of a partnership there with the business because it’s less anymore about the ones and the zeros that the business historically hasn’t really had a lot of insight into — where that was really technology’s purview — those things are not necessarily as constraining as they would have been before.

So I think it’s have we hit the pivotal “gone over the cliff,” where business runs everything in all dimensions? Probably not. But I think we’re seeing an acceleration of that trend.

Again, as the technology continues to evolve, I would anticipate that that’s going to continue to be the case and the business is going to ultimately continue to get more control over what platforms and technologies are being used to run their business.

Charles: Christian, I’m watching your facial expressions. Being together in the same room is a rarity over the last 18 months… if you think about all those lender discussions we’ve had, do you really think this moment is starting to arrive for the business side of it? Or it’s still we’re not quite there, but we’re getting there?

Christian: I think we’re getting there. Because what I’ve seen is with various engagements, there would be rooms you walked into where you knew that, at the end of the day, the technology and platform decision, lived on the IT side of the house versus business. Or in some organizations, vice versa.

And I’m seeing more cooperation when we walk into those discussions where you’ll have the IT stakeholder, but also the business stakeholder. And one of the core things that both sides seem to look at is how easily can we replace certain components?

So whether it’s an in-house build or a system that they’re purchasing, lenders in general, from both sides of the house, they’re trying to get to a point where if they do need to make a change or a shift in something, the different pieces and components that run their business, it’s something that you can quickly lift and shift, and change the strategy and move on to a different technology if something doesn’t work out.

And so that partnership between IT and business becomes much more vital because IT needs to understand what are the short-term and long-term strategic business initiatives that are going to take place. I may design something that I’m being asked for today, but I also need to understand that future growth. And that really takes place in all of those conversations, no matter what aspect of the actual platform they’re talking about.

Charles: We’re talking broadly here, where we’re one of a number of market participants or originations vendors. Do you think collectively — and not calling out anyone for not doing it — but do you think that collectively, we’re responding to this demand from lenders effectively? And if so, how do you see that happening?

Scott: I think it’s a question of intent versus execution. And I can’t speak to how others have executed in response to that, but I think you’re seeing a trend of providers billing themselves as being cloud-based configurable solutions, and putting more control in the hands of the lender from a business standpoint. But looking at it from my perspective, I think our approach has been: “Understand the business need first, what’s the problem? What’s the best way to solve that? And then look at all the fringe cases that feed into that.”

Lenders tend to have the same fundamental problems, but their business process and the way they prefer to solve it is going to be somewhat unique across the board.

First to the degree to which the lender has that same problem, and B how imperative is solving it to their overall ability to deliver their products and services in the best manner to their clients.

We as a provider have to really look at that and be able to define a solution that enables lenders at different points along that “need curve” to be able to understand what they can do with the platform and be able to solve for that.

So, I think the approach has to be getting away from being a Deli counter worker, where somebody says, “I want half a pound of Munster,” and you give them half a pound of Munster.” You really need to be much more adept at understanding what that problem really is, so that you’re giving them what they need, not necessarily exactly what they asked for.

And not that we should ignore what clients ask for, that’s certainly not what I’m saying. What I’m saying is understand the fundamental problem that they’re asking you to solve so that you’re able to give them a solution that will work for them to solve that problem, not only today, but also as their business needs change over time.

And as that problem itself begins to morph, continually be able to solve for that through configuration needs, and allow clients to be much more reactive to influence and much less beholden to a provider that would have to go in and continually code around whatever that particular problem is.

Part 7: Are Vendors Listening?

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