THROW THE BABY OUT WITH THE BATH WATER (PART 8: WHAT’S GOING TO BE DIFFERENT)

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What’s going to be different going forward in how lenders take advantage of what is being made available?

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: From the lender side and from the vendor side, what’s going to be different? How much can lenders now decouple from that monolith, as you both described it, and take advantage of being made available by originations vendors?

Scott: Again, I think it’s recognizing where your specific pain points are, or your specific market competency is, or your competitive advantage lies. Looking at those things first and understanding from a market perspective, what’s available to you to help solve for that.

And then I think what has to happen is then you start looking at what’s the best way to deliver the capabilities necessary to meet that need. And it may be going with a solution that gives you the right amount of control, and as Christian said, configurability is a buzzword, but gives you the amount of control over that platform behavior and how your users interact with it to be able to close that gap.

If you have a business model or a product set that’s highly unique and there’s not something out there that out of the box gets you close to a 100% solution, then I think you start looking at what technologies are available that serve as the core backbone of what you’re trying to do. And then you start solving for those pieces that fall outside of the off-the-shelf type product. And that may be building a piece of it on your own and may be going through some other piece of software that can help close that gap in and of itself, and then integrate it.

And then the decision comes down to as a lender, what’s your proficiency from a technology perspective and your ability to do that work on your own? You can buy a workflow engine and a rules engine and build all these integrations and do all of that work… it’s certainly doable. It’s what we do for a living as a provider.

But as a lender, you have to decide whether your needs are such that that’s the route that you have to go or are you able to get a solution that gets you most of the way there from a configurable out of the box and then just bolt on the pieces to integrate the pieces that you need?

Charles: Christian, thoughts on this? Let me paraphrase it for you in another way, which is what should…you in your day job, what are the best questions and areas of investigation that you think a lender should be pushing you on, and then you being representative of the entire originations vendor community?

Christian: I think what lenders should be pushing on is understanding… back to the configurability and flexibility being buzzwords … what does that really mean for the vendor that I’m speaking with? Is it flexibility just within the scope of the product that they’re offering? Or back to my point earlier, are there other things that allows that lender to do and take advantage of?

They all have IT resources, especially the larger lenders, but is it best practice to maybe spend all of that time and resources building and maintaining the entire system? Probably not, because then you’re turning into a software shop. And that’s really not a lender’s core business.

But when they start to look at the technologies and what’s being made available, what they really need to understand is what they can take advantage of to move quickly, to react quickly to the market as they need to, whether that’s using internal resources, using the vendor that they’re working with, or even being able to bring in third parties who can access what’s being made available and extensible to them.

Really understanding what flexibility means to the vendor that they’re talking with and speaking with, I think that’s going to really start to drive a lot of the decision-making as lenders go out there and start to pick future originations platforms or components of their system as they build it.

Part 9: Lenders to Vendors (What should lenders be thinking about and asking)

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