In the past few years, lenders of all shapes and sizes have moved on to digitization as technology has evolved to meet customer demand to eliminate some of the time-consuming manual processes that are part of a mortgage borrowing process.
Recently, HSBC Bank USA, the US arm of HSBC group, has been the youngest partner to introduce a digital mortgage platform Resting place, a multiple HousingWire Tech100 winner and a leader in digital lending.
So how did such a relationship come about? And what does that mean for the future of mortgages? To find answers to these questions, HousingWire recently sat down with executives from HSBC and Roostify to discuss their partnership, how it came and how it will look.
For HSBC, the decision to go digital was made by its customers.
“I think we started this process nine months ago, a year ago … to look at a digital front-end solution because our customers kept asking us to look for solutions that would make the process easier, more transparent and more convenient” , David Gates, director of mortgage lending and sales at HSBC, recently told HousingWire.
Gates said the company was considering building its own digital mortgage platform, but eventually decided that partnering with a company like Roostify would be a cheaper and more practical choice.
“We did a full review not only of the third party vendors, but also of our internal capabilities around the world. And we decided that from a Roostify perspective it would take us some time to develop internally and the best solution for our US business is absolutely to partner with Roostify, ”said Gates.
This build versus buy decision is one that many financial service providers face, especially those in the mortgage business.
More and more companies are buying instead of building. Beyond HSBC, JPMorgan Chase, TD Bank, Guild mortgage, and others have all chosen Roostify.
And Rajesh Bhat, the co-founder and CEO of Roostify, expects others to follow suit because of the financial benefits of buying a solution as opposed to building a solution.
“It’s becoming increasingly evident in the build versus buy equation that buying is a very viable option for banks of all sizes,” Bhat told HousingWire.
“Getting to market quickly is a big part of it, but also a number of other things. On the one hand, as a software-as-a-service company, we concentrate on continuous innovation, ”continues Bhat. “If a bank decides to build it, it risks spending only about a year building its next legacy system, while our obligation to our customers is to continuously improve our offering and to be able to deliver a roadmap that drives customers “and move the industry forward.”
For Roostify, what it can offer lenders like HSBC is a selling point.
“We’re not really selling a product, we’re selling results,” said Bhat. “Our goal with our customers is to achieve these results, be it an improved conversion rate, a shorter completion time or lower costs for the creation.”
And so far, HSBC is satisfied with its decision for Roostify.
“We looked at a number of vendors and Roostify was high on our due diligence,” said Gates. “Suffice it to say that we are satisfied with this choice.”
From a quantifiable standpoint, Gates said that HSBC has already seen a decrease in the time it takes to get a loan, thereby achieving one of HSBC’s digital mortgage transition goals. And from an anecdotal point of view, Gates said the company’s loan officers enjoy the Roostify partnership.
“I don’t want to sell so short because the back office has grown significantly from an efficiency point of view. While we’re at the beginning, some of my front-end loan officers thanked us for providing this platform, ”said Gates.
“They noted that they couldn’t imagine manipulating the volume without this tool in the backend to retain customers and work with customers,” said Gates. “And obviously it gives the customer and the back office an efficient way of communicating what is needed, and we’re already seeing things move faster, which is great.”
Customers can use the platform to submit a loan application online, share documents digitally and securely with the bank and track the status of their loan from application to completion.
For HSBC, the move towards digitization is part of an expansion plan for the USA
The bank currently has branches in California; Connecticut; Washington, DC; Florida; Maryland; New Jersey; New York; Pennsylvania; Virginia; and Washington.
But the bank has plans beyond that.
HSBC announced last month that it would “significantly” expand its presence in the US by opening up to 50 new stores in new and existing markets and hiring more than 300 employees.
Anthony Glover, US director of retail banking for HSBC, said last month that the bank is “taking a hard look at expanding into Chicago and Houston,” which Matt Klein, director of communications, retail banking and wealth management for HSBC, told HousingWire. has been confirmed.
“We’re in a position to keep trying to grow our US mortgage business in the US, and as an international bank, foreign government loans and newcomers are a big part of that business,” Gates told HousingWire.
“We continue to grow because our customers need us. Of course, the Roostify tool helps us to get in touch with these customers and to work with them, ”Gates continued. “We see our volume continue to grow and are satisfied with the pace of our business growth.”
For Roostify, signing a deal with a bank the size of HSBC has benefits now and in the future.
“HSBC is obviously a leading bank in the world and we are getting better at working with banks of this size and managing the complexities of technology infrastructure and the general ecosystem within such banks,” said Bhat. “We hope that the success here is a sign of the competence that we have built up over the past few years.”
Bhat congratulated HSBC on its commitment to digital transformation; one factor, he says, is absolutely necessary to be successful in the future.
“As this area we are in evolves, we are spending more time enabling digital capabilities, not just for the consumer but for the banker as well,” said Bhat. “And as consumer skills mature, it becomes increasingly important for bankers to live in the same digital experience as consumers.”
As Bhat said, digitization is becoming a must for mortgage lenders. Expect partnerships like this to become the norm because if lenders don’t go digital, they’ll be left behind.