In the last few years, lenders of all shapes and sizes have begun going digital as technology has advanced to meet customers’ desire to remove some of the time-consuming manual processes that are part of getting a mortgage.
Recently, HSBC Bank USA, the U.S. arm of HSBC Group, became the latest to launch a digital mortgage platform, partnering with Roostify, a multiple-time HousingWire Tech100 winner and leader in the digital lending space.
So, how did such a relationship come together? And what does it mean for the future of mortgages? To find answers to these questions, HousingWire sat down recently with executives from both HSBC and Roostify to discuss their partnership, how it came to be, and what the future holds.
For HSBC, the decision to go digital was driven by its customers.
“I think we started this process nine months ago, a year ago…to start to look at a front-end digital solution because our customers continually asked for us to look for solutions to make the process easier and more transparent and convenient,” David Gates, HSBC’s head of mortgage originations and sales, told HousingWire recently.
Gates said the company considered trying to build a digital mortgage platform of its own, but eventually determined that partnering with a company like Roostify would be a more cost-effective and practical decision.
“We went through an entire review, not only of third-party vendors, but also what our internal capabilities were globally. And we decided that what we saw from the Roostify perspective would take us a fair bit of time to develop internally and the best solution for our U.S. business is absolutely to partner with Roostify,” Gates said.
That build versus buy decision is one that many financial services providers are facing, especially those that operate in the mortgage space.
More and more, companies are choosing to buy instead of build. 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 due to the financial benefits of buying a solution as opposed to building one.
“In the build versus buy equation, it’s becoming more and more obvious that buy is a very viable option for banks of all sizes,” Bhat told HousingWire.
“Getting to market quickly is a big piece of it, but it’s also a number of other things. One is that we’re, as a software-as-a-service company, we’re focused on continuous innovation,” Bhat continued. “So if a bank decides to build, they risk really just spending a year or so building out their next legacy system whereas our commitment to our customers is to continually enhance our offering and to be able to deliver on a roadmap, which is pushing customers and the industry forward.”
For Roostify, a selling point is what it can provide to lenders like HSBC.
“We’re not really selling a product, we’re selling outcomes,” Bhat said. “Our goal with our customers is to deliver on those outcomes, whether it’s an improved conversion rate, a reduced closing time, or a reduced cost to originate.”
And so far, HSBC is pleased with its decision to use Roostify.
“We looked at a number of vendors and Roostify came to the top of the list when we did our due diligence,” Gates said. “Suffice it to say, we’re happy with that choice.”
From a quantifiable standpoint, Gates said that HSBC has already seen a decrease in time to originate a loan, accomplishing one of the goals of HSBC’s digital mortgage transition. And from an anecdotal standpoint, Gates said the company’s loan officers are enjoying the Roostify partnership.
“I don’t want to sell that short because there’s been a significant pick-up on the back office from an efficiency perspective. While we’re in the early days, I’ve already had some of my front-end loan officers reach out and thank us for putting in this platform,” Gates said.
“They’ve made the comment that they couldn’t imagine going through the volume right now without this tool in the back-end to help them engage customers and work with customers,” Gates said. “And obviously it gives the customer and the back office an efficient way to communicate what’s needed and we’re already starting to see things move faster, which is great.”
Using the platform, customers are able to submit a loan request online, share documents digitally and securely with the bank, and track the status of their loan from application through closing.
For HSBC, the move to go digital is part of an expansion plan for the U.S.
The bank currently operates branches in California; Connecticut; Washington, D.C.; Florida; Maryland; New Jersey; New York; Pennsylvania; Virginia; and Washington.
But the bank has plans beyond that.
HSBC announced last month that it plans to “significantly” expand its U.S. footprint by opening as many as 50 new branches in new and existing markets and hiring more than 300 employees.
Anthony Glover, HSBC’s U.S. head of retail banking, said last month that the bank is “taking a hard look” at expanding into Chicago and Houston, which was confirmed to HousingWire by Matt Klein, HSBC’s head of communications, retail banking and wealth management.
“We’re in a position where we’re continuing to try to grow our U.S. mortgage business across the U.S. and as an international bank, foreign national lending and new arrivers are a big piece to this business,” Gates told HousingWire.
“We’re continuing to grow as our customers need us. Obviously, the Roostify tool helps us connect to those customers and work with those customers,” Gates continued. “We’re continuing to see our volumes grow and we’re comfortable with the pace that we’re growing the business.”
For Roostify, inking a deal with a bank of HSBC’s size has benefits both now and in the future.
“HSBC is obviously a leading bank in the world and we are getting better and better at working with banks of this size, handling the complexity of the technology infrastructure and the general ecosystem within such banks,” Bhat said. “We hope that success here is an indication of that sort of competency that we’ve been building out over the last few years.”
Bhat complimented HSBC on its commitment to the digital transformation; a factor he says is absolutely necessary to finding success in the future.
“With the evolution of this space that we’re in, we’re spending more time enabling digital capabilities, not just for the consumer, but also for the banker,” Bhat said. “And as the capabilities become more mature for the consumer, it becomes more of an imperative for the bankers to live in this same digital experience as the consumers.”
As Bhat said, going digital is becoming an imperative for mortgage lenders. Expect partnerships like this one to become the norm, because if lenders aren’t going digital, they’re going to get left behind.
