Dark Matter Technologies, formerly Black Knight Origination Technologies, is gearing up to bring more lenders on to use its Empower loan origination system in 2024.
The firm is primarily focused on creating an application programming interface (API) marketplace where Dark Matter Technologies can collaborate with developers on automation and cutting expenses for third-party vendors and lenders.
“We’re very focused on automation and getting the expense out. Allowing vendors that come in and plug in their APIs into a format that as soon as that lender starts using that particular vendor partner, we’re taking that data and moving it through the workflow,” Rich Gagliano, CEO of Dark Matter Technologies, said in an interview with HousingWire on Wednesday.
Empower is the second largest LOS in the industry after Intercontinental Exchange‘s (ICE’s) Encompass that takes up more than 40% of the market share.
In competing with its largest rival, automation in the origination process will be a big differentiator, said executives from Dark Matter Technologies, which is under the Constellation Software umbrella.
Artificial intelligence (AI), a trending topic in the industry, will help pull data and information for lenders, which will ultimately have to be validated by human beings as discussed with regulators, Gagliano emphasized.
Read on to learn more about how Dark Matter Technologies’ plans increase market share and utilize AI in its LOS.
This interview has been condensed and lightly edited for clarity.
Connie Kim: Last year was about a smooth transition of Black Knight’s Empower LOS to Constellation Software. What are some of the things Dark Matter Technologies is prioritizing for Empower to compete against ICE’s Encompass LOS?
Sean Dugan: We’re hard at work on transitioning some of the product capabilities with one of the main drivers being our API Marketplace.
One of the things we had to date was kind of a closed architecture where I would say it was not really time efficient or effective, or sometimes not as cost effective for other third parties to integrate with our platform.
We are creating that API marketplace where we can collaborate with other developers that want to put that special sauce in the outskirts of the loan fulfillment process – whether that be third-party vendors, whether that be our clients.
Rich Gagliano: We’re very focused on automation and getting the expense out. Allowing vendors that come in and plug in their APIs into a format that as soon as that lender starts using that particular vendor partner, we’re taking that data and moving it through the workflow.
An important part of our model is we don’t want to be bringing on partners that are going to create these manual steps, we want everything automated.
Kim: Artificial intelligence being able to help with the origination process is something that a lot of tech companies and lenders have been talking about. How has Dark Matter Technologies been incorporating AI into its LOS and what are its plans going forward?
Gagliano: We’re doing a few things using AIVA – Artificial Intelligence Virtual Assistant. Going back seven years ago when we started the AI journey, it was always about creating these digital assistants that are going to help users but also borrowers on the front end. From a user perspective, bringing the information to the user.
We want everything to come to them along with pulling data off of documents if it needs to, running everything possible so that the user is primarily focused on the customer as opposed to chasing down potentially documents although we’re working on a piece there too.
Kim: How are lenders looking to incorporate AI into their system?
Gagliano: Lenders are looking to us, quite honestly. A lot of lenders haven’t been paying attention and what we’ve been doing is trying to educate them.
Regarding AI, we’re not interested in working on anything that’s making decisions. We believe bringing the information to the human and validating it is the right way to do it. We’ve also had conversations with the regulators and they seem to be on board and agreed that we’re doing the operational lift, letting that user work with the borrower.
Kim: ICE executives had said it envisions its company to become the ‘life-of-loan’ platform from powering origination to final settlements. How does Dark Matter Technologies’ Empower plan to get ahead of the competition?
Gagliano: We integrate with the servicing providers today and we also pull data which Encompasses didn’t do and they probably will. We also pull information out of the servicing system. We still have all that capability.
As far as the lifecycle goes, we’ve had the life cycle and nothing really changes from that perspective. If a lender wants to see their servicer’s information, they can pull that through Empower just like they did six months ago.
I think the big differentiator for us has been the automation piece of it – focused on no manual tasks, getting to a point where we’re doing exception-based processing [which happens when a borrower falls out of the lender’s guidelines]. We’re focused on how we can move loans faster primarily on the refi side but on the purchase side as well.
Dugan: Regarding exception–based processing, it’s something that we have in production today specific to our correspondent channel capabilities. So we continue to strive as our North Star to get to that exception-based process on retail and wholesale and the other channels as well. But correspondent has been in production and has that capability for the last year and a half.
Kim: The origination landscape is expected to improve more than what it was in 2023. Are lenders still on the same page as most economists are for this year?
Dugan: The sentiment of the clients that I’ve been speaking with is there they’re hopeful, they’re optimistic in 2024 and further in 2025. Probably a couple of dips – Fed cuts that will occur this year that will help stimulate some of their origination and revenue.
It’s a matter of getting the right tech stack in place so that they’ve got the ability to take on that volume as efficiently and profit-oriented as possible.
