Since 2008, MortgageTech has seemed to be a sector where good ideas go to die. The consensus opinion has been that this is due to a lack of innovation contributed by an industry dominated by a few banks and servicing companies, uncertain regulatory changes and a weak consumer backdrop.
We attended the MBA Tech Conference in Chicago this year and observed a significant change in the air. We came away with three key observations:
Here’s a quote that captures the burgeoning spirit: “…the whole world just shifted…we’ve gone from clawing our way to real interest, traction and beyond breakeven economics…”
What’s driving this change? It seems like a confluence of factors:
1. The non-big lenders appear willing to experiment
2. The refi market is giving way to a long-tail purchase market recovery
3. A few headline ideas such as e-mortgages have taken off
We met with several innovative companies at MBA Tech that are gaining notable traction.
We’ve seen new blockchain entrants like Factom (with notable new Executive hires of Jason Nadeau and Laurie Pyle from Stewart). We've also seen LoanNex progressing its efforts to serve lenders and Simplenexus helping Loan Officers build their franchises.
Additionally, Investors are back in the market and fueling more new entrants. Last year, CB Insights noted 12 newly funded startups in the Mortgage Tech arena and in January of this year the number had increased to 25 that are “transforming the mortgage industry”. Notable investors include Serent Capital, 500 Startups and Bessemer to name just a few. The graphic below highlights several new ideas:
While trends continue to build in the mainstream area of analytics, new areas were introduced at the conference this year including robotics and blockchain. Comparing the MBA Tech Conference Schedule this year against last year's schedule (yes, one of our analysts did a side-by-side word match), there is a notable evolution towards new areas of technology. Whereas last year touched on mobile with a preponderance of compliance – this year moved into more emerging themes that drew in the largest crowds, including:
1. Cognitive Tech – IBM discussed the implications of “machine learning”
2. Robotic Process Automation – The application of digital labor
3. Blockchain – An emerging technology makes its first appearance on the agenda
After a long dry spell where lenders, servicers and end-customers were unwilling to try new ideas, it appears that a corner has been turned and innovation is becoming the new new thing in Mortgage Tech. We can’t wait to see where the future takes us.
DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.