Can LOS functionality match what POS vendors bring to the table?
There’s no hotter topic in the mortgage lending space right now than point-of-sale platforms. Anyone who has attended a recent industry conference can attest to the obnoxiously long lines at the Blend, Roostify and MortgageHippo booths – to name just a few. Someone is obviously handing out free drinks.
To cut through the chatter of news releases, trade press and conferences, I’d like to set the record straight about POS providers and their offerings related to the average mortgage lender.
First, the POS providers have some really cool technology – often exceeding what most loan origination system providers have to offer. Along with an excellent interface for the borrower, these solutions boast a simplified, dynamic application with easy borrower registration, intuitive status updates, and co-browse features that are nice, even if they don’t fully support a financial institution’s real-estate products and can’t offer an automated pre-qualification letter.
The big question here is who will dictate the “best practice” and define processes where POS and LOS functionality overlap? This takes time to work out, so it won’t work to simply slam in a new system and hope it leads to a happy borrower. Vendors on both sides of the fence tend to dodge questions surrounding the handoff and process variances.
So if these systems are that cool, why isn’t everyone using them? There are a couple of reasons for this. First, the cost floor is high. Unless you’re consistently booking 100-200 loans per month (depending on the provider), these products are going to bust the budget. This alone excludes roughly two-thirds of the community banks and credit unions in the country that are originating mortgage loans. The second reason for the lack of traction is that vendors are still establishing their partnerships and integrations. There are certainly active deals in flight, and it’s necessary for these partnerships to continue developing, but if the cost doesn’t come down these vendors won’t be reaching the mortgage lending masses anytime soon.
Lastly – and let’s not be subtle about this point – they’re getting arrogant. Astronomical booth lines and a few well-deserved, large clients along with some hefty funding is seriously affecting these providers’ approach to the market. When the POS vendors are dictating to the LOS providers what “they” (the LOS vendors) need to do to be able to work with “them” (the POS vendors) – which is happening – the tail is starting to wag the dog. To be clear, the POS is the plug-in to the LOS, not the other way around. Unfortunately, we’re at a point where the cost of a POS solution can rival the cost of an LOS.
I get it, digital lending is the future, and the ability to effectively capture and engage borrowers throughout the entire lending process is critical. These POS providers are doing it better than anyone. But, the momentum of banks and credit unions moving to these platforms is not as strong as many believe it is. The long booth lines are not an indication of the number of community bank and credit unions signing up. At least not yet.
If these providers can reach critical mass with integrations to the popular loan origination systems and bring their prices down from the stratosphere, momentum in their products will get a lift.
If nothing else, the POS vendors, along with this little thing called Rocket Mortgage, are forcing LOS vendors to develop better solutions for their systems faster than they likely would have otherwise. Improvements are a key focus right now for LOS vendors, and rightfully so. The real question is whether the LOS functionality can match what the POS vendors bring to the table. For many mortgage lenders, it is a “wait and see” game.