How is technology impacting Canada's mortgage industry?

​Fergal: [00:00:28] Hello again and thanks for joining us on another edition of CMP TV. I'm Fergal McAlinden CMP's editor, and today we'll be taking a closer look at the role technology plays in the mortgage industry and how it has advanced in recent times. It's something of a cliche to say that the pandemic supercharges the importance of technology, but it's certainly true that it has never been more important as brokers, lenders and their clients increasingly turn to digital solutions to streamline their work. With me today to discuss the role that technology plays at the companies and some of the main trends coming down the line in the future. I'm very pleased to welcome Akber Abbas, President, CIO and Principal Broker at 8Twelve Mortgage. Grant Armstrong, Director of National Sales and Lending a Community Trust. And Brennan Trenouth is director of sales at Home Trust Company. Gentlemen, thank you for joining me today.

All: [00:01:16] Thank you. Thanks for having us.

Grant: [00:01:18] Thank you.

Fergal: [00:01:19] Akbar, I'd like to get started with you, if you wouldn't mind just telling us some of the most significant advancements that you've noticed in the use of technology in the mortgage industry over the past few years.

Akbar: [00:01:28] Yeah, absolutely. Thanks for the invite and happy to be here today. 8Twelve Mortgage is a national brokerage, so we lend to consumers right across Canada and some of the advancements that we've known is the automation of the process of digitizing the mortgage and that is helping to build a more seamless process. And it's also helping with a lot of new technology trends that we're seeing, whether it be crypto or blockchain. And that's some of the advancements that we're seeing on our side as we're dealing with and expanding our base.

Fergal: [00:01:59] Thanks, Akbar and Grant. Obviously, community trust technology is something that's hugely significant. What are some of the main advancements that you've seen over the past maybe two or three years?

Grant: [00:02:10] Absolutely. We love technology. So one of the biggest advancements is tools that we use to bridge that communication gap. So our Community Trust Cafe, which is now both on desktop and a mobile version, was the number one technology tool we bring in to bridge the gap between communication between broker partners as well as us in the lending department. But we've also seen as the opportunity to introduce some technology tools or some some bots, some AI integration in the background that help do some of the very automated processes. So things that might take an underwriter or a fulfillment specialist an hour or two to do that administrative work of instructing a file. And it's repetitive. We can actually save them the time to look at more documents to help out our broker partners and automate those processes internally. So we've got a number of administrative processes that are underwriting or funding our fulfillment teams that we can just make it simple and it's done, and they can actually take that time and focus it towards what they really are good at, which is helping the broker partner.

Fergal: [00:03:14] Is there anything particular, Brennan, in what you've noticed in terms of advancements in the tech space over the past couple of years?

Brennan: [00:03:20] I would mimic what what Grant had to say there, too. I know a lot of companies that switched to the portal World Home Trust has had a portal for quite some time now. That's why we're so heavily invested in it and making sure that it's up to date with the latest tech and all that stuff. I will just add that we're seeing a lot more companies investing in AI capability as well, giving them the ability to look at data that they've collected to predict future outcomes or the likelihood of an outcome using that data to help develop products and programs for for the end consumer. At the end of the day, it just allows you to be a little bit more flexible with with your risk appetite when you have that data available and you know what you can do and what you what you can't do, it allows for easier risk assessments in a very time sensitive environment.

Fergal: [00:04:08] So you mentioned this a little bit already Akbar. Could you take us through your own company's approach to technology and specifically how it can be used to generate a better or a quicker process?

Akbar: [00:04:20] Yeah, that's a great question. So I'd like to start off by talking about the stakeholders in the mortgage process. So internally we have our licensed mortgage agents and our mortgage brokers, and those are internal stakeholders who work hand in hand with our internal underwriters and then our external underwriters at each of the lenders like at home trust and so on. So what's really important for us is coming up with a single source of truth that we have one application that comes through and that we can help automate our process for the internal stakeholders as well as external stakeholders, which will be our lenders, our clients, appraisers and banks and so on. So our approach has been, number one, make it convenient, make it simple, have one single source of truth. And that includes a lot of integrations that we're doing currently with other lenders and lender partners. We also want it to be convenient for our customers. So one one way of doing that is we have a secure portal for our clients where they can create their application, they can send us documentation. We can also work with other providers to get conveniently whether it's bank statements or notice of assessments. And we want to do that all in an efficient way as we're heading into the future with open banking, we want to be compliant and some of the work that I do with the regulator that we're always looking at, have we done our best to make sure that we're compliant? We've managed suitability and we've given options, and that's all under our approach to making sure that we're generating a much better process.

Fergal: [00:05:45] What about for Community Trust Grant? What are some of the ways that it's utilizing technology to generate a better process?

Grant: [00:05:52] One of the things we do with technology is we actually ask our broker partners what are their stumbling blocks or the challenges? Where are the processes that they need to improve? So we're very lucky to have a great group of brokers that sit on a broker advisory council that say these are opportunities for you to help us better. So that's where our cafe started from, with better communication tool. And even before that we created products like our instant value ins to share to help streamline our process. So we're one of the few alternative lenders that have an automated valuation model where there's no need to have a full appraisal, which was obviously very valuable over the last couple of years with our clients wanting an appraiser into the property. But we embrace that technology to speed up the appraisal process or insta share where their clients can seamlessly send their bank statements again, trusted documentation that's quickly into our systems that we can rely upon and move very quickly on. So we use technology a lot to speed up the process, to get rid of the blockages or the blockers that we have in our and our processes. But we also measure it by our customer satisfaction, which our brokers and our own staff. Are they able to do their job faster, simpler, easier? Are they getting more satisfaction? And are our broker partners seeing the improvement in a process that want to continue to work with us over it?

Fergal: [00:07:08] Okay. Thanks Grant. Brennan over at home trust. Is there anything in particular that you're keeping top of mind in your use of technology and how you're using it to make things a little bit easier?

Brennan: [00:07:17] Yeah. One of the missions at home Trust over the past few years was investing in what we called Ignite, which was our our data and digital era kind of overhaul, bringing us up to date with the latest technology and things like that. It's so important that we're investing in technology that kind of integrates everything that we already had in place. And I think that's really important because then it starts to give you a full 360 view of customers, products, processes, everything like that. You can see different behaviors and from there you can also determine what kind of solutions and cross-selling can we offer to these clients. So that's what we've been working on for the last few years. We just did a massive overhaul of our existing platform that allows us to be more flexible in the future with anything that we want to do in the system. Before, there may have been some constraints. Now there's there's not. So we're really pushing ourselves into that next digital era. Like I mentioned before, the portal is so important to to our success and our brokers success that communication it's so critical to have that that link between our underwriting team and the brokers bringing accountability to everybody, more efficient, things like that. The last thing that I would mention, too, is we've invested a lot in broker education. One of the things that is close to me is we launched a podcast last year trying to leverage that technology to reach more, more customers and brokers and speaking with different members of our our industry as well, bringing the latest information and things like that. So we've done a lot over the past few years by way of digital and technology.

Fergal: [00:08:58] So obviously at the top, I mentioned that technology has really been supercharged by the pandemic and things like that. And obviously mortgage brokers are using technology more and more in their day to day work Akbar. How do you use technology to better serve the brokers that you're dealing with.

Akbar: [00:09:14] Yeah, great question. So in our environment, we have mortgage brokers and agents that we're servicing on a daily basis. We mentioned and just to add on to what Grant was saying about the portal side of the business, we do also have a platform we built. It's a mortgage brokerage platform end to end called Infinite, and it enables us to manage everything from licensing all the way to lead management and then the actual mortgage application. So having a fully digital and a secure customer experience has been really important to us and being a little bit flexible that folks will adopt technology at different rates. So change management is at the top of our priorities and really making sure that we're providing the training to ensure that that adoption is there is very important to us. So the technology is great, but if folks aren't using it, obviously they won't see the benefits of it. So one of our main focus is build it in a way that's easy to use and makes their life better, as well as the customers are getting a consistent experience as well. So we want to kind of bridge that gap that these aren't just leads or files, that these are really Canadian families that we're going to service. And how do we do that in a secure and consistent way? That's been top priority for us on how we're using technologies to make it very, very secure and easy to use.

Fergal: [00:10:33] For sure and it's clear from what you said. Grant, that obviously the mortgage broker is kind of front and center in how you're developing technology and how you're using it. Is there any are there any other ways that you're using technology to interact with and better serve the brokers that you interact with?

Grant: [00:10:48] There definitely is. So one of the things we've started, we've brought some technology into our underwriting platform over the last couple of months that have been able to actually look at deals that come in the door that's missing some really critical information. So normally what would happen? Deal comes in the door, it waits for an underwriter, could be busy. It might take a day, it might take two. And then they're like, Oh, I'm missing this. A well on septic property, how old's the property? There's missing very critical data points. So we actually have a system that goes in as the deals are ingested to actually say, okay, hold on, we're missing this critical data point. Let's get a message right back to the broker immediately and say, hey, can you fix your application? Or We're missing something so that when it gets at an underwriters plate, it's the most up to date, it's the most accurate application it can be, and they can work on it. We've also really invested in security. We wanted to make sure that our technology platforms are very secure broker data. Our client data is incredibly important. So when we're interacting and working with the brokers, we want them to be able to work with their clients and say, Hey, yeah, when you give me your job letter, your pay stub, your taxes, and I upload it to the brokers portal. Community Trust puts extra layers of security on there with the proper authorities proper two factor authentication so that never or at least I shouldn't say never but we're significantly reducing that risk of of clients information being open out there. So I highly encourage brokers to to pay attention the portals and the lenders are working with to make sure that security is top of mind and very key.

Fergal: [00:12:18] Okay, for sure. And Brennan, could you just talk a little bit about using technology at home trust specifically to interact with and to serve brokers?

Brennan: [00:12:25] Yeah, so something very similar to what Grant just mentioned to. We have something in place there where it will stop an application from coming through if there is missing information on the application. And I think that's so critical from the time that you're going to spend reviewing that application. If it's missing information, you're going to waste a lot of time going back and forth with a broker. It should be complete on its way in. So we have we have that in place as well. Like I mentioned before, with our Ignite program, we just did a huge overhaul with our system. And that will just allow us to bring in other pieces that will make it more efficient, will allow us to use other tools to verify documentation and connect us with with other third parties and things like that. So there's a lot a lot of technology stuff that's going on. And at the end of the day, we're trying to make it better so that our broker partners are are seeing it's more efficient. It's a faster turnaround time and same for the inclined to we know that it's a very fast paced environment. So anything that we can do to continue to invest in that technology, to have that quick turnaround time and quicker decisions, that's what we're doing.

Fergal: [00:13:37] Okay. Well, I'll bring the other two in on this in just a second. But I want to stick with you on one other question just to buy probably for brokers who maybe haven't become that accustomed to technology during the pandemic, or maybe they're not using it as much as they should be, do you have any recommendations for them as to how they might be able to kind of ease themselves in and use technology more effectively?

Brennan: [00:13:55] I think you just have to be open to change, and I think that's one of the main problems. We even saw this when we first came out with our portal. We had a lot of push back from from brokers and industry. It was all brand new to them. They've never used a portal before. I think you just need to be open to it. I think if you really take time to understand what it is and have those conversations, you'll realize that it's actually there to benefit you in the end. Client It's making things a lot more easy. You're not losing documents in an email that you're sending to an underwriter. Everything's being uploaded, it's time stamped, everything is can be audited, things like that. So that's that's my, my advice. I mean, technology changes every single day within within the entire world, right? So you just have to take the time to really understand it and play around with it. At the end of the day, it's there to benefit you.

Fergal: [00:14:49] Absolutely. Anything else to add on that front in terms of recommendations for brokers who might want to use more technology, but they're not using it that much at the moment.

Grant: [00:14:57] Embrace embrace the change. It's it's it is. There's many brokers that have been doing this for a long time. And they and they they understand that some of their tried and trusted methods are good. But you have to embrace that technology. I mean, we heard recently one of the awards ceremony is one of the prominent brokers said, I remember when my pager used to tell me that the lender approved a deal. If they had not embraced technology today, they'd still be running to a payphone to collect their approvals. But they need today to embrace it. But talk to the lender, meet with the BDMs, meet with their tech departments or their individuals that represent and train on it and say, Why do you present this? Why are you using this? And get the understanding of what they're trying to accomplish? Lenders aren't trying to ask a broker to follow their rules. They're asking them to use the technology to help make the transaction simpler, easier, faster, more trusted in sometimes. I mean, we want to make sure that the documentation is the most verifiable possible and this technology can help us. And when that technology steps in, we can see things change really quickly. We can close deals faster, we can make decisions faster and really help the end user and the broker.

Fergal: [00:16:12] And I mean Akbar, I'm sure that you're you're dealing with some brokers who maybe you're thinking aren't using technology as much as they should. What is it that you say to them when you're trying to convince them to embrace it?

Akbar: [00:16:22] Yeah. Just to add to what the other gentleman we're speaking of, we have two suggestions or I have two suggestions to add. One of them is to manage change, get hands on experience early and often. The more you use a tool, the easier it'll get. So we definitely suggest that. And that also comes with simplifying your tech plan just like anything else. Look at the applications you're using on a daily basis and the ones that are redundant are not providing efficiencies. You have to swap those tools out and put in the new tools. The last piece I'll mention here is really start with baby steps, and we like to start by automating a process. You know, when you go to one Tim Hortons, you get a double double in Toronto, it's the same as it is in B.C.. We'll start with those repetitive tasks. What are you doing on a daily basis? Whether it's taking notes and whether it's giving compliance documents and preparing information, providing real time updates to your clients. If the technology can simplify your life by doing some of that automatically, well, I would look at those platforms. Lenders do a great job of providing those sorts of notifications. So do the title, insurers and so on. We're now seeing the availability of that technology on the agent and the broker side, similar to what we've built in Infinite. And we've realized that there is a step by step plan that you can work through that framework that will make your life a lot easier. Embrace that change. As my peers were saying, this will help you to make your life easier. Ultimately, your process more files, more files at the end of the day will deliver more results for your business plan as well.

Fergal: [00:17:52] Okay. For sure. Well, we've taken a look at some of the things that have been happening over the past few years in terms of mortgage tech, what's happening at the moment. Brennan whenever you look at the future in the next few years, what are you seeing or what are some of the things that you think are going to develop?

Brennan: [00:18:06] That's a good question because I think there's a lot of things going on, a lot of different companies trying to come into the industry. I mean, the first thing that really comes to mind is blockchain and cryptocurrency and the mortgage industry. I think it's not really recognized right now to a lot. There's still a lot of unknowns and it's very volatile as well. So that's something to keep an eye on as well. Eye-buying in Canada as well. Is that something that that we're going to see in the future? You know, clients are looking for more peace of mind in a hectic market. They want simple, simple transactions, no listings, no showings. Eliminate that back and forth. So that could be something to definitely take a look at as well. There's a lot of third party companies that are coming into the industry as well that have access to financial institutions. Do you start to see more brokers and lenders teaming up with these third parties for more automated process there? When you're talking about collecting mortgage, bank statements, things like that? I mean, there's a company in Canada right now called that that's currently doing that. There's Fundable in Alberta and in Ontario now, which is a 100% financing so that homebuyers can make a financing free purchase without having to worry about if it's going to go through or not too. So just a couple of things there to to really think about. And there's a lot happening in the States as well. There's a couple of companies there that that boast 50 minute mortgage approvals as well. So I think there's going to be a lot of those types of companies that that come into the to the industry over the next few years. It'll just be interesting to see how that plays out.

Fergal: [00:19:49] It will for sure. Grant Is there anything that you're thinking that's going to play a really big role in the next few years in terms of tech?

Grant: [00:19:55] I do. I think there's a few I mean, open an open table,  open banking is is making a big difference or some announcements this year this week, sorry, from the government on the new chair of the open banking advisory. And I think that's going to push forward. But I also think you're going to see a lot more push for direct to source verifications. I think you're going to see the ability to validate income. You're not going to be asking clients to provide a job letter in a pay stub. You're going to be saying there's a link and there's a connectivity, and lenders are going to be able to get into that more so than they can. Today, there are tax programs, potentially things working with the government to help allow institutions to validate taxes. I think a lot of the instant verifications are going to come to Canada, a lot of that integrated API technology with either third party or again direct to source. What I also think is going to be and it's been definitely happening over the last couple of years, but more and more is going to be a lot of data, data coming at lenders. So we're going to get more data than we've ever had or actually even know what to do if we're going to be able to actually be able to do more forecasting and more templating. And we're going to be able to drill down. I mean, you go back 20 years, there was maybe 50. 20 points on a mortgage application. 15 to 20 credit points that you want to look at. There's probably a couple hundred and you're going to be able to do a lot more risk weighting and you'll be able to actually predict with a lot more accuracy based on the data that you're getting. So I think those are the three big changes that are going to make big impacts in our industry.

Fergal: [00:21:31] Okay. Excellent. Well Akbar, I'll give you the last word on this one. Do you see any other big technology trends coming down the line in the mortgage space in the future?

Akbar: [00:21:38] Yes. Two comments to add to Grant and Brennan and then two other ideas real quick. Grant was mentioning about open banking. And so we've been watching that very closely and something that you and I discussed about as well, the direct to source and the data migration piece that is out there. We're seeing that as well, where it's going to drive a lot of efficiencies for us to reduce our pre underwriting, I'll call it where we're talking to clients for the first time and we're being able to get a better idea of what they will and will not qualify for. So that's definitely a trend that I agree with as well that's going to help us drive a little bit more as we are seeing trends in automated appraisals, credit, decisioning, and we think that focus of being a little bit smarter on what folks can and can afford and what the outcome will be will be a big trend. So we're following that as well. Brennan mentioned about blockchain. So to go a little bit deeper, we're seeing a trend and we're preparing for in our technology today, smart contracts. We think that that smart contract is going to be a big part of the process in the future where lenders will eventually be able to say, this is the formula or the type of risk that I will accept. And that whole process will be automated at some point, maybe not in the near future, but we can see the trend moving towards that where those decision matrix are already built in. At the agent level. As we're doing intakes, lenders will be able to tell us if it fits this criteria, it will work. The last piece that we're working on at 8Twelve is around multiple currencies and very specifically around what crypto will do. And so crypto to fiat transactions and how that will be integrated into smart contracts. We have a lot of focus on that. It's technology we're already working with in our labs and we're looking at deploying some examples of that in the future because we believe that eventually the down payments and the other co-equity programs that are coming to surface that are some of them special to 8Twelve and the partnerships we have, they're going to be looking at other currencies as well. And how do you verify those down payments? So those are three areas that we're focused on as well.

Fergal: [00:23:46] Okay. Well, there are some interesting times that come into the line in the mortgage industry where tech is concerned for sure. We're going to leave it there for today. But I'd like to thank you all again for coming on and sharing your really interesting insights today. And I'm sure that this isn't the last that we've heard from any of you on these issues. That's all we have time for today. I'd like to thank 8Twelve Mortgage, Community Trust and Home Trust for joining me today. Thanks to you for watching and stay tuned for more great content from CMP in the near future. We'll see you very soon.