Editor’s Note: LenderClose, a fintech startup based in Des Moines, Iowa, is developing new ways for banks to close deals, particularly in the mortgage market. BankBeat talked to its CEO Omar Jordan about the young company’s take on crossing the finish line.
Q: What shortcomings in mortgage lending did you set out to improve?
Omar Jordan: Like every legacy business model, community lending is feeling a lot of pressure to move faster, to serve borrowers digitally and to create seamless experiences that make applying for a loan easy.
It’s true borrowers have always wanted a fast, easy “yes” from lenders. But that urgency and insistence on convenience has been cranked to 11 today just because of the way consumers are being served by digital-native providers.
Technology can certainly enable the fast, digital and seamless experiences lenders want to give their borrowers. But honestly, the culture and mindset of tenured lenders is often as big a hurdle to growth and evolution as the lack of technology. That’s why we take a double-sided approach to the way we work with clients. It’s our aim to ease the transition to digital lending on both sides of the coin: Technology and culture.
Q: How does community banking’s “hands-on” philosophy jibe with tech solutions that focus on automation?
O.J.: From our perspective, the whole point of tech in the community lending space is freeing the lender from menial tasks so he or she can focus on the human side of the business. We strongly believe people will oversee, not succumb to, technology.
There’s an entirely new generation of “white collar” robots headed for the financial services space. Compiling, entering and verifying data, ordering services, processing transactions and creating workflows are all tasks well-suited to automation. We think lenders add value by listening to the dreams of their borrowers, then thinking critically about how to make them come true, not keying the same data into four different platforms across four different providers.
Q: How does LenderClose work within regulatory guidelines?
O.J.: Injecting new technology into any legacy process can be scary. We like to call it a fear of the “compliance boogeyman.” As every transaction in the financial space — from mortgage lending to car buying, payments to insurance claims — is digitally transformed, providers come across regulatory questions. Largely this is because regulators have not yet addressed the particulars of digitization within that area. But regulators create rules that are intentionally vague so the nation’s community financial institutions can adapt and evolve to better serve consumers. We always advise community bankers to work closely with their compliance team as they introduce new technology.
Q: What advances in mortgage lending might your average community banker not be aware of?
O.J.: E-notary is something we’d like to see more local bankers push with their state’s legislators. Last June, our COO Ben Rempe came into my office upset because we were having trouble getting a notary to show up at a closing in Orange City, Iowa. We ultimately got someone there, but it was more expensive and more difficult than it should have been. That’s what sparked our conversation about what it would take to get e-Notary into our state.
Q: What’s the fintech scene like in Des Moines?
O.J.: I moved literally across the world to find the best place to launch and scale a fintech business. With proximity to Iowa State University and a slew of heavy-hitter insurance and financial services trailblazers, Des Moines has really important attributes.
First, there’s a proven willingness among our investor scene to finance entrepreneurs.
Second, our financial services community — a sector rich with incumbents hungry for innovation — is incredibly strong and active in the pursuit of digital transformation.
The role of civic leaders cannot be overstated. It absolutely matters that the state’s central business hub is also home to our state’s government. The governor of Iowa attended our launch party, a clear indication she believes in the power of startups to advance the Iowa economy. Government can’t create a startup scene, but there is a lot they can do to support it. It’s happening in Iowa, but don’t tell anyone. We like living in a best kept secret.