Editor’s Note: This feature originally appeared in the May issue of MReport, out now.
Rocky Stubbs joined Flagstar Bank in January to lead the bank’s direct-to-consumer group. As SVP of Direct Lending, Stubbs and his team work to improve and scale Flagstar’s digital platform and enhance its capabilities in servicing recapture, digital acquisition, and home equity. In his previous role, Stubbs was the Head of Consumer Direct Lending and Digital Mortgage at Capital One. Stubbs spoke with MReport on how the enhanced digital platform at Flagstar Bank will improve the borrowing experience for customers—especially millennials—and about the issues facing the industry today.
M // Can you tell us more about the digital platform that you and your team are building for Flagstar?
Stubbs // Flagstar is a strong lender with about 40 billion in originations annually, most of which come from the third-party originations space. The bank is now focusing on diversifying its business model and expanding to include both distributed retail and direct to consumer business. The digital platform we’re building is to enable a seamless lending experience for returning customers from application to closing. We’re laying heavy emphasis on mobile through this platform to create a high-tech, high-touch experience for them.
Despite these features, we’re keeping the personal service element at the center of the platform as our goal is to build a technology ecosystem that empowers the loan officers to provide a very personalized experience and keep relationship and engagement as the focus of the customer experience.
M // What type of consumer experiences are you building into the platform?
Stubbs // Customers today want to engage on their terms, and therefore this platform is “omnichannel” to engage with them seamlessly through the web, phone, email, and live chat and give them the option of choosing what channel suits them best. Part of our approach is to offer various modes of communication ranging from logging in to our portal or calling us on the phone to adding SMS capabilities so that they can text us or even using social media channels like Facebook Messenger to get in touch with us. Our goal is to give the customer full control over how they’re initiating the conversation with our lending business through a channel they’re most comfortable with on their terms.
M // How do you see technology catering to an ever-changing financial services industry?
Stubbs // Now that giants like Amazon have entered the market, they’re setting a very high bar for tech disruptions in the industry. For example, digital applications were a big part of the first wave of tech disruption, where we were using third-party data to pre-fill applications. Today, we are looking at technologies that center around customer convenience where we can obtain automated income and assets without the customer having to scan and fax over a lot of documents; or in case of e-signatures, closings can be completed without having to go to a title company physically.
Despite these breakthroughs, the average closing time for a loan is still more than 30 days in our industry.
The next wave of disruption would be in removing full process steps to improve the times to close loans. For example, Automated Valuation Modeling (AVM) data is becoming so powerful, that it’s possible for us to now see a world where physical appraisals become obsolete.
Although it’s going to take us several years or more to bring all of those things to fruition, these technologies were impossible even to think about three years ago, and now we’re seeing a landscape where there’s a lot of conversation around them.
M // What should mortgage professionals do to adapt to these changes in technology?
Stubbs // There are two aspects that business leaders must keep in mind. First, everyone in this business should be purposeful about being aware of the tech solutions that are becoming available. The time when you could delegate the technology strategy to the IT department is over and professionals must wear the technologist’s hat and personally immerse themselves in the role of technology in our business.
Second, the pace of change is fast, and it’s easy to get sucked into the ‘shiny new toy’ syndrome where you can end up putting a bunch of things on the tech roadmap that might look good separately but are quite bad once stitched together. It is important for business leaders to know what they want from that technology; to talk to their team to get a sense of what’s happening and keep the bar for technology to actually make it on the roadmap unbelievably high. It is important to be selective. There’s a quote from Shakespeare’s Hamlet that says, “Give every man thy ear, but few thy voice.” I would tweak that in this context and say, “Give every man thy ear, but few thy investment dollars.”
M // What do you think are the most critical issues facing the mortgage industry today?
Stubbs // We must address the issue of affordability. Millennials are trying to enter the market in earnest as their incomes rise. But down payment savings, as well as persistently low housing inventory, continue to be a challenge restraining would-be buyers from really coming into the market the way that they desire. The industry can begin to address this challenge through, low down payment programs, which is something that many lenders are already discussing.
We are also starting to see private capital coming back into the market, and residential mortgage-backed securities gain a foothold again. Shared equity programs are also at an interesting juncture, where lenders or even a third party are keeping a stake in the equity and the appreciation in the property in exchange for a lower down payment for the buyer. Moving ahead, that that could be a powerful lever in this space.
Lastly, mobility is becoming a challenging issue, because the workforce is evolving. With rising interest rates coming our way over the next couple years, some of the current discussions on mortgage portability can take a turn. Product innovation is one of our sweet spots at Flagstar and we’re certainly doing our part to bring innovative solutions to some of these challenges.