Optimal Blue — a provider of secondary market solutions and actionable data services — plans to solidify its position as an end-to-end solution from pricing a loan to hedging, trading and selling a loan, Scott Smith, interim CEO of Optimal Blue, shared in an interview following Constellation Software’s acquisition of the firm.
There will be no one-stop shop for mortgage tech, which in turn makes having an open platform of integration all the more important in a highly competitive environment, Smith added.
“Open platforms of integration are critical. Optimal Blue integrates with all the loan origination systems (LOSs). We have lots of integration points, I think we have about 70 partners that use our application programming interfaces (APIs) as well,” said Smith.
Smith, who also serves as co-president of Romulus portfolio at Perseus Group of Constellation Software, noted the importance of partnership with the largest mortgage tech player in the market — Intercontinental Exchange (ICE) to win over customers.
Read on to learn more about Optimal Blue’s long-term strategies and how Constellation Software plans to get ahead of competition in the mortgage tech space.
This interview was condensed and lightly edited for clarity.
Connie Kim: Optimal Blue provides data across a large spectrum – including originator data, market data and investor data. What are lenders in search of when it comes to data and how is Optimal Blue fulfilling those needs for lenders and investors?
Scott Smith, interim CEO of Optimal Blue, co-president of Romulus portfolio at Perseus Group of Constellation Software
Scott Smith: We provide a ton of data and being a new owner, I probably won’t even do it justice how much we actually provide. The monthly originations market report uses rate lock data from the Optimal Blue PPE to give the market a view into origination activity. Our Optimal Blue Mortgage Market Indices provides an interactive analysis of actual locked rates. Our customers have access to the product data, so they’re seeing in real time what’s going on in the market whether that’s on the PPE side or on the hedging and trading side.
Kim: Since Optimal Blue began as an information services business, it has expanded to offerings in the secondary market and a whole loan trading platform. What is the vision for the company going forward?
Smith: When you think about the product itself with the PPE product, our hedging, trading products, Compass Analytics and CompassEdge product, I think we’re the only real end-to-end solution from pricing a loan to hedging, trading and selling a loan. We’ll see more work that continues to solidify that position.
Kim: What kind of tech are lenders interested in acquiring? I often hear lenders talk about the difficulties of implementing add-on products with ICE becoming the largest tech provider in the industry.
Smith: I think integration is key. I don’t think there’s a one-stop shop for your tech. Open platforms of integration are critical. Optimal Blue integrates with all the loan origination systems (LOSs). We have lots of integration points, I think we have about 70 partners that use our application programming interfaces (APIs) as well. So I think an ongoing open platform is critical.
I genuinely don’t think there’s ever been a place where it’s just one provider supplies for everybody. If you have the LOS side of the business, you have the product and pricing engine side of the business, hedging, trading, servicing and so on. From our perspective, the integration side is pretty key. You’re going to use the tools and we’re going to make sure our platforms are open and able to integrate.
Kim: You currently serve as co-president of Romulus portfolio at Perseus Group of Constellation Software as well. Intercontinental Exchange (ICE) is a major competitor in the mortgage tech space. How is Constellation preparing to get ahead?
Smith: When we get into the market we’d love to be the strongest player in the market. We’re quite happy with what we own. Right now directly in my purview, there are five businesses in the Constellation market stack. Optimal Blue, Dark Matter Technologies, Mortgage Builder, ReverseVision, which is a reverse mortgage LOS and a document storage business called Axacore. So we think we can bring a lot of those assets together.
We look at the customer base, and we say, ‘what makes sense for Constellation to invest?’ We define that based on what the customers want. So Optimal Blue and Dark Matter Technologies work together today. But Optimal Blue also works with ICE’s Encompass. So we’re partners with ICE. We can both be competitive in some spaces but also be an open platform and be cooperative.
Kim: Are more acquisitions in the cards for Constellation?
Smith: I have nothing to announce right now but at Constellation, we are serial acquirers. So we own about 1000 software companies and we’re constantly in the market to buy software. I expect more acquisitions will come as it’s sort of core to what we do as well.
