Editor in Chief Sarah Wheeler sat down with Scott Smith, interim CEO at Optimal Blue, to talk about the right tech investments to make now and how the company plans on keeping its customers for life.
Sarah Wheeler: What differentiates your tech?
Scott Smith: I think a differentiator is our position in the market. I think we have the most comprehensive end-to-end capital market platform. So, from origination to processing, closing, sales and servicing — we don’t have the servicing piece, but we connect the dots into servicing for valuation and analytics, and so on. Also, we’ve been around for over 20 years so we have the background and rigor you get from having a deep solution, with 20 years of experience on setting rules and compliance and uptime — all the complexities and the stuff that’s not super exciting on the front end, but is incredibly important on the back end.
Optimal Blue is the No. 1 provider today and our plan is to keep it as the No. 1 provider. We have a pretty strong investment being part of Constellation Software now.
SW: What are some of the benefits of those 20 years’ experience?
SS: I think it is a significant advantage. The complexities of a product and pricing engine and the rules and the configurations, it’s no simple feat to get that right. You’re talking about many hundreds of investors with their different rules and what they’re willing to underwrite. Then you have the same thing on the hedging and trading side where you’re dealing with spreads and margins and selling these loans. All of that is behind the scenes. It’s not as exciting, but it’s critical. It’s like the oxygen in the room — you don’t notice it’s there, but if it’s missing, you really notice it.
That’s core to the backstory of what we’ve built inside Optimal Blue. And with all that pulled together, we have the largest ecosystem in the industy. We have about 68% of the top 500 lenders on our platform and about 64% of the top 50 are on our platform. So this experience over time has allowed us to build this up with a large network and a very significant marketplace, and allowed us to continue to hone in and refine all of the rules and the compliance and the workflow.
SW: What’s your approach on building versus buying?
SS: We acquire a lot of businesses at Constellation, but then we run our businesses independently. At Optimal Blue, specifically, we really focus on building and partnering — that’s core to our strategy. Our solution provides the end-to-end for lenders and investors, and helps them more efficiently and more profitably operate their business with a goal of getting more dollars spent, and more possible homeowners and consumers getting loans.
From a technology perspective, we’re cloud native with our infrastructure and very focused on being scalable and a reliable platform. And then we built a fairly significant open network model where we partner with companies. We have about 70 partners that leverage the Optimal Blue APIs and I think this has really helped drive a broader technology ecosystem. And then we have the largest number of investors, so building that marketplace out. So we build and partner — and then as part of constellation, we look for opportunities to acquire companies and bring them into Optimal Blue.
SW: What does it look like for your employees to be building that much?
SS: We brought over a fairly significant team from the acquisition that closed in mid-September and we’ve been adding to that team. We’re investing in all areas of the business so we’ve been adding to the technology team as well as infrastructure and security and compliance. As a well-rounded business, we’ve got a fairly significant customer-facing organization where we work very closely with the customers, both on the B2B side and working with originators and third-party compliance, as well as on the hedging and trading side.
SW: How do you think about technical debt?
SS: Technical debt is something every business looks at, but to me, vertical market software is a platform where you’re providing mission-critical, ongoing software and support and our strategy at Constellation is to have customers for life. So investing in that software and continuing to do what their customers need sort of eliminates that concept of technical debt.
We’re [Constellation] in about 125 vertical markets. We’ve seen customers try to build their solutions in the past, and I think technical debt hits them pretty hard. When you’re in one business, and you decide you want to be in the software business, it doesn’t really work out that well sometimes. I don’t believe there’s one solution provider for everything. Instead, we believe strongly that there’s integration into various different components, whether that’s integration into the LOS or integration into CRM or integration the other trading systems.
In the late 80s I went straight from university to start at Microsoft and my job was helping build up the Windows platform. The success of that was built on the back of getting third-party software developers to write up applications for the platform. And that’s what we see in in all these marketplaces — that you have a core solution that’s mission-critical and there will be point solution components that are value-add that somebody can be really good at. So we invest a lot in our API platform and we work very closely with all the partners across the APIs.
SW: How do you think about security?
SS: Security is key to all of our businesses. We’re an independent company, but as part of Constellation, we benefit from the additional cybersecurity resources that we get from our parent company. So we have our parent company resources and our robust security infrastructure that we build out as well.
SW: What keeps you up at night?
SS: A lot keeps me up at night! I spend a lot of time with the team thinking about how we can show up for our clients. In a challenging market, how do we partner and engage with our clients within Optimal Blue? I’ve been in real estate and real estate tech for about 20 years so we’ve weathered these up and down cycles before. How do we make the right investments now and partner with clients to come up with a long-term strategy that’s great for both of us? The goal is to continue to invest and make sure that we have the right team and products and clients in place to retain that No. 1 position forever.
SW: How are you leveraging AI?
SS: We’ve always taken a very intentional and thoughtful approach to all product development and innovation and I put AI in that same category. So we’ve started to work on AI with our R&D team. Microsoft allows you to come on site and spend significant time with them working in some of their innovation labs, so we’ve spent a lot of time with that.
There’s no shortage of ideas inside our product and R&D teams right now. It comes down to how do you productize it and how do you bring value to a customer beyond AI being just this buzzword? Are we actually providing efficiency and the ability to get things done faster and helping you get a higher ROI? I’m excited by what I’m seeing, but also we’re being rational and reasonable about what we do here as well.
SW: What makes you optimistic about mortgage tech this year?
SS: We’ve seen a lot of perseverance and resiliency from our clients. We are hearing about investment going on and the optimism in the market bleeds back into the team. Having been through these up and down cycles before, I’m optimistic that when things rebound, we’ll be in a good position to take advantage of that. Optimal Blue is strong financially and Constellation as a parent company is strong financially and also committed to investing. So the investments we can make now that will help us get through this time and then come out even stronger at the end of it is exciting for me.
