Welcome to the 6th episode of the #AskAPrivateLender Podcast brought to you by Mortgage Automator. In this episode, we are talking to one of our partners—Filogix—a part of Finastra, one of the biggest companies in the Fintech industry.

We sat down with Ryan Spence, the Lead of Filogix’s broker channel. Ryan has been a known figure in the Canadian Mortgage Industry for the past 20 years and has great insights to share. We talked about the changes in the industry that have been happening lately, where this evolution is going to take us, how this can be a win for borrowers, brokers, and lenders, and so much more!

Listen, watch, or read the interview below. And stay tuned for more episodes coming up!



Lawrence: We are really excited to have you come by. Considering the new changes, obviously, everyone wants to hear directly from the source what’s been going on. But before we jump into that, let’s talk about your role with Filogix and how you got there. You lead the broker channel. What does that mean? What are you in charge of? Who do you deal with?

Ryan: It’s definitely a good question. My typical answer is if the words ‘broker’ and ‘mortgage’ appear in the same sentence, then that’s in my responsibility. I run the team of one, which is me, on the broker facing community. So basically, if you’re a broker, coast-to-coast, there’s a large chance that you’ve dealt with me setting up your brokerage or with questions, or as you’re moving around. Or if you’ve got questions on what happens in the industry, there’s probably a chance we’ve chatted in the past. I’ve been with Filogix for about 20 years. So there are brokers that I’m dealing with today that weren’t born when I started. And others that were my age who are now retired. It’s a good cross-section of everybody in the country.

Lawrence: You’re seeing people come and go.

Ryan: Actually, yeah. There are kids of brokers I dealt with 20 years ago who are now brokers themselves, so there’s, I don’t know, some sort of generational switch that makes me feel far older than I really should be.

Lawrence: So, Filogix is a technology company. I don’t know if you guys consider yourselves a tech company per se, because you’re so heavily involved with brokers and the broker market. Do you come from a tech background prior to Filogix?

Ryan: No, my story’s probably a bit different. I have a degree in Evolutionary Theory, I’m trained as a biologist. I went to the University of West Ontario in London, this was 20 odd years ago. Biology and ecology, and environmentalism weren’t quite as important as they are today. I did a degree in biology, did some field research, and then focused on ecology and evolutionary studies. That didn’t pay the bills as well as you might expect despite its awesome-sounding handle. I spent three months working on a contract, and the last two weeks of any three-month contract trying to find the next three-month contract. Rent and food became a bit more of a priority. I had to make the switch.

It just so happened, I was playing hockey with a guy I’d gone to school with who was working at this little company called Centric Systems. He said, “Hey, we need someone on the help desk. We’ve lost one of our staff. And you’re looking for a change of job. Why don’t you try it out?” So 20 odd years ago, I started working as a help desk rep in what was then the Centric Systems. Which ultimately became the precursor to all of the various iterations of the company that you’ve seen until Filogix has arrived.

I want to say in the 20 years, we’ve gone through about seven purchases or sales and changed the names a bunch of times. Fortunately, my phone number’s stayed the same throughout the entire stretch. I always figure as long as someone has my number, regardless of what the company’s called, they’ll be able to get to me. Now, after 20 years from Centric Systems to Filogix to DNH to Finastra to now, Filogix, a Finastra company, I’ve had a lot of different logos, but at least the same phone number for the whole time.

Lawrence: And you are consistent with the company, no matter who’s buying, selling, changing names. You’re still around. People know who you are. They’ve met you over the years. You’re quite familiar with a lot of the aspects of the system. So people can definitely rely on you for help and assistance.

Ryan: I think that’s one of the things I really like about the broker channel is it is very familial, right? There’s so much history I’ve got with a lot of people. They ask for help, they call and say, “Can you help me?” Any time one of your friends calls and asks you for help, it’s something you really want to do. It’s very satisfying to be able to help your friends when they call, and that’s kind of what it feels like on a day to day basis.

My role has changed, as, of course, the industry’s evolved and the brokerage community, the technology’s evolved. My role has evolved as well. My job changes every 18 months to two years just because that’s the nature of change within the industry and within the community.

Lawrence: Let’s jump into the private mortgage space. It’s definitely an area that’s been growing rapidly over the years. How long have you guys been looking at that space and saying, “We know brokers are using our technology. They’re printing the apps, they’re printing the bureaus. We need to do something about this for security and transparency to the borrowers themselves, for Equifax requirements, and so forth.” Is this something that’s been on your radar for a very long time and it’s only just come to a point now to make a move on it?

Ryan: Years ago we did have software that was used by a fair number of private lenders, and for those who’ve been around for a while, you might remember the old Lender Base software. Which was kind of the lender equivalent of the Mortgage Base software that the brokers use. This is going back 15 years. 

Lender Base was more on the institutional lending side. But just as it got older and the technology advanced, those bigger companies needed more aggressive and more enterprise-level software. The Lender Base solution just kind of drifted down to the smaller lenders. A lot of them were private lenders. Then that worked for a little while. But then, at a certain point, and really it was when the CASL legislation came in, that became the end of the Lender Base era. Because a lot of lenders were using that to distribute email and CASL kind of kiboshed all of that. The Lender Base software was pretty old. It didn’t really have a replacement. So it just kind of died off.

But one of the things we tried to do, and this is going back six or seven years, was to find a solution that would appeal to private lenders who didn’t have a large budget for technology and each had some different need for that technology. Maybe 80% of their elements were kind of core. But the other 20% were highly configured or customized, so it became hard to build a piece of software that would suit a lender’s technology needs at the price they were willing to pay back then.

Most lenders are still using an Excel spreadsheet to do stuff. They are emailing stuff back and forth. They just didn’t have sophistication internally, and they didn’t need it at the time. But as more and more volume went to that private space, and certainly, we’ve seen a tenfold increase at least over the last maybe 6 or 7 years in that private space, the need for those lenders became more prevalent. 

This is where other companies like Mortgage Automator were able to step into that. Because you did have that experience. You were able to build a slightly cheaper element for a niche of lenders who needed a more robust technology, who are now to the point of being willing to pay for that for their entire business operation, not just the acquisition of the file. So certainly the partnership with Mortgage Automator allowed us to get back into that private lending space in a bigger way. Because certainly there’s a lot of value in the broker community having nice, secure, easy access to a host of private lenders in the same way they do with institutionals as well.

Joseph: It is actually interesting how this all happened. I feel like all the stars did align all at the right time. When Lawrence and I had met Tim originally at one of the CMBA retreats, you guys were already talking about moving to the digitization world, and we had just started acquiring clients onto the platform. Then Equifax comes out with these rules, literally within a few months.

There was very little time for people to actually figure out what was going on. I have to say, the stars did align really well. Because in such a short period of time, there is now a true proper solution for not just the big guys who were the original people who did sign up with you. I remember back in the day, there were four or five guys in the drop-down menu. Now you look at it today, there are almost 100 private lenders.

Ryan: Even more actually, I think we’re at 140 now, give or take? And certainly, we’re adding more. There’s definitely much more need for the lender to be connected. But there’s also much more realization from the lender that yeah, that’s just kind of the way business is now, that security is important. You just have to have that as table stakes. I always think, when you’re a broker, or even worse when you’re a regulator, when you look at the transaction, you’re not really looking at who the lender is. You’re looking at how the consumer’s information is handled? What protectants were in place? How did that broker manipulate the information? Where did they send it?

The lender almost becomes a little bit less relevant in the transaction because a regulator expects you as the broker to handle every consumer, and therefore every lender in the same way. I think lenders are recognizing that as well, as they see consumers also looking to ensure that all of the people in the transaction are holding their information well. Just like you and I would expect that of one of our colleagues or when we go to apply for whatever. We expect our information to be held well by the company we’re buying from.

Joseph: Right. But it is surprising that so many people in such a short period of time have jumped on board. Because there was a lot of noise being made saying, “Not doing it. Going to keep doing it the old school way.” I’m not going to mention names, but I remember talking to a lot of people in the industry about it, and now I look at the drop-down menu and I see their name on that list now. 

I feel like whether they wanted to fight it in the beginning because of the beeps, I think they’ve come to realize that it’s not about the money. It’s actually about the ease of receiving that business and from a competitor’s advantage, they don’t want to seem weak optically to the brokers and to their competitors by not being on the platform. You’re almost doing yourself a disservice by not being on the platform.

Ryan: Yeah, I think historically we have some lenders that would want to be on the system because it gave some social evidence that they were noticed and good, and trustworthy, right? You’re on the system, therefore you must be a good lender. And on our side, we do a lot of validation on who’s part of our network. We like to have good partners that are ethical and trustworthy. That’s kind of the goal so that when you come into that network, you have that inherent trustiness of what’s inside the network.

I think everyone kind of realized that that’s a good place to be. Because there was a fair amount of communication going out, and everyone was kind of getting that message roughly at the same time. So everyone’s thought process was happening at about the same time. 

I think because there were going to be a lot of changes, the lenders knew it was coming and they could kind of see it a few months down the road. They had enough time to think about their strategic objectives as a business. Not just, “How do I get the deal in the front door? What’s the cheapest way to do that?” But, “What tools do I need to actually run my business from stem to stern?” 

Isolate each of the steps of the transaction, determine where I’m efficient, where I’m not, where I could be more efficient. And if I can save dollars over here at the backend of the transaction, then maybe I’m more efficient overall. I can do more business. I can be more profitable, more productive, even if that costs me some dollars per month if I’m saving the human cost of doing that, or redeploying my human costs from basic data entry to becoming a trusted advisor, or data mining, or soliciting business. That is far more profitable for me as a brokerage. So my return on investment in this technology is much more than I would’ve expected.

Joseph: Yeah, I think that’s where a lot of our clients really saw the value. They looked at it and said, “There’s obviously a cost to being on the platform to receive the business from Filogix.” But what they realize is someone still has to be paid, or they themselves have to mainly import that information into a system to generate the docs or mainly prepare the docs. 

I think they sort of realized, “Well, if I could digitally receive everything and it shows them beautifully formatted for me, it’s saving me 15, 20 minutes of data entry. If I’m doing 20, 30 deals a month, they’ve got to start running those numbers and realizing it could be thousands of dollars they’re saving in man-hours by doing it this way. I remember we’d get phone calls, in the beginning, saying, “We’re not paying for this, we don’t want to do this.” We’d say, “Okay, don’t.”

Lawrence: I agree with you. It’s that, but it also creates a proper process for a business, right? Being a private lender, previously, if you were not on a platform to receive deals, you had one employee in the company who’s receiving these deals via email, or you have some random email address set up that everyone goes in and checks to see when the deals are coming in. It’s not a viable solution to running a business.

Joseph: Or to scaling a business.

Lawrence: You need a platform where the groups of employees or certain employees have access to seeing the new deals that come in. They can underwrite it, the details and the data is right there in front of them. There are no errors. There are no mistakes when generating docs. I mean, it just makes it easier to run your business.

Joseph: I think the other part of Filogix and Equifax, and this partnership as well, is providing relief to the lenders. That the credit bureaus they’re getting, are exactly what they’re supposed to be.

Lawrence: Ryan, I don’t know behind the scenes, and I’m not involved in conversations that you guys have as a company. But is this just stage one of an ultimate goal? Are there other things rolling out in the future, or thoughts, or ideas that you guys have that you want to implement?

Ryan: Yeah, certainly, it’s an evolution of the system. I go back to when I sta