computers-tech-on-table INTERNAL TECHNOLOGY FAILS

Back in 2012, a large mortgage bank aggressively recruited JVM to join its ranks, touting its internal Loan Origination Software as a major plus for joining.

Their internal software, however, was a major reason we said “no thanks” and sure enough, several years later they went belly up partially b/c their software was subpar.

Similarly, a close friend of our ours came to us for help in 2016 b/c he was the product manager for a major VC-backed Fintech mortgage company that was burning over $1 million per month to build its propriety mortgage software.

Despite all their engineers, spending, and fancy software, they couldn’t attract actual borrowers and they flamed out last year.

In early 2017, we visited yet another Fintech company that had also spent millions developing its internal mortgage software that… didn’t actually work that well. They too disappeared shortly after our visit.

More recently, a huge mortgage bank spent $80 million on its internal software that few of its loan officers use, and the company is now losing millions every month (I blogged about this recently too).


On the mortgage side, technology will make the loan approval process much easier for borrowers. It will take borrowers much less time to fill out applications (much of the info will autofill), and take them much less time to provide necessary documents (lenders can gather them for borrowers electronically).

Technology also makes it easier to sign all of the necessary disclosures and documents. In addition, technology will eliminate work for lenders, reducing costs and allowing them to offer lower rates.

On the real estate side, among other things, technology makes finding and viewing properties much easier, it makes valuation estimates easier and more accurate, and it makes negotiating and contract signing much easier.

But, despite all of tech’s promises, buyers and borrowers still want the assistance of competent advisors; tech will not replace people (something else I’ve blogged about several times).

But the above is more of an aside – what really prompted this blog was a list of Fintech mortgage and real estate companies I viewed yesterday; all are spending millions to develop their own internal technologies that they think will catapult them to success.


Experience shows that internal technology often fails for several reasons:

(1) the tech developers are not in the trenches working with customers or employees to truly understand market needs;

(2) the developers underestimate the costs, particularly when they are not currently generating business to help with cash flow;

(3) great technology alone does not bring clients in the door; and

(4) there are often external providers who offer much better solutions b/c their very survival depends on it (let them spend the money on development).

I always get nervous when I see someone hitching their wagon to a horse that is touting its internal technology b/c I have seen those horses stumble all too many times.

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646

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