Buying a home is a pivotal decision for anybody. Much more than a routine commercial transaction, it speaks to that person’s aspirations, hopes, and family identity. It was with this awareness, and a vision to help families and communities grow stronger through home ownership, that Kevin J Stitt, a career professional in the mortgage industry, started up Gateway Mortgage Group in 2000. By 2017, through some of the most challenging times for the housing market, Stitt had grown Gateway to become one of the largest privately held mortgage origination and servicing companies in America, employing more than 1,200 people at 160 branch offices.
In November 2018, Kevin Stitt was elected Governor of the State of Oklahoma, but before he stepped aside from the position as CEO at Gateway he had been able to advance a long-held desire to move beyond the origination and servicing of mortgage loans and turn the company into a fully-fledged bank. Leveraging the expertise of Stephen Curry, a banker specializing in banking transitions who replaced Stitt as CEO in August 2018, Gateway acquired Farmers Exchange Bank to form Gateway First Bank which, with $1.2bn in assets and five banking centers in Northwest Oklahoma, emerged overnight as one of the largest banks in the State of Oklahoma by asset size, and one of the largest bank mortgage operations in the United States.
The enabling technology team
Growing the technology infrastructure to support the radical and highly-unusual transformation from a mortgage company into a bank is a process that has been ongoing since the appointment of Steven Harpe as CIO in 2013. Harpe had held senior leadership roles in IT for more than 20 years. Back then, there wasn’t really a technology division in the present-day sense, he recalls: tech was seen as a black box, and the relationship with the rest of the business was an adversarial one. “We had to develop a managed services concept within the business,” Harpe explains.
Digital enablement is now recognized as essential to all financial services, though the industry as a whole has been slow to acknowledge that. This is a company built on service, and that has been the secret of its rapid growth to date. “As we continue to take on additional customers we also want to be able to effectively recruit the sales and corporate staff that will serve them. Attracting the best people means offering them the best products available through a top tier technology platform.” Harpe adds that it’s a mistake to suppose that millennials are the only group to embrace digital technology, citing his mother who, at 74, is inseparable from her iPad for communication, shopping and financial services too. “Financial services were late getting into this space but as we move forward it's no longer millennial problems we are trying to solve. We are trying to solve problems for everybody and the digital platforms that we are building and integrating today can do that,” stated Harpe.
Over recent years, mobile-friendly technology has penetrated all industries, with mortgage lending no exception, Harpe points out. “Increasingly we turn to technology to reduce the number of touchpoints and enhance the borrower experience by giving them an intuitive one-touch technology platform.” Fintech has become a commodity, so his strategy has been to outsource the principal elements to the partners who do it best. “I want to spend our time on applications, enhancing digital experience, and making better use of data to understand how we can best deliver our mortgage and other financial services,” Harpe added. “We see ourselves as servants to everyone in this company, and I am proud to be able to say we quickly ditched the old backroom mindset and created a very dynamic, agile and digital forward-thinking group.”
The IT organization Harpe leads now has around 40 people, all with a problem-solving mentality. “When we hire someone, we look well beyond IT knowledge and competence,” he comments. “We want people who will take ownership of their ideas, and have a sense of urgency about them; people who are excited to be here and keen to solve problems for the business.”
Four key platforms
On the front line of a lender’s relationship with its clients is the point of sale (POS) system. In a competitive environment, the speed and efficiency with which a loan application can be processed makes all the difference. The POS system Gateway selected was provided by Blend, a Silicon Valley software developer that now connects more than 15,000 banks and financial institutions to make routine checks. “It used to take days or even weeks to get through an application process, which was stressful for the applicant, but now on the mortgage side of the business we average less than 30 minutes,” stated Harpe. “We can automatically pull W2s, tax records and the like, ingest these files and use the Blend platform to digest the information and quickly get through the 1003 process.”
The difference this makes to the customer experience is immense and it helps Gateway deliver its vision to realize the American Dream of homeownership. As Blend’s founder Nima Ghamsari has said, a large number of people don’t realize they qualify for home ownership until they go through this process. Not surprisingly, customer satisfaction and net promoter score (NPS) rates have soared. “Everything we're doing is geared around the customer experience and we remove as much friction from that process as we can,” Harpe emphasizes. “Blend is going to be helping us with direct deposit for new deposit account creation as well.”
After approval, the loan application moves into the loan origination process. The current loan origination software (LOS) provider Byte has served the company well but Gateway will be selecting a new partner in the summer of 2019. Discussions are in hand with two industry-leading contenders.
As the launch of Gateway First Bank approached it was clear it should move to the most sophisticated core banking system available. In January 2019, it was announced that this partner would be FIS, a global leader in financial services technology with a focus on retail and institutional banking. “FIS is a global company, and it supports many of the leading direct-to-consumer banks in the market around the world,” says Harpe. “Its service will be hosted on its own private cloud, in which it has invested massively, and it has deep experience and scale in digital banking.” The transition from the current Jack Henry banking system will take place in July 2019.
Loan servicing is the ongoing relationship between lender and client, and this relationship will be trusted to Sagent LoanServ, another partner with its own private cloud. Moving infrastructure from the data center into the cloud, whether private or public, has been an ongoing goal of the IT team, and has largely been achieved, with Blend hosted on AWS as well as both contenders for the LOS. “By the end of 2020, we are going to be sitting in a very unique place. We are a mortgage company that became a bank – and that is exciting enough in itself – but by then we will have all of our core technology running our operations in our business wholly on the cloud, on some of the largest fintech platforms.” Such partners were selected because they are highly future-oriented organizations that look at themselves primarily as technology companies. This, says Harpe, drives their behavior and decision making.
Playing the ball in front
Most of Gateway’s growth up to this year’s bank acquisition and merger has been self-generated, so the new bank will be focusing on safeguarding its reputation as Harpe emphasizes. “Over the coming years, we will see mainly organic growth mixed with some acquisitions. But to use a baseball analogy, we are very much a ‘play the ball in front of you’ company – one thing at a time. The ball in front of us is the bank transition, the transfer of our core systems to FIS and choosing the right loan origination partner.”
Digitizing the operations and leveraging 21st-Century technologies such as machine learning and automation will definitely not endanger jobs at Gateway, Harpe predicts. “We are, in fact, creating scale. When you implement new technology, new skill sets are required and new jobs get created. We are excited about those opportunities, and even more excited about what this is going to provide for our clients. If you are a mortgage or a banking customer (or hopefully both) you are going to be able to consume Gateway First Bank through a common set of digital experiences from a single platform. That is where we are headed.”
The future of banking is omnichannel, and as such Gateway will try to achieve a full set of responsive, personalized digital services to its customers. For example, The Digital One Online Account Origination solution will allow customers to open and manage their accounts via mobile and laptop devices. “This is a foundational time for us,” enthuses Harpe. We are creating a brand new foundation so mobile banking, credit cards and personal finance will all be extendable through the APIs and digital services that we are building. Our customers will find it easy to find us and do business with us.”
Gateway First Bank is a nationwide operator that was founded in the communities of Oklahoma. Its community spirit and commitment are a real differentiator for the company, Harpe insists – home ownership is all about aspiration, the family and a stable society, so the company that Kevin Stitt founded has always looked for ways to reach out. The projects it supports are numerous, but typified by the establishment and continuing support of a Christian school in Nigeria in 2009 as well as the Gateway Youth Ranch in Uganda which enhances the lives of disadvantaged young people in that country.
Closer to home, Harpe picks out Pearl’s Hope, a Tulsa-based project and refuge that supports homeless women and their families and helps them get back on their feet. “Oftentimes they find themselves having to run from home without the most basic necessities of life: Gateway provides Pearl’s Hope with some of these essentials.” The compassion he clearly feels chimes in with the company’s ethos of helping hard-working people regardless of their current wealth.