Technology addresses both lender and consumer needs
Blue Sage Solutions launched in 2011 focused on the mortgage origination technology space. It avoided external funding until 10 years later, when Goldman Sachs Equity made a growth equity investment in the company.
The investment is helping to propel growth, but that’s not the only reason the bank’s commitment is such a huge deal, according to Joey McDuffee (pictured), Blue Sage’s vice president of sales and marketing.
The reason: some customers worried about the future of a company with a sole owner and operator. Founder Carmine Cacciavillani has served as president and CEO since the start. By accepting investment from Goldman Sachs, McDuffee said, the company achieved a greater sense of stability and reputation in the marketplace.
“We looked at a lot of options … joint ventures, a lot of VC money, but at Goldman Sachs, there is a level of credibility that’s unsurpassed in the industry,” McDuffee said. “It actually worked out well for us.”
Since that key investment [the company did not disclose specifics], Blue Sage has been expanding in staff and market reach. It employed about 20 people when McDuffee joined in 2019 but now that number is up to 140. Driving that growth is the company’s Digital Lending Platform, a browser-based end-to-end mortgage lending system, delivered through the cloud. It is both a point-of-sale and loan origination system.
“In many cases, folks have disparate platforms that are really a Frankenstein monster or patchwork, a discombobulated mixture of technologies that don’t really talk with each other,” McDuffee said. “With our combined platform, having one source of truth, it streamlines the entire lending process, reducing errors [and] increasing productivity.”
Up in a down market
Blue Sage has held its own in what has become a down market for many technology companies.
“We’re continuing to hire, unlike many others in our space,” McDuffee said. “We are … averaging the same number of loans that we did last year, so we think that [our] down market performance is a testament to having a platform that can pivot.” The platform has drawn interest on the mortgage side, for example, but also from clients dealing with home equity lines of credit – a part of the business that has shown resilience and even increased interest during the downturn.
“Some of our customers have really focused on the home equity space, tripling their volume since last year,” McDuffee said. “That’s a testament to having a modern proven platform like ours.”
During this period, Blue Sage has seen a “very large” uptick in credit union clients seeking to update their technology.
“They have access to liquidity [and are] looking for a combined platform that supports more to do,” he added.
The company also targets the top 300 mortgage companies including independent mortgage lenders and bankers and has engineered 17 implementations of its platforms and counting, McDuffee added.
The Digital Lending Platform has been around for about a decade, though it has evolved through regular updates including one recent one.
“To include other integrations with third parties as well as native functionality, we added a document management utility so clients can split and merge or review documents within our platform instead of having a third-party technology,” McDuffee said.
McDuffee touts the platform as being one of the only that has been “API-based from the beginning,” which has enabled accessing of third-party data to help make loan decisions quicker. The platform also provides mobile capabilities for loan officers, as well as elements of machine learning that allows for automated document recognition and data extraction.
Technology advancements are key toward making today’s digital platforms both effective and useful, he said.
“It has to be open, and it basically has to be enabled to accept or access data for sure, and that’s the foundational building blocks of Blue Sage’s platform,” McDuffee said.
At the same time, Blue Sage’s philosophy is to not include every technology advancement itself.
“The accessibility of other technologies is a must have, but we’re not going to write everything ourselves,” he said. “We want to focus on what … makes the most sense for our clients and then leverage other third-party technologies.”
Blue Sage’s integration process with clients can take weeks or as long as six to eight months, involving training, configuring with other systems, and contracts.
It starts with a series of workshops.
“We go through a series of workshops to understand [clients’] current state, the current process and how we can streamline that using our particular process,” McDuffee said. “It is an iterative process, but we provide a reference bill, where they can process a loan within the first six weeks after they sign up with us.”
That reference bill is tailored according to clients’ tasks, fees and products, so when the new process goes live, it reflects their way of doing business.
“It’s a combination of not just technology implementation but also process transformation,” McDuffee said.
APIs are also key here, to integrate both legacy and third-party services.
The longer integration process is important, McDuffee said, to get clients properly up to speed.
“We have done implementations in weeks but it really comes down to the alignment [of a client’s] business process” with what Blue Sage can provide “out of the box,” he added.