Capacity’s David Karandish on taking the friction out of lending

Alcynna Lloyd: Hello, HousingWire listeners, today I’m joined with David Karandish, the founder and CEO of Capacity, which is an AI-based support automation platform. Thanks for joining us on HousingWire Daily, David.

David Karandish: Hey, thanks for having me.

Alcynna Lloyd: Of course, listeners David has joined us today to discuss the use of technology in the mortgage industry and how innovation is benefiting both borrowers and lenders. David, before we dive in today’s main conversation, can you tell our audience more about you and your company?

David Karandish: Yeah. So again thanks for having me here this morning, a little bit about myself. I’m a serial entrepreneur, been in the tech space for just over 20 years, started Capacity in January of 2017. And our whole mission is to help teams do their best work. And the way that we do that is by providing a support automation platform tailor-made for the mortgage industry around automating the questions, both borrowers and LOS have automating the processes that happen internally and then helping you build out your stack where all of your apps can connect back to one central system of intelligence.

Alcynna Lloyd: Right. Thanks for sharing your journey with us David. Let’s move on to today’s main discussion, which will focus on how technological innovation has transformed the mortgage industry. David, as the CEO and Founder of Capacity, how have you seen technology impact the lending process over the years?

David Karandish: When you think about the history of technology, you have a series of steps where we continue to abstract away from the underlying data. So you think about original, like my dad was an electrical engineer as an example, growing up, you know, he worked literally with zeros and ones, and then you had assembly languages and then higher-order languages and then JavaScript and HTML. And now we are in a point wherein the tech space organizations expect non-developers to be able to automate things, to be able to write, low code environments, develop low code environments, no code environments, to help automate what’s going on in the workplace. I think you have that trend that underlies a lot of what we do.

I think, secondly, you’ve got a trend around the migration of everything with the cloud, starting with the LOS, but also your, anything from your onboarding and training platforms to how you handle your overlays and your guidance. And so you’ve got one market trend of abstracting away from code, another market trend of moving to the cloud. And I think those have collided together at the mortgage industry at the perfect time. Specifically, we see organizations saying, look, “We need to rethink the way that we create best borrower experience.” Borrowers have questions at every hour of the day, they shouldn’t have to talk to someone directly to get an answer for a baseline question.

My mom’s a real estate agent as an example, and we all know this market has been pretty wild here with 16 offers going in on a home, you know, above ask sort of thing. And so from a borrower perspective, there’s a big need for folks to get instant answers to what they’re looking for to better work their way through the process and for mortgage companies, to be able to say, “Hey, we wanna better convert the folks on our website, into potential buyers.” Now on the flip side, a lot of people like to talk about the borrower experience and we do too, but we also believe that a great borrower experience is paired with a great experience for loan originators as well.

And so the idea being as an LO, your ability to go ask a question, get an answer, have an automated workflow, power a lot of what’s happening behind the scenes. We see that as a huge piece of optimizing the puzzle of creating a frictionless mortgage. And then over time, we start to see that bleed over into adjacent areas in the title space and the rest of real estate and commercial real estate, etc.

Alcynna Lloyd: All right. And now I wanna discuss your company more in-depth as we discuss prior capacities and mortgage automation platform. It’s powered by AI technology that automates support for borrowers and loan officers. So why is this technology important for mortgage companies to utilize?

David Karandish: Investing in this kind of technology is the equivalent of investing in a website when the internet was starting to take off. And you look at the folks who made early investments in that channel and how well they’ve done over time, to where now, like everyone expects you to have a website. You couldn’t be in the mortgage space and not have a website. I think very similarly your borrowers are expecting to be able to have an AI-driven experience that helps them work their way through the process. And increasingly in the war for talent, loan officers are saying, “Hey, I wanna work at a place that’s gonna get me the best possible tech stack to go do my work.”

You know, we were doing some work with Katherine Campbell over at Assurance Financial, and, you know, her approach is that she’s like, David, we just have to work with the best tech stack if we want to attract the best people and having Capacity sit on top of all of your apps so that you can ask whatever question you want and get an instant response. That’s the initial core value prop of what we provide. And as we got going, we realized that we were gonna need to connect to anything from Ellie Mae’s encompass to Microsoft office, to Salesforce, to HubSpot, to you name all of the apps in your stack. And so our developer platform allows Capacity to not only answer questions from a knowledge base but to answer questions from the rest of the apps on your tech stack.

And then finally, what we’ve found is that no matter how good the AI is, there will always be questions where you need to bring someone in. And that’s okay. When we started, we were at about a 55% match rate when we kicked off initially. Today we’re at 90%, which is state of the art, I put us up against anyone in the industry with those types of numbers. But even in the 10% of the time, when the bot doesn’t know the answer, we will go escalate that up to a person on your support team who can then not only respond, but also store that answer in the bot for next time.

Alcynna Lloyd: Okay. So what is the financial impact of implementing mortgage automation technology?

David Karandish: Yeah, so I think we can break it down into couple different pieces. The first part is when you think about the borrower experience, the ability to create a better, more seamless experience on your website, in a world where people are one click away from your competitor, you know, that’s a huge value add being able to instantly answer their questions. And we’ve seen this across our clients. Another, an example of this we’re working with one financial institution that from the time they launched our bot on their website after we raised their net promoter score by 10 points, which is a big experience driver that they measure.

And frankly was, you know, beat any expectations that they had on what that could look like. Conversely, we believe that there’s a big opportunity to take out the costs of processing these mortgages. We’re working with one organization right now. They handle a lot of the forbearance claims in the mortgage phase. And they’ve got a team of 20 somethings who are staring at these documents, trying to compare them back to the LOS, and our technology can automatically read the document, compare it to the LOS, and then help process that loan at a much lower cost. And so that’s another big ROI win.

And then finally from a financial impact on just the overall training and onboarding like, you think about all the work it takes to get someone up to speed, whether it’s using your internal systems or helping to work through all the myriad of guides from Fannie and Freddie and VA and FHA. Our AI technology allows you to ask a question into those guides, get an instant answer back, link back to the guide for any follow-up. And so we saved thousands of hours for our clients with this kind of tech. And so the combination of those three borrower experience automating the backend process and then just saving the overall time would be the three economic impact areas for us.

Alcynna Lloyd: All right. So it sounds like your product itself is meant to obviously improve only the borrower experience and the lender experience but the overall procedures and the financial impact on these individual companies as well.

David Karandish: Yeah, we really don’t look at them as separate work streams. We look at them as part of an overall process of which we are trynna take as much friction out as we can. Imagine for someone who frequently uses Amazon to go back and say, “Hey, we’re gonna need to talk with someone. We’re gonna need to add our credit card information. We’re gonna need to stand in line.” Amazon took the friction out of that buying process, and which is why it’s on the shortlist of trillion-dollar companies right now. We believe that there’s a trillion-dollar opportunity in the mortgage space to take the friction out of the process.

Now that doesn’t mean that there won’t be people involved. We are big believers that any time you’re spending the amount of money that somebody is on a home, particularly as you’re getting educated early on a human component will still be a part of that process, but there should be no human component that isn’t adding value. This wasn’t just a thesis that we started out with or even a strongly held belief. This is a core fundamental principle from which we operate. And when I talk about early on our mission is to help teams do their best work. Our technology is helping automate the support for that mortgage from the borrower to the lender. And that’s how we live out our mission every day.

Alcynna Lloyd: Okay. So we’ve gone to the end of our interview now, before we wrap, I wanna know is there anything else you think our audience needs to know about Capacity or the mortgage industry in general when it comes to FinTech and Automation, some of the cool technology that’s coming out?

David Karandish: Yeah. A couple things I would point out one, seeing is believing when it comes to this tech. Unfortunately, there are a lot of people in this space who’ve talked about doing a lot of the things that we do and frankly not done a great job. I’m in St. Louis. So Missouri is the ‘Show Me state.’ So don’t take my word for it, come check out. Check out a demo, check out a video, check out a webinar so you can see this in action and we’ll be happy to answer any questions you have and, you know, with the number of mortgage companies we’ve worked with, you know, we’ve seen it all at this point.

Anything from, even the wholesale side, to the residential to the, like I said, title companies are working with us now. So we’ve got a wide variety of different organizations that we can be helpful for. The second point I would throw out is that I like to say you don’t have to clean up before you take a bath. A lot of times folks will come to us and say, “Oh, I gotta get all this stuff organized.” Or, “I gotta get all my ducks in a row.” Now that’s not the case. You can start and eat that elephant one bite at a time, you don’t wanna try to swallow the whole thing at once otherwise you’re gonna have a tusk coming outta your side.

And so, just figuring out what’s the first easiest place to get this technology implemented and then rolling out from there. We’ve seen that be very successful with our clients. And then lastly, I’ll just end with one of the things that we’ve been very blessed with is that our client base is very happy to talk about what we’re doing and how we’re helping them. And so, again, if you need a reference call, if you wanna hear from somebody else, we’re happy to connect you with that as well.

Alcynna Lloyd: All right. Well, David, thank you so much for joining us today.

David Karandish: Thanks for having me, appreciate it.

Alcynna Lloyd: Of course, listeners will see you back here tomorrow. Thank you.

David Karandish: Take care.