The vast majority of brokers send mortgage applications to lenders using a software platform called Expert. Expert is like the Microsoft Windows of the mortgage broker industry—a dominant product that commands an estimated 90% market share.
Expert was acquired by Davis + Henderson (D+H) in 2006 when D+H bought Filogix. The platform is now used by 77 lenders and 14,500 brokers (this is the number of unique brokers who’ve submitted an application on Expert in the past 90 days).
There have been few challengers to Expert in recent years. MorWeb and Axcess Canada are the two current competitors, and it’s no secret why there are just two. Taking market share from a well-entrenched industry player is a formidable task. New entrants need to:
make huge investments in infrastructure
convince brokerages and lenders that their new platform is worth the training, time, and investment and,
contend with customers’ existing contractual obligations.
The contracts lenders sign to use Expert are sometimes a challenge in and of themselves. We’ve heard that lenders may be restricted, for example, from accepting applications from Expert users via a competing platform or via that lender’s own website.
From an objective business standpoint, however, it’s hard to slight D+H for wanting to protect its franchise. Those who expend enormous efforts to build multi-million dollar enterprises always “dig moats” around their companies. It tends to make competition-driven innovation more difficult, but that is business.
When a technology vendor dominates its space like D+H does, there is also a question of how motivated it is to enhance its platform.
"We never underestimate the competition,” says Steve Malone, VP of Broker Services at D+H. "We are more motivated now than ever to strengthen our product offering to clients. Becoming part of D&H, makes this more so.”
Like all software, Expert has had occasional faults. One well-known bug has been unintentional client-data merging during simultaneously open sessions. Due to its complexity, that fix has taken longer than some expected. Nevertheless, D+H says it takes every bug report seriously and prioritizes them as soon as they come in.
"A major initiative is working on maintenance,” says Malone. “We now have a dedicated team working solely on those fixes with their own release schedule.”
Indeed, having a well-capitalized company behind the industry’s core technology has benefits. Additional resources are but one of the advantages a major company like Davis + Henderson brings to Filogix.
“There is stability that comes from being part of a company that’s been around since 1875. There are investment dollars available that never would have been available when Filogix was on its own. Simply because of our size, our customers have access to a much more robust skill-set than before. D+H employs 750 people in our technology area, and this number continues to grow.”
Apart from reinvesting in Expert and other loan processing technologies, D+H has been at work on a few new items. One is an identity theft solution called IDefence. IDefence is being launched at CAAMP’s Expo in November and brokers will get a complimentary basic membership, just by being an Expert user.
D+H is also rolling out a new landing page for Expert. It’s intended to be a “destination website” for brokers with news and offers from D+H partners.
In the near future, the “Filogix” branding that brokers have come to know will change, says Malone. “I think it’s inevitable that you’ll see all parts of our business branded under the D+H banner in the near future. It better supports who we are now—an integrated solutions provider with a much broader range of capabilities.”
Sidebar: Davis+Henderson’s stock has ascended 26% in the last 12 months. Here’s a Chart…