10 Lessons From FormFree Around Data, Partnerships, and Disruptive Lending

Brent Chandler, CEO and Founder of FormFree sat down with Jane Barratt, CAO at MX, to discuss how FormFree fundamentally disrupted and changed the lending process by using actionable data to gain better insights into its borrowers. Here are the top 10 highlights and lessons of how FormFree reimagined the lending experience and what it takes to scale successfully.

Watch the full conversation here: https://www.mx.com/webinars/before-and-after-modern-connectivity/

1. Plan for the unknown 

Chandler explains that in the journey being patient is a critical component to success. Being patient through the process, he says, requires “making preparations and planning for the unknown. I’ve learned to handle the process and understand that there are no guarantees. So we do our best by getting out of the business of focusing just on results and rather focusing on doing our best and going 110%.”

2. Find your product market fit

When building a product, know what differentiators you’re bringing to the marketplace. For Chandler, he knew how his product would fit into the market immediately. He says, “I personally knew with great conviction, unequivocally, this is the way it was going to be. The journey was getting the rest of the world to believe it.” And even though there was great buy-in from people around him, Chandler had to take an iterative approach. He says, “It was an iterative process, the business that we’re in is highly regulated with tremendous oversight. [And we started the company] in the midst of a crisis in 2008.”

3. Have the right data 

When powering your solutions, it’s not simply building the technology, but having the right data to power it. As Chandler says, “The technology component is really an interesting play on understanding where data resides, how to gain access to it, and  how to make it actionable. Those three components are ultimately the recipe for the intelligent applications that we built. It’s about understanding the truth of data, the source data, versus trusting the data.” 

He goes on to say, “The complexities come in when you're dealing with touching a very large market and a huge infrastructure. It's a massive data security infrastructure you're dealing with people's most intimate financial data.” 

4. Think big out of the gate

When it comes to building products and services, build for the future — not simply today. Chandler says, “We built an infrastructure that was based on a stock exchange. So it was an alternative trading system with high throughput — billions of transactions. We recognize that yes, the mortgage industry would never reach those realms, but having that throughput and that extra bandwidth was important for us because speed was a big part of our delivery. It's about thinking beyond what you think you need. If you go short, it's really hard to catch up. So go bigger than you think.”

5. Have the right partnership 

The right partnerships can help push your company forward. As Chandler says, “Our focus has been best of breed. If you make the wrong decision, it’s a tremendous burden on the company. So it's really important to identify and vet your partners and trust that they can deliver technologically. But even more importantly, you need to ask — are they the right people?”

He goes on to say, “I want to brag about MX because, you know, we've been through data aggregation before. I've been in aggregation for over 20 years. But MX really brought a different approach to it. And for us, it made a world of difference. It made a world of difference with our partners and our lenders. Our business is focused on serving those lender communities, but ultimately, our business is also the buyers of those loans, the regulators, the GSEs, the investors downstream, and so on. So quality efficacy of data is critical, which is what MX focuses on to power applications and serve customers.” 

6. Get to know the people behind the partnership

A partnership is always a collaborative approach, so knowing who you’re working with is critical. As Chandler puts it, “Dig in and get to know the people. Spend that extra time and really understand not only the vision, but also the meticulous details of what  the partner's going through. [Find partners who are] committed to the outcomes and the mission of serving others, that's how you structure a great partnership.” 

7. Treat customers how you want to be treated

To successfully scale a great customer experience, you have to treat people well. As Chandler says, “There’s a lot of pride built into the opportunity to work here. So we give  that service back, knowing that this is how we like to be treated. It's a good lesson. It's a little bit intuitive by the type of people we hire. So we look for those types of people who really cherish the idea of gratitude and the idea that this is a great opportunity for them to build on themselves. And this is how we treat other people.”

8. Look beyond traditional credit scores 

Traditional credit scores only give you a small glimpse into a borrowers’ ability to qualify or pay for a loan. As Chandler says, “COVID was a horrible experience for so many people in so many different ways. But what it really did was exacerbate how underserved and underbanked people are. Today, 53 million consumers who don't have a credit score can't get help. And while the feds expanded and lowered interest rates to nearly zero, the banks tightened, leaving this huge demographic behind, and those days have to end. The FICO score has systematically excluded people for over 60 years, and it's not by design. It was good 60 years ago.” 

Today, Chandler says, “With new data, we can do different things. We can look at residual income, discretionary income. We can understand a consumer's ability to pay. We can add vectors against component analytics that understand ability to pay. We can algorithmically use intelligence to understand how much you can afford and do it safely, and allow banks to have transparency into consumer risk. This whole thing is about risk, it's understanding where the risk lies and then how to effectively work with that. It doesn't necessarily mean everybody's going to get the loan they want, but they're going to get a loan. By empowering people to have access to credit, we can create a much more democratized lending environment.” 

9. Understand that technology has outpaced regulations 

Technology is rapidly evolving the financial ecosystem and regulators have some catching up to do. As Chandler says, “Technology is moving at such a rapid pace — we're living on 1980 guidelines and we're in 2021. There's so much innovation happening that the regulators understand it and are trying to keep pace. It’s a complex system, so this won't be overturned or just appended with new technology. I think it has to be methodical. I think it has to be thought through. We have to see it in action. We have to think about all possible outcomes. Chandler adds that, “What  source data does is allows these regulators to see differently. The idea of KYC, of understanding the counterparty risk to be 100%, to know instantly because the source records are there — that's an exciting proposition and government agencies are building in this direction and leveraging good partners.”

He adds, “We believe that there'll be a day that a consumer will have a fungible token that is effectively their ability to exchange their information anonymously in a digital fashion and have a marketplace of lenders that can effectively bid on them, creating a very systematic transfer of lending to the right consumers.” 

10. Check in with yourself each day

Pushing beyond the status quo and taking on complex challenges is not for the faint of heart. As Chandler says, “You need to know where you want to go and check in with yourself each day and ask, ‘am I doing something right now that’s going to help me reach that destination five, 10 years down the road?’ Visualization, understanding, and believing in a destination that you can get to is great, but you have to come back to reality and say, ‘Is everything I'm doing today is helping me achieve that?’ And if it's not, then you course correct.”


Watch the full conversation here: https://www.mx.com/webinars/before-and-after-modern-connectivity/