Thought Leaders in Financial Technology: Rich Longo, President of NXTSoft (Part 2)

Sramana Mitra: The pain point that you are solving is speeding up the loan appraisal and processing process. Is that an accurate synthesis?

Rich Longo: We cover the entire life cycle of the origination process – from the beginning with a customer entering a loan application to the loan getting serviced and the closing of the loan application.

We are taking the friction out of the consumer side, but we are reducing the cost to the institution or the lender. We are speeding it up by half to a quarter of the time it would normally take from application to closing and funding. For the institution, we are potentially taking out over 70% of their former cost by taking out the human intervention in that process. 

Sramana Mitra: Is that your primary use case or are there other ones?

Rich Longo: There are plenty of other use cases. You could go across an institution to deposits. There is also data aggregation. Our approach is different is different from that of Plaid, which uses screen scraping. You have to enter in your user name and your password to a disparate application and it grabs that data, not necessarily securely and not with all the permission standards. There’s a massive class-action lawsuit against Plaid because of the permissibility of it.

We get all the security permissions and standards from all the sources. We create a secure marketplace so that data can be shared and we help aggregate that data together. For example, as a consumer, when you are in your Wells Fargo account, your Merrill Lynch account, and all these other accounts because you want to see your total financial relationship, that requires connectivity. We can transport your data securely so that you could aggregate it together to see your financial situation.

Today, in the financial world, there are so many disparate applications. For example, Bank of America has over 30,000 applications. Think about the lines of business. You are a customer that has a business, so you deal with the commercial line of business. You have your accounts, so you deal with the retail line. You have investment accounts so you deal with the investment line. You also have insurance line. Each one of those are verticals in a business that have a completely disparate ecosystem.

Now on the Bank of America website, all you want to do is see all your commercial accounts, retail accounts, and insurance accounts and have it all aggregated together. That’s very complex and not easy. That is one of the things we do in helping with the connectivity side of the business.

The other piece that we help our clients with is on the conversion side. A lot of our financial institutions will have a ton of data and they will choose to start switching from one core banking system to another. When they do that, there is a mandate that requires them to keep a lot of that data.

For example, if I have a loan for the past nine years and it’s still active, I have to have all nine years of history. I have to keep the data of that loan for another set of years after the loan closes. That’s a lot of historic data.

Now, I need to go ahead and convert those images. I need to convert all that data that exists in those disparate systems, and I need to bridge the data as if it always existed in this new system that I am deploying. Doing that is complex. We are very good at converting that data from legacy systems, combining it, and trying to create more value for them through the consolidation of application stacks.

Banks might say they use five systems for this set of functionality, and we found one that all of those five systems could do. We’ll help them with the data conversion side of it too, and we will improve their efficiency with connectivity, achieving all this securely through our cyber tools.

This segment is part 2 in the series : Thought Leaders in Financial Technology: Rich Longo, President of NXTSoft
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