Flagstar Bank, headquartered in Troy, MI, and the Detroit FinTech Bay innovation hub are partnering to launch a new mortgage technology accelerator—and program organizers say it’s the first and only US accelerator focused exclusively on incubating tech startups in the mortgage industry.
The banking sector in general has been slow to adopt new technologies, says Rocky Stubbs, senior vice president of digital and direct lending for Flagstar. That’s partially due to the complexity of the regulations around financial services, he adds, as well as the recession that began in 2008.
“A lot of money was spent managing the crisis and on compliance,” Stubbs explains. “But around 2012, banks started to have more room to breathe and more money to spend on technology.”
Stubbs, who will help oversee the accelerator, says that within the larger banking industry, the mortgage sector has lagged even further behind. He says mortgage technologies tend to fall into two buckets: those that streamline the process for consumers, and those that improve financial service business operations. (A mobile app that allows people to apply for home loans digitally is an example of the former; underwriting software that tracks the industry’s ever-changing rules and regulations, of the latter.)
The Flagstar accelerator program is looking for early-stage companies working on breakthroughs in all facets of the mortgage business, including mortgage origination, processing, marketing, servicing, compliance, sales, underwriting, credit, and quality assessment.
“As we can automate more things, we can provide a better customer experience and lower our costs,” Stubbs says. “It’s a win for everyone and that’s why this accelerator is so exciting. Even if we’re just looking at improving existing technology, there’s a lot of headroom.”
Stubbs says the goal is to have five startups in the inaugural cohort, although it could potentially accommodate more depending on the number of candidates. Applications will be accepted until July 27, and the program runs from Sept. 1 to Nov. 30. Participants aren’t required to give up a percentage of equity or pay a fee, nor do they receive investment capital upon acceptance into the program. However, Stubbs says Flagstar does have “the ability to be a paying customer or offer equity capital or have some kind of joint venture” if that is mutually agreeable.
Each startup in the accelerator will get a “bespoke acceleration roadmap” that could include help with product development and testing, customer acquisition, management and governance, or operational scaling, Stubbs says. They’ll also get access to Flagstar’s network of mentors and a workspace. Companies that are accepted into the accelerator aren’t required to move to Detroit, but would be expected to travel there at the program’s request.
Stubbs says Flagstar will benefit from the accelerator by getting a glimpse at new innovations. “It helps us to get ahead of the curve and it informs our decision-making,” especially if Flagstar sees that a technology it uses is on the brink of being antiquated. “It helps us be aware of what’s happening in our industry,” he says.
