Optimal Blue's new CEO on coming back to the mortgage arena

June 12, 2024 5:39 PM

Long-time mortgage technologist Joe Tyrrell is back in the business, as the new CEO of Optimal Blue. He takes the top job at the product and pricing engine provider as it reestablishes itself in the marketplace as a standalone entity following its three-year sojourn as part of Black Knight.

Ironically, it was Black Knight's acquisition by ICE Mortgage Technology, where Tyrrell served as president from the time Ellie Mae was picked up by that organization through March 2023, that set Optimal Blue on its course, becoming a part of Constellation Software.

Between the time he left ICE Mortgage Technology and now, Tyrrell was the CEO of Medallia, a customer experience technology firm that offers proprietary artificial intelligence. The perspectives he picked up during his time at Medallia and generative AI was among the topics of discussion he had with National Mortgage News.

Questions and answers have been edited for length and clarity.

You were only out of the mortgage business a short time, but a lot of things have changed in technology since you left. What do you think is the biggest difference that you'll be dealing with at Optimal Blue?

It's interesting even though I stepped out of the industry for a year and a half, I found myself getting contacted by CEOs of some of the largest lenders over that period of time, just asking my opinion on things or wanting me to share my perspective on emerging technologies. So while I don't think there's been a fundamental shift yet in the type of technology that's used in the mortgage industry, what I'm seeing now is at least a willingness for lenders to engage with it, especially things like generative AI.

The biggest challenge for us in this industry and what I'm most excited about, when people hear the term generative AI, everybody's like, "yeah, I want to use it, how do I apply it?" But nobody's actually really doing it at scale, because they're still worried about the unintended consequences that it can introduce in a very highly regulated industry.

What I've been doing for the last year and a half is I've been introducing generative AI to some of the biggest brands in the world, but doing in a way where I'm applying it for very specific use cases, that has a high level of value and a very low level of risks so that they can get comfortable with starting to engage with generative AI and get the benefits of it without being worried about what is it going to introduce to their client base or to their risk profile. People are willing to do it. They just need a very clear roadmap and blueprint on how to engage with it.

Do you think having this experience outside of the mortgage industry will help you explain generative AI better to the people in the industry?

When you've been in this industry for so long, you get caught in this trap of "oh, this is the way things are done because" and then you come up with a list — because the agencies require it this way, federal regulations, state regulations, whatever it might be. Sometimes it's great just to take a step back and figure out "well, the regulations aren't going to change. How do we engineer a better experience for the borrower and consumer, while still meeting all of those requirements?"

Going and supporting companies like Apple and Target and Walmart and Marriott gives you a different perspective of all these industries that have very similar challenges, but some are a little further ahead than others in how they're leveraging technology to help them not just be more efficient, but more effective with their customers.

The mortgage industry has typically been a late adopter of some of the more general technologies that the rest of the universe seems to be using.

One-hundred percent. For lenders, the stakes are high if you make mistakes and so they have to be very confident when they're going to deploy something new. It's the reason why you see a lot of these new companies that come in with all these huge promises of generative AI and using [large language models].

A lot of lenders that are going to be hard pressed to run and grab the newest thing off the shelf because a lot of those companies don't understand the requirements and responsibilities that lenders have.

That's what I'm excited about in joining Optimal Blue is I can leverage the 20-plus years I have in this industry focusing exclusively on technology but now I get to leverage all of my real world experience in delivering cutting edge technology, in also very heavily regulated industries. Like healthcare, for example, where they're using generative AI to really significantly improve the patient experience, but doing it through specific use cases that they can get comfortable with and still see an immediate value.

When you left ICE Mortgage Technology, Optimal Blue was still part of the Black Knight deal. Did you gain some extra insight during that due diligence process into Optimal Blue?

Not really any more than I already had from working very closely with them as a partner for the previous 20 years. I mean, my experience with Optimal Blue goes back to the founders, Ivan [Darius] and Larry [Huff]. I worked very closely with Scott Happ and Sue Baker when they came in and took over. I've always been very, very familiar with the company.

At ICE Mortgage Technology, the Black Knight acquisition that I was part of creating the strategy around, I was really excited about Optimal Blue, because I felt it was just at this critical point where for a lender today their ability to really not just drive profitability but to a level where they can grow their business, reinvest in it, help say yes to more homeowners, is all about how they're managing their secondary market and capital markets execution.

It used to be that everything was focused on the origination process. Now for lenders, it really comes down to, "have you picked the right partner who can scale and who you can trust from a secondary marketing perspective?" because that's where all your revenue is coming from.

Are you concerned about the growing competition in the product and pricing engine space with ICE putting money into the Encompass PPE?

Competition is great for this industry. Lenders are going to make a choice based upon a couple of factors, at least in my experience. First and foremost, it's going to be can they trust that this provider knows what they're doing, especially when you talk about secondary marketing. It is so important for speed and accuracy as the markets are changing all around us to make sure that those lenders get up to speed with current information and can execute things quickly.

I'm not afraid of having competition. It's great for lenders to have a choice. But at the end of the day, they're going to choose Optimal Blue because of our expertise and because of our proven ability to earn their trust.

Because of the way the deal is structured Optimal Blue is a standalone company following the acquisition by Constellation Software. Do you think that your new status is actually a help when you mark yourself to the various lenders?

It's going to be our ability to perform that's going to trump everything else. For the past long period of time, I've been trying to focus lenders on the advantages of consuming everything from one provider. What I've learned after kind of pounding my head against the wall over a decade or so, is they're certain capabilities where a lender is going to pick best of breed because it's just too important to their business to sacrifice capabilities, because they get some minor cost savings when they bundle everything together.

When I looked at the Optimal Blue opportunity, this is one of those best of breed decisions that lenders are going to make. It's good for lenders to have choice, but I'm pretty confident that regardless of how things are packaged or bundled, what they're going to choose is what's the best solution for their business. Given how critical secondary marketing is, I feel really confident that we'll be able to show very well to those lenders.

Optimal Blue wasn't part of the Black Knight family all that long. The deal was in 2020. Now that it's back to being independent, is it ready to fly on its own?

Very much so. If you look at what Optimal Blue's already done from a generative AI perspective, there are already capabilities that are resident within the platform. When you talk about the competition, you've got people that are trying to build something to catch up, or people are trying to figure out how they cobbled together technology to make it look like it can solve this problem.

For us, we're just going to continue to extend out that finish line by adding more and more capabilities in the platform. Our customers are going to get more value tomorrow than they're getting today for the same amount that they're paying. My focus is on constantly delivering more and more value to the lender. It's been running this race for quite a while, and it's used to having people try to chase it from the back of the pack.

How's it working with the people at Constellation Software?

I have experience working for very large public companies and I've also worked for private equity firms. There's pros and cons with both of those structures. What's interesting about Constellation is they really bring together the best of both of those worlds. It's a very large, stable, scalable, public company.

The advantages that we get is we have a company that understands the importance of delivering value to customers, so they're prepared to make significant investments for what we're trying to do on the platform to take it to the next several levels.

But you also get that discipline that comes with being a private equity firm. You get to bring together this very scalable, large public company, but you get to still be very nimble and very thoughtful about where you're making your investments and measuring things to make sure that you don't wait until two years down the road to realize you needed to turn left sharply. We recognize that very early. So it creates a nimbleness for us that I think that our customers are going to appreciate.

Besides AI, any other areas Optimal Blue's looking to work on in upgrading its PPE technology?

There's been some really good work done on refreshing the user interface, making it more simplistic and more intuitive. That's already starting to roll out. I'm excited for the work that the team has already done there.

When people talk about generative AI, a lot of times what they really just mean is basic automation. There's a ton of automation that's in the current roadmap, some of it that's getting released literally on a monthly basis. I'm excited for the work that's happening there.

There's a ton more we can be doing in pushing more data to our customers, showing them their data and how that compares in an aggregated, anonymized way to the data that we see. We touch such a large percentage of all the loans in the industry. There's a lot of value we can deliver back to our customers by helping give them some insight real time on how they think about pricing to make them even more competitive by being on our platform.

People are worried about how the data is used, but they also make the case that AI works best with more data in the system.

Any words used by AI is only going to be as good as the models that you've trained. The models that you've trained are only going to be as good as the data that they've had to train. If you've got six or seven customers or 10 customers, or if you happen to have 500 customers but they're all very small and do very low volume, in either of those cases, you have a very small data set in order to really try to let your systems learn and understand how they can become better with the very next loan that they see.

With Optimal Blue, we're in a very unique situation because it's one thing to have origination data. It's another to have the actual data showing where the rates were when the loans were locked and how those locks changed over time and why they changed over time.

I'm excited to work with the team in managing all this data. Again, the data is our customers' data. So we're always going to be very careful and make sure that we're protecting that data. We're using AI in an extremely ethical way with a lot of transparency and visibility.

This brings up data security. This is something where the information is secure as your last cybersecurity incident.

Security will always be the No. 1 job for us because of the type of data that we sit on. All these companies that try to come into our space with flashy PowerPoints and talk about solving these problems when you get under the covers, they really don't understand the responsibility that they have. That's the thing that Optimal Blue does extremely well and has for decades.