Rocket offers borrowers access to a renowned personal finance app

Rocket Companies has announced that it will provide its 2.6 million mortgage servicing customers free premium access to its recently purchased personal finance softwarewhich will be renamed Rocket Money.

Additionally, 3.4 million members using the legacy Truebill software, which will be officially renamed at the end of next month, will be able to opt-in to access Rocket’s auto and home loan products.

“Where we are evolving is yes, you want to improve your finances, but that is not an end in itself. You want to improve your finances towards some goal. That goal could be to buy a house, it could be to get a car or to refinance,” said Haroon Mokhtarzada, co-founder and chief executive officer of Rocket Money, in an interview. “The platform closes that cycle and offers you that product.”

The latest plans for the company’s personal finance technology raise questions about whether the home lending industry in general, which has been known to follow the lead of Rocket’s more innovative digital strategies. in the pastcould do when it comes to this one.

The acquisition of the former Truebill created a countercyclical advantage by generating recurring revenue from clients who do not work with Rocket’s lending units, analysts at Keefe, Bruyette & Woods said. Those cash flows are separate from, but supplement, the servicing revenue that mortgage companies will increasingly depend on if rates continue to rise and originations continue to fall.

Additionally, with rates increasing as refinancing rates and terms decrease, the potential mortgage opportunities that personal finance software can generate are attractive in today’s market environment.

“Lenders look for great consumer databases to market their products to. With this technology, they can see opportunities for people who, for example, are too leveraged in debt and who may be candidates for a consolidation loan,” said Brett McCracken, senior adviser at Stratmor Group, in an interview. “The key is to reach them before they reach your competitors. When you can accumulate a number of signals from your existing customers, you can do it before your competitors know.”

However, Rocket’s acquisition of Truebill was priced at $1.28 billion, suggesting at least one potential barrier to entry for the typical non-bank company looking to pursue a similar strategy. Although mortgage companies have hoarded some cash during an unprecedented refinancing boom in the past two years, few have Rocket’s scale and resources or the breadth of financial products. In addition, the industry has been dealing with thinner margins more recently and many have been in cost cutting mode.

While other big players in the industry may not offer a resource exactly like Rocket Money, they have been making some efforts to support borrowers who use similar technologies or provide related information, such as quarterly updates on credit scores and property values. said Greg Self, mortgage manager. practice director at consultancy CC Pace. He sees room for improvement when it comes to the customer experience involved.

“Larger managers are more likely to interact with personal finance software, but in my experience, this process is still complicated,” he said in an email. “Smaller admins are generally not connected.”

The industry typically runs personal finance and mortgage software systems more or less separately, but some information is exchanged between players who could benefit from automation. Self, for example, recounted that he updated the information in his personal finance software due to a transfer of service and noted that he was able to do so after a process of generating, retrieving and sending codes.

“You want to control the experience, but it has to be a great experience,” McCracken said. “You want to provide an experience that adds value, saves time, and makes a complicated experience that much easier.”

What Rocket is doing involves a greater degree of automation and more data points than are typically exchanged between personal finance and service systems, Mokhtarzada said, noting that the company is starting with access through a single account and that will further integrate customer experiences over time.

“For example, when you go to see your mortgage, you can also see your finances. We’re working towards sort of a singular view and dashboard or dashboard for your financial life,” he said. “You’ll see every asset, every liability you have, full visibility into your credit. It makes sense to be able to see these things together… It’s even a bigger picture than just connecting mortgage and personal finances.”

Today’s mortgage market requires investment in leads over a longer period of time, which leads to this kind of blanket approach, Mokhtarzada said. Both Rocket and Truebill have said they have had high customer retention rates, with the former reporting 92% net customer retention in 12 months at the end of the first quarter. (Second-quarter earnings had not yet been released at the time of writing.)

“If they’re not ready to buy, the question is how do you maintain and build a relationship and loyalty with that person so that when they’re ready to buy you don’t have to buy them again. That is… what we have to offer,” Mokhtarzada said. “There are times when the mortgage business is more difficult, and what we are seeing is that the vast majority of [companies] They’re shrinking, but Rocket is investing.”

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