Personal finance

Rocket offers borrowers access to renowned personal finance app

Rocket Companies has announced that it is offering its 2.6 million mortgage service customers free premium access to its recently acquired personal finance softwarewhich will be renamed Rocket Money.

Additionally, 3.4 million members using the legacy Truebill software, which will be officially rebranded at the end of next month, will be able to sign up to access Rocket’s mortgage and auto loan products.

“Where we are moving is yes, you want to improve your finances, but that’s not an end in itself. You want to improve your finances towards a goal. That goal could be to buy a house, acquire a car, or refinance,” Haroon Mokhtarzada, co-founder and CEO of Rocket Money, said in an interview. “The platform then closes that loop and offers you that product.”

The company’s latest plans for personal finance technology raise questions about whether the broader home loan industry, which is known to take a page from Rocket’s more innovative digital strategies in the old daysmight do when it comes to this one.

The acquisition of the former Truebill created a countercyclical advantage by generating recurring revenue from customers not working with Rocket’s lending units, Keefe, Bruyette & Woods analysts noted. These cash flows are separate from, but complementary to, the servicing income on which mortgage companies will increasingly depend if rates continue to rise and issuance continues to fall.

Additionally, with rising rates decreasing the rate and duration of refinancing, the potential mortgage leads that personal finance software can generate are attractive in today’s market environment.

“Lenders are looking for great consumer databases to market their product to. With this technology, they can see opportunities for people who are perhaps, say, too much in debt and who might be candidates for a consolidation loan. “, said Brett McCracken, senior consultant at Stratmor Group, in an interview. “The main thing is that you want to reach them before they go to their competitors. When you can collect a number of signals from your existing customers, you can do it before your competitors know about it.”

However, Rocket’s acquisition of Truebill had a price tag of $1.28 billion, suggesting at least a potential barrier to entry for the typical non-bank looking to pursue a similar strategy. Although mortgage companies have amassed cash in an unprecedented refinancing boom over the past two years, few have the scale and resources or breadth of Rocket’s financial products. In addition, the industry is grappling 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 either made efforts to support borrowers using similar technologies or provided related information such as updates. quarterly reports of credit ratings and home values, said Greg Self, mortgage practice director at advisory firm CC Pace. He sees room for improvement when it comes to the customer experience involved.

“Big repairers are more likely to interface with personal finance software, but in my experience that process is still clunky,” he said in an email. “Small repairers are generally not connected.”

The industry generally manages mortgage and personal finance software systems more or less separately, but some information is exchanged between players that could benefit from automation. Self, for example, recounted updating 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 generation, retrieval and submission. of code.

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

What Rocket does involves a higher degree of automation and more data points than typically exchanged between personal finance and service systems, Mokhtarzada said, noting that the company starts with single account access and will integrate more customer experiences over time.

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

Today’s mortgage market requires investment in leads over a longer period of time, which this type of holistic approach is conducive to, Mokhtarzada said. Both Rocket and Truebill reported strong customer retention rates, with the former reporting 92% net customer retention year-over-year at the end of the first quarter. (Second-quarter results had yet to be released at the time of this 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 out? That’s… what we have to offer,” Mokhtarzada said. “There are times when mortgage business is more difficult, and what we find is that the vast majority of [companies] entrench themselves, but Rocket invests.