Leverage Technology in Regulatory Compliance

Mitch: Welcome to today's episode of Lending Made Easy. We've got a special guest joining us today, Brynna DeSantiago, Head of Marketing at Encapture. You might have seen her if you were with us at Prosper this year, presenting on leveraging AI to automate regulatory compliance. So, Brynna, welcome to the show.

Brynna: Thanks so much for having me, Mitch.

Mitch: Give our listeners a little bit of a framework. Can you tell us a little bit about yourself and a little bit about Encapture?

Brynna: I'm the head of marketing within Encapture. Been here about three years now. My background is in marketing. I've had a great time within Encapture learning about the banking world. What we do really at Encapture, what our specialty is, we're a document automation platform, and we help banks eliminate manual data scrubbing, with mortgage, HMDA, lending processes. So we help use our software to streamline lending operations across the bank.

Mitch: Awesome. that's great. And I think you might've already answered one of my first questions, but maybe we can dive in a little bit deeper here. Something that you probably would have guessed would have come up given the title of the podcast. But, how does Encapture make lending easier for banks and credit unions?

Brynna: That's really the cream of what we do. We, our goal is to make the lending process easier for banks, financial institutions, credit unions. So how we do that is our first goal is to eliminate the manual data scrubbing that's involved in regulatory reporting. So anything from loan processing documents that integrate with the LOS, your core system, your LAR, your image repository.

Encapture basically integrates with all of those systems and pulls documents across your loan process to streamline and see and compare what exists in your system and what is actually the source of truth. So your small team of loan officers or HMDA workers doesn't have to go through and review every single one of your loans by hand and look at that stare and compare manual.

So what we really do is we take the human error out of the process. No one likes looking at data. No one likes scrubbing screens. We take the sexy stuff away from you guys and we do all of that.

Bryan: That explanation I think probably helps the audience too a little bit where I think for some of us here chatting, scrubbing the data makes a lot of sense to us, but it's eliminating those redundancies, right? It's getting rid of the checkers, getting the. The people back in the value added work instead of ensuring data is in alignment because I can't tell you how many times I've seen it over my career where somebody will go through an origination process will go to dock the loan.

This could be attorney prepared, could be with a standalone documentation system. As much as we don't want it to data gets changed, the somehow the docs end up out of sync from the loan origination system. What was actually a decision could be a lot of different reasons. And then when that data is then keyed into your system of record, your servicing platform, or your core, you end up having to add audit processes that you aren't expecting.

What's so powerful about Encapture is. How you guys have segmented some of the different processes tied to regulatory need, like you were talking about with HMDA and LAR and CRA, others to use technology to ensure that the data is in sync instead of trying to use people.

Brynna: Exactly. We had one of our customers out of Texas. They had two people who were scrubbing loans and they looked up and those two people, all they were doing was looking up data from Encompass in their system and making sure it was right. And once they used Encapture, those two people were able to get promotions because they were doing highly strategic things and not focusing on looking at data points and seeing if a comma got missed or if an attorney now didn't scan the right signature or if someone's income was miscalculated or if a gross annual revenue, there's so many different indicators and processes that people have in place.

And it's so unrealistic to take two, three, five, 10 people to just look at those systems and add in that additional layer of audit, especially when there's extremely new expansions on the regulations like HMDA, CRA, and now the CFPB just ruled that 1071 is going through. So there's that huge pressure right now that this stuff cannot be wrong.

Bryan: That's an awesome value point that you got people getting promoted, right? For using technology far too often, the focus is on eliminating costs when in reality, a lot of these solutions. Are all about freeing people up to do the value added work. It's they're getting bogged down in this minutia, in this repetitive work, and this is where technology should be applied and where I think there's a lot of exciting things with AI on the horizon to kind of further that, not to take people's jobs, but to free them up to do the stuff that the technology can't today. So here in the you've got clients getting promoted, that's, I think an awesome testament to what Encapture does,

Brynna: Yeah, and like a lot of our other community, more local banks that we work with sometimes tend to be afraid of AI. They don't want to, we're not going to fire people and, replace them with a computer. And we don't want you to fire people either. There's so much more things that they can be doing.

That's what AI is here to do it's here to replace the mundane, the, the boring tasks that are taking too much repetitive things and let them focus on the highly strategic initiatives.

Mitch: I think too, it speaks a lot about scalability. I think you're talking about taking these couple of people right now, they can be great assets for the bank, but then it also allows them to do more loans, right? It allows them to have more capacity to do more with the same number of people. I think that's a, huge one for any financial institution, right?

So have you seen any examples of that? Where. from using, , software from and capture that one of your clients has been able to grow their loan volume just from that lift in the scalability of the software.

Brynna: Yeah, exactly. I think multiple customers come to mind. I know a couple of our customers in the Midwest will have a big goal for one to two acquisitions a year. And you can't do one to two acquisitions a year and double, triple your loan volume. You still have that one person doing all that. And now you've grown and you've hit a new threshold and, you have higher scrutiny of data because you've acquired two more banks.

So, Your one guy, he can't now do all of that data scrubbing and make sure it's the integrity and has good integrity for these audits and, new regulations. So I think it does, it helps with, like at the big scale, they do need to be focused on mergers and acquisitions. How can they grow their customer experience, their digital experience?

That's all we're hearing about at these banking events is how can we make the customer open deposits, account openings? That's a huge goal. So. Our customers want to focus on those and not the data integrity. So I think having those large scale mergers and acquisitions, they're not, they don't have to double their staff.

They can keep their small staff and at scale as they do that, which is amazing.

Bryan: yeah, it is for sure. Brynna, I know you, the HMDA, LAR, those regulatory ones that we've mentioned a few times. Are there other exciting things on the horizon that in capture is, thinking about where you can apply this kind of concept to scrubbing those documents to compare to systems?

Brynna: Yeah, definitely. One of the great things about it is it's so applicable to any line of business. So right now with, the regulatory environment and the interest rate environment we were in, we found that with banks, there isn't a lot of money to spend, but there's always money to spend when it comes to regulatory compliance, because that's the biggest risk.

So we found that's a great way to get into the door to these banks, but we're this process of scrubbing your data and looking at documents is applicable to all lines of business. So within mortgage, commercial lending, consumer lending, we have a huge, indirect auto. Prebuilt solution as well, because, that's a very document intensive process with indirect auto lenders also work with credit unions.

So any document intensive process, whether that's consumer, commercial, real estate, mortgage, CRA, now, 1071, whatever kind of that big process is, that's document intensive and capture can be applied to it. And we found that using our prebuilt solutions, once you get it on the compliance, it's kind of like the base model for everything. Once we are attached to your LOS and compass, we're excited to partner with Baker Hill soon. So once you have that baseline model with us, we're able to integrate with your other players because ideally there's one LOS, but that never happens.

So when we integrate with all of those and then find that it's a great base model to apply across the systems.

Bryan: Obviously regulatory compliance that people always spend, like you mentioned if I can find answers to those problems. That I can do less expensively or more efficiently. They, will open pocket books for that. What do you see though, is the biggest barrier to adoption of the platforms beyond the spend aspect?

Are people still kind of scared of that piece of it, the, that it's coming to take my job or other change management aspects that people struggle with as they roll the Encapture platform out, help people back from maximizing in this space.

Brynna: We've seen a good trend in the fear of AI is definitely decreasing. you talk to a banker last year about AI and they're like, Oh no, that's way too risky. I don't want to implement this change. who knows, especially people think of AI, they think of generative AI and chat GPT and that line of AI, which we're more of a traditional AI.

Not generative. So one good thing is we've seen banks that are more willing to adopt this. There's now kind of a mutual understanding that if you don't adopt efficiencies, AI automation, you're gonna be left in the dust. So there's definitely that's been a good trend. People are more open to it. But one of the biggest issues I think is always the systems we get in and we discuss, okay, what's your, what's your data scrubbing look like?

And someone will say, Oh, 10 minutes, and we talked to someone else and they go, it actually takes me 30 minutes to get into Encompass. And then it takes me 10 minutes to look at this document. And then it takes me 20 more minutes to find the file. And then it's been 75 minutes and now I updated it.

So there's a lot of misunderstanding within organizations about how long processes take and where the actual pain is. So John Smith is just scrubbing our data. Do you know that John takes an hour per loan to do that? So definitely a lot of the misaligning of systems and processes is a huge barrier to us.

And then once we are able to, kind of see that pain and identify that within the bank. Once we get across, meeting the right people, that's always the hardest part to just making sure we can get the value produced, for the CEO and for the executive team, that's always the biggest problem.

So how can we show them that? Yes, maybe data scrubbing is time is improving and we can reduce your time from 75 minutes per loan to 5 minutes per loan. What does that actually let you do? Like we said earlier, that lets you acquire a lot more companies so that your team can stay reliable at scale. So I think just bringing that messaging up to the executive team is always a challenge as well. But as long as we tie it back to those, those mergers and acquisitions and focusing on those high values, strategic points, things are super successful.

Bryan: We see the same, right? Where certain levels of the organization, they just look at it and see, the work's getting done, must not be a problem. And they're removed a bit from what it takes to get the work done. Like you were saying, and that's where the time savings, the effective use of employees comes into play is understanding where those time sucks are that we can apply the technology to, so very applicable in our, world as well.

Mitch: Brynna, it's been great having you on the show today. great conversation. if someone out there is listening and they, want to learn more about and Encapture what's, the best way for them to get in touch.

Brynna: The best way to get in touch is through the Encapture website, also through the events that we're going to. Encapture is at a lot of the banking and regulatory compliance events will be at we were at Baker Hill Prosper. We'll be at the ABA Risk and Compliance Conference in June. So those are great chances to meet us in person, get a little back and forth about what we do, but we'd love to see something as well on the website from you.

Mitch: Great. Brynna, thanks again for, joining us today and, thanks to everyone out there for listening to today's episode of Lending Made Easy.

Brynna: Thank you so much, Mitch.