E-Loan CIO: Jay Shah

Dan Farber: Jay thanks for joining me.

Jay Shah: Thanks for having me. It's nice to be here.

Dan Farber: Now I remember E-Loan from years and years ago. It was one of the real web pioneers. I think since its inception it has done about 35 billion dollars in transactions. So what has really changed today in terms of working in the online mortgage and banking space?

Jay Shah: Absolutely. Well we are a very innovative organization. We started off primarily as an Internet direct to consumer operation supporting primarily refinance loans, but as the mortgage has evolved and the mortgage economy has changed we've moved more into purchase mortgage products. We've also offered home equity loans and historically we've offered auto loans as well.

Dan Farber: Now at this juncture the mortgage industry is in deep trouble right now. From an IT perspective let say, how have you responded to that? How have you helped the company get through that?

Jay Shah: Absolutely. Well, we are presented with opportunities day in and day out. Right now we are hunkering down; it is survival mode. When we do get an opportunity with a new business partner or a new product what we do is we try to work directly with the business in order to develop those innovative solutions, in order to increase our chance of success.

Dan Farber: And then on the IT side, how do you innovate around that in terms of lowering your costs to do transactions?

Jay Shah: Absolutely. We're focused on cost savings and efficiency of course. We also try to support the business process of innovation. The culture is very innovative at E-Loan in and of itself. What we do is we try to take those ideas and catalyze them into products and solutions. We try to do turn and iterate, to bring those solutions to the marketplace as quickly as possible.

Dan Farber: Now in an organization like yours it's not a huge organization how many people in your IT group?

Jay Shah: Just under 50 people now.

Dan Farber: How do you create that culture of innovation? What kind of tools are you using to enable people to collaborate?

Jay Shah: Sure. A lot of it is really process driven. It is creating a discipline where we facilitate and foster the ideas that come from the business community. As well as trying to charge innovation from within and build that back out to the business. We have routine processes where we meet weekly with our executive leaders. We present ideas from within. We also pull the ideas from the business and we develop those ideas and try to build a backlog of features that we develop into software.

Dan Farber: Are you using any of the so called Web 2.0 collaborative products? Wikis, blogs, predictive markets, and all the kinds of tools that many of the companies are starting or at least gradually adopting as a way to get more out of the employees.

Jay Shah: Absolutely. We use an online twiki within our group in order to develop ideas and build our documentation. A lot of what we do for software development is agile software development. So what we focus on developing are our short, discrete product cycles, or indiscrete product cycles where in two to three weeks we can go from concept through into solution and deploy a functional software package for the business.

Dan Farber: What's an example of a case where you've been able to iterate very quickly in something that brought a good return on the investment to the company?

Jay Shah: Absolutely. Recently one of those changes in the marketplace has been the departure in the marketplace from sub prime lending. The emergence of a new product FHA loans is an example where the opportunity came into the business for us to generate that product in tandem with being certified in compliance and offering that product. We brought that into our group and within weeks were able to turn that product out and get it out to the marketplace as one of the initial leaders as the market changed.

Dan Farber: It would appear and I'm looking at some statistics that E-loan is rated number one by some sources for its functionality, ease of use, the privacy security, and the quality of the website. What kind of work goes into maintaining the website at that level? Especially given that web technology is changing quite a bit and the user expectation is changing.

Jay Shah: Absolutely. I spoke a little bit about our innovative process, but there is a lot to be said about our infrastructure. Over time we've developed quite a robust platform. We believe in clustering. We believe in high availability solutions. To be able to get the performance stats and build a security infrastructure we've developed this over the years. Now the other part of that is ease of use and functionality. That goes into the software engineering that we turn out on a routine basis.

Dan Farber: In terms of the website, how do you go about testing it and making sure that these features are going to generate the kind of returns? Especially given your business is completely web based, so if people are coming to the door and going away you're not doing very well.

Jay Shah: Absolutely. Well we can't just rely on instincts. We need good instincts to come up with new products, but once those instincts are taken into action we deploy our products. There is a couple things we do. We use a lot of business intelligence systems to be able to gather all of the statistical information in our product performance. For example we'll do AB testing with a new deployment.

Dan Farber: So you instrument the pages and see what happens?

Jay Shah: Absolutely, and we'll typically do that champion challenge or type of campaign. So we'll put the champion out there if it's a solution that we have that we're trying to iterate or try to improve upon. Then we'll actually test the results. What it does is it takes a little bit of the gut instinct and the guesswork out of it, and we actually make data driven solutions. That drives our ongoing innovation.

Dan Farber: Privacy and security are obviously big issues. People coming to your site really have to trust that the information that they're putting in, and also the data that they're getting from you are accurate. How do you deal with that, especially given the hypersensitivity people have to giving their data up when they're dealing with a transaction of large sums of money?

Jay Shah: Absolutely. Well since the inception of the company the cornerstone of our brand is privacy and security. We have to be. If we have an information security breach or if we're at risk of a perception issue with privacy then we're at risk of losing our customers.

Dan Farber: Are there certain technologies or techniques that you use? State of the art, you could say.

Jay Shah: Absolutely. In terms of our network security, the software applications, the detection, the prevention and the monitoring of our systems, as well as our applications. All these lend themselves into our privacy and security model. A big part of our model as well, in terms of privacy, is giving our customers choice.

Dan Farber: In what sense?

Jay Shah: So for example, we allow our customers to choose if they want to... some people prefer to get paper disclosures. We've provided that choice throughout time. Also we have the opportunity sometimes of sharing information with third parties, and they can restrict the option of how much of that information is shared. Over time we've invested in offshore operations, and that was really to help us manage the peaks and valleys within business cycles. Many financial service companies haven't offered a choice to their consumers, but we thought it's their data. This is part of our brand; we want to tell them exactly what they're doing. We want to give them a choice.

Dan Farber: What are some of the areas in which you're investigating right now where technology plays an important role?

Jay Shah: A couple current technologies... I would say business resiliency for us is really important, up time for our business. We just can't afford the alternative, so what we do is we continue to look at our high availability systems that I mentioned our clustered applications. We might not have something that's fundamentally broken. We might not have a problem so to speak, but if we see that we have a spot problem here or if we are doing research and development and find a new opportunity to improve our infrastructure those are the things that we tune in and go after.

Dan Farber: Give me a little bit of a picture of your infrastructure; are you basically using scale out to use service providers?

Jay Shah: We manage our own data centers. We have deployed all of our own technology. We use a blend of open source third party products, but our nature is to get those products, find the best of those products and tune them continuously. So sometimes we'll end up developing our own solutions adjacent to commercial standards that we've found. This is the process that I mentioned. Looking for the single points of failure and continuously trying to improve.

Dan Farber: With many of the companies I talk to we have this conversation about integration and maintenance versus innovation, coming up with new things. What's the percentage for you?

Jay Shah: I think it's an even split. We continue as it relates to maintenance and infrastructure we're always looking to do things more efficiently. We're confronted with new opportunities all the time. For example, we're trying to compress our technology footprint when you look at our data centers. We have opportunities for better scale through virtualization of our machines and therefore reduction of power. That all translates into cost. So where we save there we try to apply that back into RND and reinvestment back into the business.

Dan Farber: So I guess you could call that part of your green initiative.

Jay Shah: Absolutely. Green is very much a du jour topic. For us it's been something ever since inception. We've been trying to automate a very paper driven mortgage process. So when I speak to the technology platform that we've created whether that's the infrastructure or the software applications that support our production line of our business. All the way from the Website through our decisioning systems, through customer contact in our mortgage operations we've built effectively a completely end to end electronic platform including our supply chain integration. As a result of doing that this platform has afforded us opportunities to get into a new business line. We had mentioned the online savings and CD accounts that we've begun to offer as a firm. From the moment the business said 'Jump, we have an opportunity here. We can now get licensing as a bank.' we set our vision. Within six months we deployed our solution. We were able to do so in a completely paper free environment and to do it without a single bank branch operation as well.

Dan Farber: As you look out on the horizon what do you see for the banking and the mortgage business as it evolves? Especially given that you're more of a pure play, you don't have physical banks or anything.

Jay Shah: Sure. I think there's an argument that our company is a little bit ahead of its time. We're trying to innovate a traditionally not very innovative industry. We're trying to extend brand new products and get into new marketplaces as the Internet as a landscape continues to change. That's what I feel is our opportunity to continue to innovate. The advent of social networking sites. New forms of devices and media in which we can continue to capture an audience and perform transactions. So to my mind we are a little bit ahead of the marketplace in adoption, but as we continue to move with the marketplace I think that's where our opportunity is.

Dan Farber: Well Jay, thanks so much for speaking with me.

Jay Shah: Dan, thanks for having me.

Dan Farber: I've been speaking with Jay Shah who is the CIO of E-Loan. For CIO sessions, I'm Dan Farber. Thanks for watching.