Adam Carmel

Polly takes long view to deliver value to mortgage capital markets

While real estate has been late to embrace fintech, Adam Carmel plans to help it catch up and excel in the space.

Carmel is the founder and CEO of Polly, a company seeking to transform the mortgage industry with a data-driven capital markets ecosystem they say provides value at every point in the process.

Addressing a decades-long pricing void

He’s worked in the mortgage industry for 15 years. Eight years ago, Carmel founded a mortgage company and began to develop technology that reduced origination costs. He soon knew the most significant pain point was pricing software, a belief that was confirmed by many industry executives he encountered during his research phase.

“They all said the same thing; they had the same pain,” Carmel said. “There just has never been competition for 20-something years. I went to our board, and I said there’s this legacy software within the pricing engine vertical that I think over time could be something that could be disrupted.”

polly logo

It sure could be disrupted, Carmel thought. He envisioned the mortgage industry’s first and only cloud-native, vertically integrated capital markets, a software solution that begins at the point of sale and runs through the loan sale and delivery into the secondary market. It specifically focuses on the capital markets value chain. 

If achieved, Carmel and his team can focus on building additional products and services to drive customer ROI. Those initiatives would be driven by machine learning and artificial intelligence.

Why real estate has lagged in innovation

Why has real estate taken so long to be impacted by technology to the level of other sectors? Carmel said it is a tricky business to operate. It is also plagued by extensive legacy software and solutions. Some software vendors became distracted by the latest tech and lost sight of the mission. Service and innovation have both degraded.

The mortgage industry consists of three software categories, point of sale, loan origination, and loan servicing. Innovators tend to work exclusively in one of them. Carmel saw an opportunity to take a different view.

“No one has ever viewed capital markets as its own category. It historically just been pricing engines, and then you had these other discreet type vendors that were relied mainly on manual work, things like spreadsheets and email telephony, to conduct their business,” he said.

“It’s also a tough problem to solve. You need deep domain knowledge, deep institutional knowledge, and deep technical knowledge. Then put those three vectors into a single organization, and do your best to bring on world-class talent. It’s really, really hard.”

The many advantages

Reach the goal, and the impact is enormous, Carmel said. Drive down the origination cost with an automated and scalable system and pass that on to the consumer.

Customers only need a few weeks before going to market, a shorter than average time frame. Carmel said Polly has been very intentional on this point. It cannot take months to deliver that transformation.

“We’re very focused on creating tremendous value for our customers,” Carmel said. “We view ourselves as a mechanism for them to drive their costs down, increase their revenue, and that’s increasingly important in the market we’re in today. We didn’t want to have any friction for them to leave their legacy systems to join our growing network. 

“And so we were very intentional and focused on making this as seamless as possible to no-code deploy. They don’t need any IT support. We have a white-glove service. And do all of the work. Then we ask that they do some testing on what’s been configured.”

Steps to innovation, looking beyond risk management

How did Carmel and the Polly team deploy new technologies to drive that growth? Start with not accepting the status quo. Think about what could be and explore the most modern modeling and algorithms. Consider where they can be used to complete more manual operations.

Expose people to the data so they can react to it instead of spending their time organizing it. Let technology address those tasks so businesses can take action.

Polly’s loan-trading exchange offers automated bidding and real-time loans where the system automatically detects when loans are eligible for sale. Advanced bidding rules use business logic to optimize hit rates and sell loans to the right investors. TBA benchmarking enables real-time, market-based decisions that reflect fluctuations in bond markets.

Carmel said most providers focus solely on risk management but never look beyond it.

“They’ve never then thought about after they’re done managing risk, how do they take these loans on a loan level and optimize the revenue on them,” Carmel said. “How to automate that whole workflow and eliminate people looking at 14 different spreadsheets, taking bid sheets from all over the place and trying to figure out these other things going on, then somehow arriving at the best decision. 

“That’s not how it works.”

Final thoughts: The Metaverse and the future

Are there opportunities in Metaverse finance? Currently, digital property as an asset class doesn’t face the regulatory burdens that physical property does, Carmel said. Protocols won’t be anywhere near as stringent. There’s no such thing as a digital title; it’s simply an NFT. Lending will likely be more asset-based than how traditional mortgage financing is done.

Carmel said Polly is prepared to deliver value anywhere in the capital markets value chain. Where they contribute will depend on where their customers see problems to solve.

“Usually, they tell us, and then we reconcile that with the longer-term vision and how we want to create value and democratize data and automation for the entire market.”

  • Tony Zerucha

    Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.