Intercontinental Exchange (ticker: ICE) recently announced that it agreed to acquire Ellie Mae from Thoma Bravo for approximately $11 billion. It makes sense that a large FinTech company is working to drive automation across the mortgage processing landscape.
Ellie Mae will nicely augment Intercontinental’s 2018 acquisition of MERSCORP. MERSCORP operates the MERS System, a national electronic registry that tracks the changes in servicing rights and beneficial ownership interests in U.S.-based mortgage loans. We got to know Ellie Mae years ago under founder Sig Anderman.
The mortgage processing industry shares similarities with securities trading operations:
- Buyers and Sellers: Operations revolve around a market of buyers and sellers.
- Heterogeneous market operations: Both mortgage processing and securities trading are heterogeneous. On the mortgage processing side, each state has unique rules and regulations around titling and such. This in turn impacts business rules. From a securities trading operations perspective, various counterparties define the same security differently. Different security types have different trade processing business rules. Therefore, Capital Markets FinTech companies have an understanding and appreciation for the heterogeneous nature of the various operational challenges posed by the mortgage services market.
- FinTech has seen this movie before: Companies such as SS&C Technologies (ticker: SSNC), JPMorgan Chase (ticker: JPM), BNY Mellon (ticker: BK), and Broadridge (ticker: BR), to name a few are well-equipped to scale mortgage processing technology platforms.