That was the question posed by nearly every client I worked with over the past several years to choose a consumer loan origination system. We all figured it would happen sooner or later, and now it has – by Thoma Bravo, which, as part of the deal, merged MeridianLink with CRIF Lending Solutions’ ACTion, Synergy and Achieve divisions. With its investment in Hyland (i.e., OnBase) and its more notable flip of Digital Insight from Intuit to NCR, Thoma Bravo is no stranger to this market.
In July 2017, Binh Dang, co-founder of MeridianLink and CEO until 2016, sought a court-ordered dissolution of MeridianLink that set off a chain of events that ultimately led to the Thoma Bravo announcement last week.
MeridianLink has been the 800-pound gorilla in the consumer LOS space, in both functionality and number of clients. The company’s growth over the years has been impressive. It has also seen some challenges along the way, including system infrastructure issues and long implementation lead times (which have since been resolved). But, it has had the upper hand with a solution that allows clients to take a loan application, cross-sell another loan, and open a new account – all in one simultaneous, seamless experience. Meanwhile, competitors like Temenos, CU Direct, CRIF and TCI have been doubling down their development efforts to level the playing field.
CRIF Lending has been a solid competitor in the consumer LOS space. The company has saturated the market with a variety of mostly legacy loan origination products used to fill a specific niche, including Appro, Teres and Cypres. CRIF’s ACTion product is its newest platform, currently being pitched to community banks and credit unions. CRIF has evolved into a competitive consumer LOS, with direct and indirect lending and new account opening capabilities.
GonzoLender is here today to talk about what this latest development in the lending space means.
The Impact on MeridianLink Clients
The biggest vendor in the space just got a little bigger. The fact that MeridianLink Tim Nguyen is a co-founder, major investor and CEO of the new company says a lot. But, even though Nguyen’s all-in commitment is encouraging, no amount of scale or capital will change the fact that MeridianLink’s customer service reputation has suffered greatly in recent years. The company has been viewed as inflexible to client requests and enhancement demands, and the new owners need to ensure an upgraded client focus accompanies all the buzz.
Add organizational and expansion challenges to the potential complications of competing products, priorities and R&D, and we can expect more growing pains ahead for this company that touts itself as a “technology company first.”
The Impact on CRIF Clients
Over the years, CRIF clients have wondered if they will ultimately have to migrate off one of CRIF’s older, legacy products. Rather than continue to support multiple loan origination systems across the prior CRIF and MeridianLink ecosystem, the combined organization will likely have one surviving loan origination system, two at best. Look for a consolidation of “best-in-class” functionality into the surviving LoansPQ system over the next couple of years. If I were a CRIF client right now, I would be wondering not if, but when my product will be on the chopping block.
The Impact on the Industry
Even with the potential consolidation of platforms within the new MeridianLink and CRIF ecosystem, there is still cut-throat competition in this space. As banks look to upgrade their customer experience platforms, we are seeing three times as many online origination selections as core system selections.
Combined, these two organizations represent an impressive client base, best-in-class capabilities, and a strong pool of talent and leadership. While CRIF brings traction and functionality in the community bank space, MeridianLink brings market penetration with credit unions and a platform known for a better customer experience. But, looking across the entire product set for both vendors, there is a lot of unnecessary duplication in technology that will need to be addressed. The full suite of solutions supported by the combined companies will undoubtedly shrink to resemble 80+ percent of MeridianLink’s LoansPQ product.
The Bottom Line
This development is going to take time to digest in terms of technology, leadership, staffing and talent. In the near term, things are likely to stay status quo, but the long-term ramifications will prove to be significant as development priorities shift and clients migrate to new platforms. The hope is that the combined entities will bring a more robust platform to offer in the years to come.