Quicken and its 25% Market Share Goal


Last week, Quicken shared its third quarter 2020 results with analysts, reporting record volume. While this is not surprising considering our recent historically low interest rates, Quicken’s numbers are truly extraordinary. The company is closing $1 billion in mortgage loans a day! This is impressive by any standard but there were a few revelations in the report that were even more noteworthy, namely, the company’s large technology workforce; and the high recapture percentage from its servicing portfolio.

Of Quicken’s 22,000 employees, approximately 2,900 specialize in technology. This means the company has dedicated 14% of its workforce to improving loan processing and delivering a better customer experience. It’s a strategy that has paid off. The company’s automated loan status for consumers and real estate agents has freed up its sales group to handle new customers instead of answering questions from current buyers about their loan status.

The second thing that I thought was incredible is that Quicken consistently retains more than 90% of its total servicing clients on an annual basis. The average lender has a customer retention rate below 20%. Quicken’s rate is 4.5 times better than the industry average. This is a testament to the company’s approach of evaluating a client’s propensity to refinance and proactively reaching out to these clients before they choose another lender.

Both results are eye-opening and I believe, are key factors in the company’s rise as a dominant player in mortgage origination. Of course, Rome wasn’t built in a day and this took Quicken many years of investment in long-term initiatives instead of fixating on more immediate, short-term issues.

In the third quarter report, Quicken also emphasized that while it currently has a market share of 7.5%, the lender’s goal is 25% market share by 2030. This seems like such an outrageous goal that it is almost laughable. But, they are investing $500 million each year in technological advances.  If anyone can accomplish a 25% market share goal, I think that Quicken can.

There are only two ways a 25% market share can be achieved: if the marketplace  expands so that more people will be eligible for a home loan; and if the company’s competitors fold because they cannot keep pace with the demands of new home buyers and the investment required to service them. Fewer lenders in the industry equals more market share for the surviving firms.

In my opinion, Quicken’s strategy appears to incorporate both of these concepts. The company is actively forming partnerships to expand sourcing for mortgage loans. Likewise, Quicken is also committed to acquiring fintech companies that can help provide a better customer experience through technology. While senior executives are not foregoing the human interface, they are trying to eliminate whatever is holding originators back from speaking to more customers. Having automatic loan status functionality is a step in the right direction. They are also focusing on automating document verification which has always been a big bottleneck in loan processing.

While 2020 has been a terrific year for the mortgage industry, it is clear that retail selling is changing for good. Quicken believes that digital engagement is the key to success moving forward and improving all the customer touchpoints in the loan process.

According to Ellie Mae, the average length of time to close a loan in mortgage lending is 51 days. Many lenders think getting a closing below 30 days would be a monumental accomplishment. It just could be that we are setting the bar too low and lenders need a significantly more aggressive goal. I’d be willing to bet that Quicken has such a goal.