Photo: Better.com CEO Vishal Garg
Update: An earlier version of this article mentioned that the company name was Better Mortgage, but it has been renamed to Better.com
Better.com and Ally Bank recently announced a deal where the bank was going to have the online mortgage company handle most of its operations for housing loans. Plus Ally Bank is investing $20 million in Better as part of the deal, which values the company at about $550 million according to Business Insider.
Since Better.com is gaining access to Ally Bank’s loans, it will also have access to billions in loan volume. And Better.com will be associated with a brand that has a more positive reputation than other banks. Better.com was founded by head of operations Eric Wilson, CTO Erik Bernhardsson, head of financial products Viral Shah, and CEO Vishal Garg.
“Strategic partnerships are an important component of our growth strategy. At Ally Ventures, we look for companies that are disrupting their industries for us to invest in and partner with to bring innovative products to the market. We felt a strong strategic and cultural fit with Better.com,” said Ally Chief Strategy Officer Dinesh Chopra in a statement. “The mortgage industry is ripe for digitalization, and our investment and partnership will allow us to deliver an industry-leading digital mortgage experience.
The $20 million investment — which was set up through Ally Bank’s investment arm Ally Ventures — is an add-on to the company’s $75 million Series C round from earlier this year. Last year, Better originated $1.3 billion in mortgages across 30 states — which is triple the numbers it did the year before.
“Our partnership with Ally supports our goal of transforming the mortgage industry across the board and delivering a better mortgage experience to all consumers,” explained Garg. “Additionally, with Ally’s investment in Better.com, we become partners not only in our shared vision for a seamless customer experience in home finance, but also in the long-term success and future of the mortgage industry.”
A number of customers approved on the Better.com platform decided to go with a different party and often paid more on their rates. With the Ally partnership, Better.com is expecting to alleviate this issue. In 2019, Better.com is expecting to reach $3 billion in mortgage origination.
“Providing frictionless, digital experiences to our customers is core to Ally’s strategy. We’re revolutionizing digital banking by putting all of our customers’ core financial services needs at their fingertips,” added Ally’s President of Consumer and Commercial Banking Products Diane Morais. “With Better.com, we will deliver best-in-class mortgage experiences in a highly innovative and scalable way, furthering our role as a financial ally for our customers.”
These new capabilities are going to be piloted in 9 states including Arizona, Connecticut, Louisiana, North Carolina, Oregon, Pennsylvania, Tennessee, Texas, and Washington later this year. And it will become available across the U.S. by the end of 2019.
