SAN FRANCISCO — A flood of fintech companies are promising to create a better experience for mortgage borrowers, forcing lenders that want to be competitive in the digital mortgage realm to contemplate buying a vendor's software, building applications in-house — or even outright acquiring a company with digital expertise.

The "build vs. buy" debate has long been critical to the technology procurement strategies of both depository and nonbank mortgage lenders. But as an increasing number of startups bring new innovations to market, the opportunity to acquire a company and all its technology expertise has emerged as an attractive alternative.

Which technology investments to make depends on many factors including whether a company has a proprietary loan origination system, an existing LOS provider or several disparate systems that need to be integrated.

"We are constantly weighing the opportunity of whether to build it ourselves or have a vendor assist us," said Brian Leimbach, chief information officer at Finance of America Holdings, a portfolio company of Blackstone Group, who spoke Wednesday at SourceMedia's Digital Mortgage Conference in San Francisco.

Vishal Garg, the founder and CEO of Better Mortgage, said he first determines if a new service is available through an API, or application programming interface, which can making cleaning up certain mortgage processes easier. But other factors also play a role.

"Does the company have some form of data advantage or regulatory arbitrage that if we plug into it will make the experience more delightful for our consumers?" Garg said.

Garg's first foray into tech-savvy financial services was MyRichUncle, a student loan marketplace lender he co-founded in 2001. The company incorporated alternative data, like borrowers' degree programs and academic records, in its underwriting algorithms, but filed for bankruptcy in 2009 after its credit lines dried up during the financial crisis.

He launched Better Mortgage in January 2016, through an acquisition of California-based lender Avex Funding. Garg said he specifically acquired "a technology-backward mortgage bank" because he wanted to see all the processes on paper, which provided a blueprint for how to improve the mortgage process.

"We had an assembly line like a Model T assembly line and we turned that into a Tesla … so we could focus on the things that matter the most to the consumer and to the investors, and not get hung up on marginal things," Garg said.

Vikram Jaipuria, executive vice president of strategic development at Caliber Home Loans, said vendors typically provide only one piece of a technology puzzle, making it tough for lenders to decide whether, and where, to spend their technology dollars.

"Choosing a partner or a vendor is critical," Jaipuria said. "What we look for is, are they the right partner, do they serve the right need now, and do they have control over what they are promising?"

Some lenders cautioned about aggressive sales pitches aimed at loan officers. Many loan officers may demand to have the latest digital tools, but may not have the lender's overall strategy in mind.

And many vendors are themselves partnering with other companies, which may be a red flag.

Lenders also debated whether customers are using the same system as loan officers, investors, processors and underwriters.

Finance of America Holdings has grown through acquisitions and Leimbach said the company has benefited from seeing how the different companies execute on the mortgage fulfillment process.

"The ability to look across several organizations and find out how they are doing their mortgage fulfillment process was advantageous to us," Leimbach said.

Jaipuria said he has a dedicated technology team that works to integrate acquired lenders with an emphasis on getting feedback from loan officers and improving the customer experience.

"You can't keep evaluating your systems every six months," he said. "Those decisions are expensive and disruptive. Be flexible but be firm about what your value proposition is."

Garg said decisions about whether a small or midsize mortgage bank should build or buy may depend on something as simple as geography.

"If your engineers can't get a job at Google, then you should probably not build, you should buy," he said, to a round of laughter.