The following is an article originally published by Sam Fleming of the Financial Times on May 5, 2016.
Casey Crawford, an American football player turned mortgage boss, says his corner of the US’s financial sector is ripe for automation. Its crusty and bureaucratic processes are due to be overhauled by innovations from Silicon Valley.
Movement Mortgage, the non-bank lender Mr Crawford leads, is introducing systems developed by Blend Labs, a California start-up, to streamline what he describes as antiquated practices involved in collecting customer data and pushing through home loan applications.
Automating technologically sleepy parts of financial services could trigger an upheaval for the industry and its employees, analysts say. Citi estimates suggest US and European banks could shed nearly two million jobs in the next decade, as new technologies transform the sector and new competitors challenge lenders on their traditional turf.
Mr Crawford, who founded Movement Mortgage after retiring from the Tampa Bay Buccaneers, says he expects “greater accuracy and efficiency per person” as he introduces the technology. He adds: “You may not need to add as many positions to support the same functionality.”
One 76-year-old customer recently managed to use the firm’s new systems to submit a completed application with accompanying documentation in an hour, he said — something that might have taken several days in the past.
The company behind the software is a start-up called Blend Labs, whose backers include Founders Fund, the venture capital firm co-founded by Peter Thiel. The firm, founded in 2012, sells systems that remove the need for employees to manually assemble and input customers’ financial data into loan applications, accelerating the painstaking and heavily regulated process of loan approval.
The firm is one of a number of companies seeking to streamline lending via computer technology, among them Roostify, which is also trying to automate home mortgages, and Avant, an online lending platform. Quicken Loans, a big non-bank lender, is aiming to accelerate and simplify its own mortgage lending via its Rocket Mortgage programme.
Nima Ghamsari, Blend’s chief executive, says decade-old technologies are being used in the mortgage sector, with workers spending hours on tasks such as typing customer information into a system or scanning and uploading faxed documents. “The eureka moment came when we realised that the inefficiencies were partially a result of Silicon Valley and the tech industry largely ignoring this major part of financial services,” he said.
Mr Ghamsari argues that new software will also free employees to offer a better service in the banking sector. “Right now there are things that humans could be doing at banks to drive a better experience for customers that they are not doing because they are doing these laborious tasks,” he said.
Some analysts predict the march of technology into customer banking could lead to heavy job losses, however. In a branch-heavy retail bank, about 65 per cent of staff do processing work that could be automated in the long term, Citi research estimates.
Ronit Ghose, head of global banks research at Citi, says that more bureaucratic parts of banking, such as trade finance and home lending, could be in line for a shake-up. “We think there will be a significant reduction of headcount in those parts of the industry,” he said.