What a difference a year makes
This past year was one of abundance in the mortgage industry. Consumer demand for mortgages skyrocketed in the wake of low interest rates and the COVID-19 pandemic. By contrast, 2022 may be a year of scarcity, with widely anticipated interest rate increases, much lower refinance activity, and significantly lower total mortgage origination volume.
This is a cyclical business. To be successful, we take the long view. And for you, our customers — as well as for Blend — the key to that long-term success is continuing to grow market share through the tough part of the cycle.
Just as we helped our customers manage abundant application volume in 2021, our commitment to you is that we’ll help you with the efficiency and experience you need to succeed in this even more competitive market. Truly successful companies invest in the downturn and come out of cycles even stronger. We know that is what you will do, and that’s what we are doing.
One of Blend’s core values is bringing a customer-first approach to everything we do. Our long-term success is fundamentally tied to the long-term success of our customers. And we’re alongside you for the somewhat unpredictable ride in the short term. When volumes go up, we win together. And when times are tough, we double down together.
As we reflect on 2021, while the mortgage industry enjoyed big wins that translated into amazing profits for many of our customers, the refi volume was often overwhelming and presented operational constraints for some of you. However, by using Blend’s technology, you had a seamless, standardized way to get borrowers through the application and approval process quickly and ready for closing. Your loan officers needed to serve more borrowers faster, and we provided you with the tools to do that.
On the flip side, while you were focused on handling the overwhelming volume of mortgage applications, many of you had little capacity to adopt new technologies or processes. Many of you made the decision to defer the implementation of Blend’s newer technologies, such as Blend Close, Title, and Income Verification. While some of you had planned to roll these out in the second half of 2021, you asked us to wait until the new year to start the process. And we get it.
While the decision to focus on managing record application volumes in 2021 was entirely understandable, it means that many of you still have unaddressed opportunities to automate processes, improve your efficiency, and reduce your costs. Even though many of you put these workstreams on pause in 2021, we knew that when a more challenging environment inevitably came our collective way, Blend needed to be ready to deliver these capabilities to you. The time to act is now.
Winning in 2022
That more challenging environment is now here in a big way. The last quarter of 2021 brought substantially lower mortgage application volumes and margins. And as we read last week in Mortgage News Daily, Fannie Mae’s latest forecast “revises nearly everything.” It’s ominous and paints a grim picture for volumes this year — something that many would not have expected even three weeks ago.
But you will adapt because you always do. How do you grow your business in a time of scarcity and incredible competition? You focus on your customer to keep them engaged, and you lower costs to be able to provide great products at good prices. This is the role of technology: better experiences at a lower cost. And that’s what we’ve been building at Blend. Modern digital solutions across the entire homeownership lifecycle that help drive down costs and make your customers happier and stickier.
Some of the things we’ve been building behind the scenes while you were managing record volumes include:
- Blend LO Toolkit, which allows your loan officer to live in the same system as the customer, across many aspects of the loan
- Blend Processing Automation, which will enable you to clear loan conditions using AI before your team even looks at the loan, getting it ready to close faster and cheaper
- Blend Income, a one-stop shop to verify income across your customers in an automated, self-serve way
- Blend Document AI, a tool that will automatically read and extract the key documents in the loan lifecycle to save you and your customers time and energy
- Blend Title and Close, part of our overall approach to automating the evaluation and protection of the property, which already includes homeowners insurance and will eventually include property valuation
Just as we helped make the loan application and underwriting process simple and efficient, we are tackling even more for the borrower, from the point where they express intent to proceed with a loan, all the way through closing. Your loan officers are able to order and clear title; the borrower is able to secure or confirm their homeowner’s insurance; and the closing agent is able to arrange for escrow and settlement, as well as schedule and conduct the closing — all on Blend. Your loan officers and processors can power your business through the Blend platform and work seamlessly with your borrowers in a secure, easy-to-use environment. Improving customer experiences, automating tasks, increasing the productivity of your loan officers and processors — all of this saves you valuable time and expense.
Consumer banking: The rise of perpetual, proactive, real-time approval
It wasn’t just the mortgage world that was transformed during the pandemic. The way consumers experience all of banking has started to change. Consumers are expecting you to know them and serve them proactively in a personalized way. And every one of you is working towards that same goal of delivering this new experience.
We’re alongside you for the ride. We’re building the software infrastructure to help you deliver these amazing experiences. We are building towards what we call “proactive finance” — perpetual, real-time approvals that work across product lines and channels using the consumer’s data. Tens of millions of consumers across the country have financial needs that are unmet. And many of them don’t even know what options are available.
For example, a consumer may have revolving credit card debt and not know they are approved for a personal loan. They may be able to save money on a mortgage. Or perhaps lower their car payments, or take money out on their house to repair a leaky roof. Alternatively, they may simply want to start building credit towards purchasing their first home.
Historically, financial providers have offered these products on a reactive basis. They typically wait for the consumer to realize they need something, make them apply for it, and respond to them several days or weeks later with an approval or rejection. With proactive finance, you will be able to tell consumers what is available to them on an ongoing basis so they can simply accept an offer — instead of waiting for them to ask for what they think they might need.
But bringing this all together is a very complex technical challenge. You need a deep understanding of the consumer’s financial situation and the data that goes with it, including data in your systems, but also third-party data. You then need the ability to approve them using that data across products and channels in a single, centralized way. And once they select a product, walking them through the process of getting that transaction processed and funded. Today, these technologies are often siloed by product line, may differ by channel (e.g., branch, call center, online, or mobile), are often not data driven, and are not real time. Bringing it all together — and empowering the consumer with a more holistic view of their borrowing power that places them in the driver’s seat of their financial future — is a massive undertaking.
This is what Blend is building, a unified layer across these products and channels that will enable real-time, proactive approvals. We’ve already partnered with some of you in these efforts, which will not only provide great benefit to your customers, but also make more of your customers repeat customers. In other words, everyone wins if we’re able to deliver this together.
A glimpse of our future, together
The cornerstone of our proactive finance technology stack is Blend Builder. We created a unified data model and approval layer across your products and channels. And we intend to do it in a flexible way that allows our customers to own their experience and products in a powerful, low-code way. In 2021 we partnered with a small number of customers to ensure the platform is designed to deliver a great experience across every product line.
Blend Builder is the future of our platform. We are investing in this technology in order to bring a level of flexibility and speed to financial products that will make you as agile as your customers expect. Implementing Blend Builder will be an important step in future-proofing your institution, allowing you to grow and change rapidly as the market changes. And it puts the control in your hands, without compromising adaptability or the consumer experience.
We’re excited to continue to invest in the future with our customers. Because our success is intrinsically tied to yours. These are early days for your industry, and we’re glad to be part of it with you for decades.
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