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Operational leverage: The opportunity lenders need to address

Our new ROI study results show how Blend’s Mortgage Suite can help lenders in tough markets.

According to MarketWise Advisors’ second annual return on investment (ROI) impact analysis and performance review for Blend, some of the biggest benefits Blend customers are experiencing include seeing an increase in both transaction speed and pull-through. Understanding the value we bring to our customers is an important part of our mission and values. We don’t succeed unless our customers do.

What Marketwise Advisors found was that while process automation and cycle compression played an important part in our customers’ success, one of the biggest impacts was the increase in operational leverage that came with using the Blend Mortgage Suite.

Read on below to discover how operational leverage can help lenders retain customers and improve closing rates in a tight margin market.

What is operational leverage? 

Operational leverage measures the average productivity increase due — in this case — to Blend technology. By calculating our customers’ increase in transaction speed, increase in closing percentage, and the overall financial impact of operational leverage, we can conclude an average financial impact per file: $448 in operational leverage alone.

Why is operational leverage important? 

Operational leverage is one of the biggest opportunities for lenders to increase their ROI. The other major variables studied were process automation and cycle compression.

In addition to more free time for other customers and more business, moving loans faster through the mortgage origination process also decreases customer fallout and increases pull-through. This can result in additional incremental loans and a potential incremental impact of $448. According to the MarketWise Advisors survey, Blend customers reported a 37% increase in transaction speed and a 34% increase in pull-through.

How can you focus on operational leverage? 

In order to maximize productivity, Blend users must use the Mortgage Suite to its full potential — including taking advantage of our full library of tech tools and features. By using more of our offerings, our users can increase transaction speed, borrower pull-through, and ultimately, impact.

Increase business while decreasing costs

While lenders have seen and experienced a turbulent market recently, our customers have found that using the Blend Mortgage Suite and its features have helped alleviate the impact. By leveraging all the tools at their disposal, lenders can maximize their productivity and potentially increase their ROI while decreasing their cost of origination.

But don’t let us be your only source of truth. Our customers can speak for themselves.

Learn more about how our customers are taking advantage of automation to cut nine hours from the origination process, decrease the loan lifecycle by seven days, and improve their ROI.

Unpacking the value of the Consumer Banking Suite

An exceptional experience across all consumer banking products underscored by a platform that helps your teams maximize productivity.

The Blend Consumer Banking Suite offers so much more than an exceptional customer experience across products. Beneath the streamlined process — which makes it easy for customers to understand next steps while minimizing manual tasks — you’ll find a platform with lender benefits that drive new levels of productivity, helping teams grow volume faster. Each feature was designed with purpose — let’s break down how they come together to drive smooth customer onboarding and productivity for your business.

Blend enhances the customer experience

Blend understands the evolution of customer expectations. Every facet of our applications has been optimized to bring customers to the finish line, easing sticking points along the way.

With guided user flows

UI of the Blend Consumer Banking Suite

When a customer opens a Blend application, an intuitive interface guides them through each step. This user-friendly journey includes inline contextual help, with useful snippets for portions of applications that can be tricky to navigate with traditional applications.

If a customer needs more help on a loan application, they can ask for — and receive — real-time assistance within the application. Blend Co-pilot gives loan officers a 1:1 visual match of a customer’s application so they can quickly understand what the customer is stuck on and provide an answer. These capabilities enable customers to get any guidance they may need without picking up the phone to call their loan officer or get in the car to make a branch visit.

With a responsive design that’s optimized for any device, customers can apply how and when it works for them — from anywhere. Staying in one portal from application to close minimizes confusion that can come from logging in and out of multiple interfaces.

And simplified applications

UI of Blend Consumer Banking Suite

In addition to shepherding customers along a clearly outlined process, Blend also minimizes the work required of applicants where possible. From the start, borrower single sign-on and applications prefilled with previously provided financial information decrease the number of fields a borrower needs to fill out.

When it comes time for borrowers to supply asset, payroll, and tax information, they have the option to connect to their accounts through a simple and trustworthy experience.

All told, Blend Consumer Banking Suite enables you to offer consistency across products so your customers get the same great digital experience in every interaction.

 

Blend amplifies your teams’ productivity

Blend fuels the application process for customers, but the impact of the Consumer Banking Suite doesn’t stop there. Automation and banker tools enable you to reduce manual work for your teams from origination to close.

Starting with origination

Data verification UI within Blend Consumer Banking Suite

Your bankers strive to close loans quickly while working with disparate tools and systems.

Blend’s Banker Workspace supports them on all key workflows across the loan process in one workspace, driving efficiency by reducing data entry, routine tasks, and compliance management.

Bankers can easily intake applications for multiple products at any step in the process and manage follow-ups with a central dashboard of applications and statuses. With the time they save, your frontline staff can focus on building deeper customer relationships.

And throughout processing and underwriting

ID verification UI within Blend Consumer Banking Suite

As soon as a borrower submits their application, Blend allows you to automatically undertake income and employment verification, eliminating the need for bankers to manually comb through and verify paystubs and W-2s.

This feature leads to time savings in processing, but it also helps ensure that underwriters will get a complete and accurate file for review.

Less back and forth between processing and underwriting allows the process to continue seamlessly — and more quickly. Automated stipulations also reduce processing and underwriting touches by surfacing issues at the time of application.

 

3 ways to overcome common loan officer challenges in a down market

Simpler conversion tactics, automated processes, and smarter marketing can help alleviate some of the economic pressures loan officers currently face.

If there’s one common challenge of loan officers today, it’s that they’ll all face uncertain conditions over the foreseeable future.

After all, consumer spending has slowed, the housing sector has weakened, and 15- and 30-year mortgage rates are projected to run anywhere from 5% to 11%-plus over the next three years. The mortgage market slowdown also has seen some fintechs and smaller mortgage-only lenders either laying off employees or closing up shop entirely.

Still, there’s plenty of room for optimism. Digital tools can help line of business leaders looking for ways to empower their teams and provide resources for loan officers feeling the squeeze of market conditions. Wondering how to navigate common challenges of loan officers in a down market? Read on for our recommendations.

Challenge #1: Maximizing exposure in a down market

In times of economic instability, it may be tempting to pull back on marketing spend. And while it’s important to control expenses, financial leaders can take a page from businesses that weathered The Great Recession in 2008–2009. According to Harvard Business Review, companies that “nimbly adjust strategies, tactics, and product offerings in response to shifting demand are more likely than others to flourish both during and after a recession.”

Strategy: Dedicate time and resources to effective marketing

Marketing ties directly to your pipeline. Pulling back — or slamming on the brakes — may compound the problem. Instead, deploying more marketing may help overcome this common loan officer challenge. Here are a few ways to maximize loan officer visibility while keeping budgets in check:

  • Update your lending website with practical and up-to-date information. For example, incorporate blog posts that offer lending guidance and financial wellness tips.
  • Leverage your social media channels. Establish trust with consumers, humanize your financial institution with authentic stories, and relay relevant industry information via social media.
  • Nurture real estate agent relationships. Despite agents’ busy schedules, loan officers can find ways to provide mutually beneficial value to real estate agent partners.

Challenge #2: Difficulty converting leads

Another common challenge loan officers across the industry are facing is that many prospective homebuyers are backing away as interest rates climb. A recent report from the National Realtors Association found first-time homebuyers dropped to an all-time low of 26% in 2022, compared to 34% last year. As a result, loan officers are feeling the pressure when top-of-funnel leads interested in purchasing a home get priced or frightened out of the market.

Strategy: Simplify top-of-funnel capture

Providing easy-to-use decision-making tools and demystifying the homebuying process with digital tools can help loan officers guide potential customers toward a loan. Here are a few ways to simplify lead conversion:

  • Use a questionnaire. Help move potential customers from the awareness and interest stage to starting an application by asking them a series of questions.
  • Capture minimum information. Show a buyer how much they can afford, how soon they can buy a home based on their finances, and any prospective property details that fall within their budget — in a few clicks.
  • Determine a prospective homebuyer’s payment structure. Quickly run soft credit scores, look at debt-to-income ratios, and use a loan calculator to simplify capture and move customers further through the sales funnel.

Challenge #3: Losing leads due to manually intensive applications

According to a JD Power customer satisfaction survey, 40% of customers are willing to participate in a completely digital lending process; however, 67% still interact with customer service over the phone. One common loan officer challenge is losing leads due to cumbersome processes, real or perceived. It can be an immediate turnoff to a homebuyer when they experience a clunky digital process with repeated requests for information.

Strategy: Minimize application friction with automation

Any snag in the loan process can increase the likelihood of consumers seeking easier solutions elsewhere. A digital closing process can smooth out the customer experience. Look for automated tools that ease the lending process, including:

  • Carry out instant approvals. Expedite onboarding with instant approvals, which can include verification of data and automation of information for loan qualification.
  • Add eNotes. Enhance transparency of the process, safely store data, and increase efficiency for both customers and loan officers.
  • Perform remote online notarization. Use remote online notarization (RON) to facilitate seamless digital signing of all documents.

Alleviate common challenges of loan officers using Blend’s Mortgage Suite

No matter the market challenges, Blend’s Mortgage Suite can help mortgage providers and loan officers deliver value and differentiated experiences. Blend designs each step of the lending process to be intuitive, informative, and polished by offering digital resources for loan officers and easy-to-complete processes for applicants.

Prospective homebuyers can leverage the tools such as our Self-serve Affordability workflow, which allows them to begin the mortgage process on their own, from any device they choose. Loan officers, meanwhile, can access our LO Toolkit – a comprehensive set of resources and tools to provide ongoing support and help guide homebuyers through the conversion funnel.

Transform your financial organization’s onboarding with a digital account opening solution

Find out how digitizing the account opening process can enhance the experience and benefit both customers and financial institutions.

In November 2022, Taylor Swift fans were eager to score tickets to her next world tour. But issues with the ticketing site such as five-hour queues, invalid promo codes, and slow-loading pages created a public outcry, with many missing out on the tour as a result. While many Swift fans were willing to wait for the chance to get concert tickets, the frustration and friction caused by inadequate technology would be a showstopper in the lending world. Consumers will abandon a digital account opening process if it’s not easy, intuitive, and fast.

In fact, 50% would abandon the onboarding if they had to answer more than 10 questions. Another study found that an estimated 70% of applicants abandon the process before they get to the signature stage. Further, asking customers to finish their account opening in a branch or requiring the upload of too many documents puts an institution at risk of losing out to the competition altogether.

In order to meet these increasingly entrenched expectations, financial leaders can look to comprehensive, cohesive account opening solutions. Here are a few challenges institutions face and how using digital processes can transform your organization’s onboarding.

Challenges of traditional account opening solutions

As consumers move more of their banking activities to modern digital channels, their expectations of excellent experiences seep across a broader range of engagement points with financial providers. Here are a few common challenges specific to the digital account opening process that bank and credit union leaders currently face:

  • More consumers prefer to apply via digital channels instead of traditional processes. Currently, only 70% of financial institutions say they offer a fully digital account opening experience. 
  • Existing digital experiences are not optimized. While most banks and credit unions have online processes, only 66% say their customers can complete the entire digital account opening process via mobile app. 
  • Consumers expect an omnichannel banking experience. Customers want the ability to bank across all channels without disruption. That includes starting to open their new account on a computer and moving over to a mobile app or visiting a physical branch to complete the process.

Factors driving account opening success

A successful digital account opening experience is driven largely by three components: risk, operational support, and the technology used to support them.

In order to mitigate risk, financial institutions must balance security requirements with ease of use for the borrower. At minimum, the account opening solution needs to confirm a consumer’s identity, verify the application is not fraudulent, and capture the correct amount of information to deliver a credit decision. Using a comprehensive digital solution allows financial leaders to streamline this process from end to end.

The right technology also gives financial institutions the ability to quickly alter workflows in response to arising challenges and evolving customer preferences. Ideally, it also provides insight into information a bank or credit union can then use to inform risk decisions. Overall, customers want to feel supported as they move through the application experience.

Opportunities to enhance a digital account opening solution

The Blend platform can help banks and credit union leaders deliver a digital account opening process that completes in as little as two minutes. Benefits of using Blend include:

Consistency across products

Blend connects a wide array of consumer banking products into a consistent, application experience with higher conversion rates. This allows a financial entity to offer customers a simplified interface built on human-centered design across the entire portfolio.

Optimization for any device

Blend’s white-label application experience is accessible on many commonly-used devices. In fact, up to 60% of Blend deposit account applications come through mobile devices.

Personalization of the customer experience

Blend helps cut out unnecessary manual entry for borrowers with an easy, single sign-on (SSO) authentication so applications are pre-populated with the right information on any digital device.

User-centered design

Blend’s digital account opening solutions are easy, intuitive, and helpful. For instance, answers to common questions are built directly into the process. Blend also measures how consumers interact with the application, noting where customers get stuck, in order to continuously improve the experience.

Marketing campaign integration for deposit accounts

Blend allows lenders to better assess the effectiveness of campaigns by capturing consumer-entered promo codes or automatically pre-filling them through external custom marketing URLs.

What to expect at Blend in the new year

A look-back at 2022 and our vision for 2023.​

Although every year is different, and every year is filled with its own challenges and triumphs, 2022 was filled with more change than we could have anticipated.

There’s no sugar-coating it. It was a tough year in our industry as macro factors such as supply chain issues, inflation, and rising interest rates cut into margins. But it was also a time in which we reinforced our customer partnerships as we helped them navigate market volatility amid a historic shift.

As we enter yet another new year — and new decade — in Blend’s history, we are grateful to have the continued opportunity for reflection and resolution. We’re even more grateful to have another year to demonstrate our commitment to our customers. And without dismissing the very real issues facing our industry, here’s why we’re optimistic about the future of finance.

Strong partnerships: How we helped our customers in 2022

Despite the mortgage industry volume decline, we saw our mortgage customers gain market share during a time of decreased volumes, budget constraints, and pressure on operational efficiency. This is a testament to the value we continue to deliver and the need for our customers to lean more heavily on technology during times of margin compression.

Thanks to the automation our technology drives, Blend Mortgage customers saw an average ROI of 7.95x, including a savings of nine hours of work per file and a seven-day shorter loan cycle.¹

Looking across multiple years, Blend Mortgage customers see an average annual ROI increase of 11%. In other words, the value of Blend continues to grow year after year.

“Over the last few years, we’ve seen first-hand the growing customer demand for simplified, digital-first interactions,” said Peter McCarthy, PNC executive vice president and head of mortgage. “Through our partnership with Blend, we’re now able to deliver a state-of-the-art experience that provides an ideal combination of digital self-service technology and support for our customers as they navigate one of the biggest and most important purchases in their lifetimes.”

Blend Mortgage customers saw an average ROI of 7.95x, including a savings of nine hours of work per file and a seven-day shorter loan cycle.¹

As the industry battled headwinds, our team continued to support strong outcomes for our customers by innovating and expanding our product lines, starting this past spring with Blend Close. Enhancements to this offering included new remote online notarization tools and MERS eVault functionality.

We built out our income and identity verification capabilities and expanded them across our Consumer Banking Suite. We rolled out SMS messaging, and our customers are now seeing greater than 95% opt-in to SMS messaging. Furthermore, Blend customers using SMS saw the cycle time for funded loans reduced by an average of eight days.

¹The results of this survey are based on an independent study performed by MarketWise Advisors. All data in this report comes directly from customers who use Blend Mortgage as part of their origination process. Individual results may vary.

2023: The year of instant-first

Success in the digital age hinges on the quality and rapidity of customer experience. And we believe that instant-first development is the future of banking.

We built out our platform functionality in support of that belief, which has now come to fruition with our first discrete product that takes full advantage of said functionality and is designed to be instant-first: Instant Home Equity.

Instant Home Equity is the first of a new wave of products that pulls together all the capabilities we have at our disposal to reduce processing times from weeks to days.

Offering our customers more control and configurability to drive efficiency, speed to market, and the delivery of “instant-first” experiences will be the guiding forces orienting new product development.

The delivery of “instant-first” experiences will be the guiding forces orienting new product development.

We took a complex and opaque process and simplified it to just a few steps. A typical home equity flow involves 30+ phases from application to funding. Now, you can instantly verify all the data required, instantly deliver a digitally underwritten offer to the consumer, and instantly order the few manual things behind the scenes to take the heavy lifting off of your shoulders — all in as little as three steps from application to close.

At the heart of this overarching, instant-first mindset is the desire to help our customers not just meet — but exceed — the growing expectation of instant everything. Instant Home Equity has generated much excitement, and we are onboarding new customers to this solution daily.

Staying committed to mortgage

But it’s important to note that we are not losing sight of our mortgage customers. Our commitment to ensuring our customers’ success and satisfaction is paramount, especially as the need for efficiency takes center stage in this new margin environment.

In a recent survey¹, our customers reported an average increase of 37% in transaction speed and a 34% increase in closing rate when using Blend. This operational leverage was calculated at an average of $448 in savings per file.

Eight years ago we built a product that changed the mortgage application process. And today, as we enter a new decade, we’re primed to expand that change across other financial products.

The next chapter

In order for us to be strong partners through this downturn, and for decades to come, we are also taking the necessary steps to focus some of our investments and resources to more directly support the needs of our customers.

As we remain focused on optimizing, we do not want to sacrifice the innovation we’re driving toward digital transformation in the banking industry.

A critical component of that innovation is Blend Builder. Our customers can use this revolutionary, configurable platform to accelerate their digital transformation across product lines, and it will play a key role in bringing our vision for the future of finance to fruition.

Our customers can use this revolutionary, configurable platform to accelerate their digital transformation across product lines.

“Blend Builder gives us the opportunity to embrace a platform-as-a-service model that can accelerate our growth through increased product adoption by both existing and new customers, and we are excited by the interest we are seeing in this platform,” says Head of Blend Nima Ghamsari.

As banks and lenders seek to provide a full suite of services and deliver a seamless experience for their consumers while focusing on operational efficiency, they come to us. And we are dedicated to delivering the value they need in this environment because we believe the lenders who will emerge from this downturn even stronger are the ones who are investing in and adopting new technology.

Thank you for partnering with us on this journey. We look forward to building this digital future together.

Blend’s work with Freddie Mac and Fannie Mae: A new way to assess credit eligibility

Blend is one of the few approved asset data service providers helping lenders implement the use of asset data for credit eligibility, reducing the red tape and creating more homeownership opportunities.

Within the past couple of months, both Freddie Mac and Fannie Mae (the GSEs) introduced new underwriting innovations that will help lenders qualify more low- and moderate-income borrowers in underserved communities. Both enhancements use a borrower’s asset data to identify a history of positive monthly cash flow — Freddie Mac’s program is applicable to loans where at least one borrower has a credit score, while Fannie Mae’s program applies to loans where no borrower has a credit score. This allows lenders to use information in addition to FICO® credit scores to help provide financing to more people.

As a longtime partner of Freddie Mac and Fannie Mae and one of the few approved asset data service providers, Blend enabled access to these tools as soon as they were released.

Vice President of Single-Family Client Engagement of Freddie Mac, Kevin Kauffman, said “We’re proud to partner with Blend to help expand the dream of homeownership to even more people.” Similarly, Senior Vice President Single-Family Analytics and Modeling of Fannie Mae, Steve Holden, said “This enhancement will improve a lender’s ability to assess a group of borrowers who have traditionally been underserved by the market.”

“We’re proud to partner with Blend to help expand the dream of homeownership to even more people.”
Kevin Kauffman
Vice President of Single-Family Client Engagement, Freddie Mac

Reducing the loan lifecycle for more borrowers

Leveraging asset data to assess borrowers who may not qualify for home financing through traditional means opens up the opportunity for homeownership for many more people. 

“Using asset data to help lenders assess a borrower’s credit eligibility,” says Kauffman, “we’re aiming to help those in underserved communities and low- and moderate-income homebuyers who may not qualify based on traditional methods of underwriting.” 

Instead, using asset data includes analyzing other means of positive income history including direct deposit of income and monthly bill payments like rent, utilities, and auto payments.

“With asset data,” states Holden, “borrowers who may have been unable to obtain a mortgage will now have the opportunity to qualify based on other factors that provide a more holistic view of how they manage their money.” 

In addition to helping more people get home financing, the process to do so may be shortened. Since these enhancements take advantage of data that’s already available within Blend, there are no extra steps for lenders to take in order to qualify their borrowers. And these capabilities are already included in Blend’s Mortgage Suite — ready to use right away. 

“With asset data, borrowers who may have been unable to obtain a mortgage will now have the opportunity to qualify based on other factors that provide a more holistic view of how they manage their money.” 
Steve Holden
Vice President Single-Family Analytics and Modeling, Fannie Mae

What Blend is doing today

The enhancements from both Freddie Mac and Fannie Mae leverage the asset verification services that are already a part of Blend’s suite of products. Blend customers are able to access an extended history asset report and take advantage of GSE programs, including Freddie Mac’s Loan Product Advisor® asset and income modeler (AIM), direct deposit income and employment verification, positive cash flow, and rental payment analysis, and Fannie Mae’s Desktop Underwriter ® (DU®) validation service for borrower’s income, employment and asset information, positive rental payment history, and cash flow analysis.

Since Blend’s conception, we’ve developed products and solutions to make the mortgage underwriting process easier. This includes relying on nontraditional consumer data to evaluate creditworthiness for borrowers who may have more unique circumstances.

Continuing to move forward

As the GSEs continue their work to improve access to mortgage financing, Blend is dedicated to being a supportive partner to help make even greater strides in the mortgage industry.