Name: Balancing the Ledger: Can Blend Pull Off the One-Tap Mortgage?
Uploaded: 2019-08-19
Duration: 9 min 54 s
Description: Blend received $130M in series E funding in June.

[ MUSIC ] Welcome to balancing the ledger where tech and finance intersect. I'm Robert Hackett. And I'm Jen Wieczner. And today we're here with Nima Gamsari and Tim Miopolis, the CEO and co- founder of Blend And the president of Blend, which is a FinTech company that is pretty highly valued. Thanks for being on the show, you two. Thanks for having us. Thanks for having us. So tell us a little bit about Blend. What are you doing? We started Blend around seven years ago. We saw that most of the processes of getting financial services product, in particular a mortgage, were very paper based, very manual Very difficult for consumers to engage with a lot of handing people documents and waiting a week for them to get back to you. And we said we think we can bring technology to the space. I'm a technologist by background and building software, something that I think could really help make the space better and building over the past seven years. Our business model is we basically partner with bank financial services institutions with banks and lenders, of all sizes. And we offer a process for them to work with consumers, white- labeled, using our product to aggregate the consumer's financial data. The system reviews that information in real time, and gets them back an answer in real time, and streamlines the process from there. Today we have about 150 banks using our software. And we do about three and a half billion a day in mortgage applications. Tim, you were previously the CEO of Fannie Mae, the mortgage giant. What opportunity do you see in blend? Well, you know, I think in the course of my career, I worked in five financial institutions and when I was leaving Fannie Mae. Might be was that a future of financial services was gonna be based on technology. I'd spent the six years that I was set for any may as CEO, really focusing on how to bring the mortgage industry into the 21st century. How to create a conditions where lenders would actually adopt digital technologies? Make that better, fast or cheaper for consumers. Make it better, faster, cheaper for lenders, but also actually make it better for the ultimate investors like Fannie Mae and Freddie Mac and to protect the taxpayer. So I was I was really interested in going and continuing that work and really focusing on the technology space. And as I looked around all of the. FinTech firms that I knew about, I certainly thought that blend was among the very, very best. You recently raised a new round of venture capital, I think 130 million dollars, something like that. Are you Do you have plans to expand beyond the financial services space or what is blend going to look like, you know, in the future and your vision? I think there's still a lot of. Work to do on the mortgage process. There's still a lot of manual processes that could be things that are done using data instead of documents. There's still a lot of friction we can take out of the process to make the consumer's ability to get a mortgage a lot better. But then beyond that I think sometimes it's easy forget, to forget when I'm so in the weeds that the mortgage is usually part of a much larger home buying process that a consumer is going through and that's a pretty psychologically important process for a consumer. But also now it's become a very onerous process because there are so many different things that you have to think about in that process. And so what we're thinking about is how do we not just make the mortgage process simple. But help bring the other all the other pieces for the consumers. They can have an amazing experience all the way through. And so part of its gonna be making the mortgage itself simpler and spending a lot more energy and time on that. There's also, I think, a broader need in financial services. You know, when we were first getting into this space, I was wondering why banks didn't have this technology yet. I think part of the reason is that You know, if banks wanted this technology certainly they had to all build everything themselves and sort of find there's just a lot of places where they're they're built stuff and a lot of places where they haven't built stuff. And things like other loan products like auto loans and deposit accounts that we're starting to think about how can we help The consumer across their entire life journey and not just the home buying journey. So getting into these other products and making those processes digital, simple and transparent for consumers and along the way. Who is most likely to get a mortgage these days? Well, Millennials are the biggest generation in American history. And almost like everything else that Millennials have done, and I've got a couple of my own You know, they've delayed everything, but every study I've seen of millennials, is they have the same aspiration to own homes as as previous generations. The real question is will they actually be able to go execute on that aspiration? And interestingly the kinds of homes they are interested in But it's not necessarily the hip urban apartment, they actually want to live in suburban homes like the ones that they grew up in. So a little bit counter to what the myth is about how millennials want to live, but then there are communities in Colorado will actually be The largest proportion of new home buyers in the coming decades. And for that reason it's all the more important that we figure out how to best serve those communities. You aspire to do a sort of one tap kind of process for this stuff. How achievable is that? It seems kind of difficult, you know? To be like push a button and, boom, I have mortgage. The consumers are getting more and more access to their financial data and we are seeing this in action with companies like Plath, we are seeing it being used at companies like Robin Hood, we are seeing it being used by companies that are helping you aggregate your finances. We are taking really the same approach and seeing we are gonna help the consumer aggregate their data And if that data is already there if you already work with that financial institution. On the way here we were talking one of the people in the lobby and he was saying he just applied for a loan with the bank for the already banks with and it took two weeks to get an approval. And that's everything they already knew him. They should have been able to instant look at his history of cash flow. Look at his history of. His payroll deposits into his bank account and say, yeah, this is what you're approved for. But also want him so it also doesn't mean that the quality of the loan is somehow inferior to something that was done in a much slower, manual process. We're still searching for and collecting the same data that would have been Collected in paper form previously. We're just able to do it much faster. We're going to the primary sources. We're going to people's bank accounts because they give us access to them, and the lender, and then the ultimate investor in the loan can see actual. What was the true financial condition of the borrower? Sounds like you have insight into kind of a broad swath of data. There's a lot of you know, both mentioned the financial crisis. There's a lot of talk now that this cycle may be ending and we may be headed for another recession Do you have any insights into the data that you're seeing in terms of the likelihood of that happening or when we will see a downturn again? I don't have any particular prediction as to when the next recession is coming. What I would say is I think that at least in the housing market, I think given home price appreciation Given the quality of loans that have been originated over the last ten years and given some of the risks management techniques that are being applied about the origination and servicing stages of loans, am much less worried about the state of housing and home prices than what it was ten years ago. I think if there is another, when the next recession comes We'll be able to weather that actually pretty well from housing market perspective. One thing we love to ask our guests on Balancing the Ledger is for their thoughts on cryptocurrencies and blockchain. I'm wondering whether there are any applications of this technology to real estate or mortgages or the housing market that you have been looking at? Now, one thing that I'm interested in and [ UNKNOWN ] is thinking about working with partners on is this idea of digital identity. Digital financial identity using blockchain to bet to power it, how do we give consumers access to their own data doing that's very difficult and having that be a thing that they can reuse and reuse and keep up to date is also very difficult and it becomes it's very cumbersome process for both the consumer and institution receiving it. So I think that there's been a few efforts in that space and there's going to be probably in five or 10 years, I expect consumers will be able to frictionless the access Their financial data, and have control over it, and be able to share who can use it and who can't use it, and that's probably a space that's gonna evolve pretty quickly over the next, maybe 18 to 24 months, and hopefully it will become mainstream in the next five years. When is the right time to get a mortgage? Rates are really good right now. We're seeing a big uptake in refinances on our platform, just because I think there's a recent announcement in the Fed, and so I think are saying we're gonna go and we're gonna get a mortgage. But for everybody else, it's a buying a home is a very personal decision. And it's like where are you gonna be for five or 10 years? Where are you gonna be. Where in you know in terms of your career in five or 10 years, not just physically. And it's something that I personally got my first mortgage while I was at blend the last two years. And it was something that I think hopefully I'll be able to hold on to for a long time. And at home I'll be able to hold on to for a long time. One more quick question. I imagine you'd be an asset for any bank to have in house. Why has a bank not just aquired you outright and do you think you'll eventually be owned by a bank? Having run a big financial institution that historically it's been a lot of money building custom made Programs. You start to realize that it's a huge investment. And it's not just the initial costs. It's the maintenance costs over a long period of time. I think our customers have realized that, they need to have a great consumer experience that they can use. But that to build that and maintain that themselves, Is hugely expensive and that they can actually get that at a much lower cost and at a regular state of excellence. By relying on somebody like us where essentially every institution that's using US is spreading the cost of of having that kind of experience. Across a much bigger base of of users. So we are able to make investments in our software that makes sense for us because we have many customers. If we were serving just one customer, that would be a much harder thing to justify. Excellent. Well, thank you both so much for coming on the show. Thanks for having us. Really enjoyed it. I am Robert Hackett And I'm Jen VH. And for more about balancing the ledger go to fortune. com. See you next time. [ MUSIC ]

Balancing the Ledger: Can Blend Pull Off the One-Tap Mortgage?

Finance

Blend received $130M in series E funding in June.