Blend Opens Digital Front Door For Banks To Recapture Loan Business

Of all the journeys in one’s financial life that is paper bound, marked by reams of paper and teams of middlemen, buying a home stands out.

Titles, legal agreements, bank forms, deeds, appraisals, wet signatures, faxes, emails, agents, lawyers — the list goes on. According to Bankrate.com, the entire process takes 47 days on average.

If ever an analog business needed to be dragged into the digital-first economy, it’s home buying. Marc Greenberg, head of Finance at digital lending platform Blend, agreed that the industry is ripe for a digital shakeup as he spoke with PYMNTS’ CEO Karen Webster.

The conversation came as Blend announced earlier this week the acquisition of Title365, a provider of property title and insurance settlement services, for $422 million. The deal will streamline the process of purchasing a home and add efficiency and transparency to the financial services ecosystem as the platform scales across a range of everyday financial activities.

Physical home closings can be arduous, involving hours at the real estate office, bank, etc. There also is no shortage of cooks in the kitchen, so to speak. As Greenberg noted, any one of them could upend or even short circuit the home buying experience.

“If the banks make it super easy and a fully integrated experience, we think in the long run they capture more business,” said Greenberg.

Get ready for the digital shift in the form of a marathon, not a sprint. As Greenberg put it, “the pandemic in a lot of ways has accelerated the digital transformation that we thought might take a lot longer.”

That transformation includes eliminating at least some of the “wet signatures” that are part of the hoops and hurdles of getting from the initial stages of making an offer to sealing the deal on a nice little Victorian, for example.

Bringing title insurance and settlement services onto Blend’s digital lending platform will automate a range of functions that have typically been tied to manual, paper intensive processes, Greenberg said. Blend itself launched with a digital homeowner’s insurance offering in 2018 and expanded to offer a digital closing solution last year, known as Blend Close.

The combined offerings enable Blend’s financial institution (FI) customers to process more than $4 billion in mortgages and consumer loans daily.

“There’s still a long ways to go,” noted Greenberg. “Title365 brings all this expertise and operational capacity so that we can transform these processes over time, and then integrate it into banking customers’ services.”

For the consumer, he said, Blend’s goal is to bring every financial experience to the intuitive level that is the trademark of Netflix or Amazon. Greenberg told Webster the Title365 deal will close within the next few months upon satisfactory completion of regulatory review.

With a nod to the high-level impetus to buy Title365, said Greenberg, “we felt like we could really build on our strategy if we could integrate all the different pieces of the home buying journey into a single unified platform.”

Grappling With Separate Silos

Banks shouldn’t have separate technology stacks for different services tied to mortgages, auto lending or deposit accounts, he said. A unified platform also offers the advantage of having a unified consumer entry point, taking those consumers through an end-to-end digital journey.

Right now, the banks have internal operations that are marked by separate loan origination systems and separate business units, he said. Some of them were created decades ago; some were created quite recently. That’s no way for a bank to operate at scale.

“Why should the consumer ‘pop out’ to take care of all these other things that the bank doesn’t offer in order to get done what they’ve needed to do in order to close their loans?” he asked, adding that “there’s a lot of disparate technologies. There’s a lot of opportunity for efficiency.”

The urgency is there for the banks to offer these services — well beyond the confines of home buying — to keep the customer relationship sticky. Greenberg maintained that traditional FIs need to pivot to digital-first strategies to grab market share back from the tech-nimble upstarts. They need to improve their cross-selling success in a way that is consumer friendly and meets the individual where they are, whether that’s in a branch or online, via chat or mobile.

Getting Ready To Make The Leap

Banks have already proven adept at making the leap, having quickened the pace of their investments and digital-first initiatives as they found themselves challenged by the pandemic.

The past year has shown just how much an external event like the pandemic, coupled with a sharp shift toward digital conduits, can lift a sector’s fortune, said Greenberg. Through the past year, he told Webster, “we’ve seen tons of growth year over year on refinancing.” More recently, the growth has balanced a bit more evenly toward new purchases and refinancing, toward movement to suburban dwellings rather than big cities.

In the meantime, he said, Blend continues to build its energy behind the consumer financial journey (including personal loans), the home buying efforts tied to property, casualty insurance and realty title.

“We’re building a platform through which we can provide a marketplace to other opportunities,” he said, naming activities such as moving/relocation and even changing utilities and cable providers as those moves happen. In short, Blend’s opportunities lie with cutting down the number and scope of interactions consumers have to make with intermediaries — through a digital front door that leads directly into an ecosystem that Blend brings together that spans FIs, FinTechs, mortgage banks, homebuilders and others.

“We’ll maintain these connections for you,” he said of Blend’s relationship with these firms and their consumers. “We’re going to build out the other pieces of the puzzle and make sure that you get the right and the best service providers at the right opportunity and the right timing so that you can close that loan or close that transaction, or open that deposit account as quickly and as efficiently as possible.”

The partnership model is especially valuable for smaller banks that do not have the financial resources that their larger, traditional FI brethren might have on the books. No matter the size of the FI, they need help with collecting consumers’ information and minimizing the paper trail. There also exist opportunities to simplify the documentation itself, to incorporate education into the process and render those dense disclosures in readable English.

“We know that it takes a long time to convince banks to change out their technology,” he said of the home-buying journey, which opens up other opportunities for FIs.

“We really are focused on the long term,” he told Webster. “We know that this is a long game.”