Blend has shared the 2023 Mortgage Suite ROI Study.
Jordan Brown, CEO of MarketWise Advisors LLC, has distributed the third annual Blend return on investment (ROI) impact analysis “conducted by MarketWise Advisors.”
The study reportedly provides “an independent evaluation of Blend’s mortgage technology and its financial and operational impacts, based on survey and interview feedback from 106 Blend customers.”
While there remains segment weakness due to economic conditions, this year’s results indicate that the Blend Mortgage Suite made “a tangible, and increasing impact, helping lenders eclipse a 10x return on their investment level (ROI).” This study defines ROI “using three main categories: process automation, cycle time compression, and the degree of operational leverage generated.”
In all three categories, Blend customers have “reported substantive and increasing year-over-year improvements.”
Customers reported that Blend’s Mortgage Suite helped “save over 16 hours per file in 2023 from product automation and streamlined application flows.”
These improvements, in turn, “helped eliminate an average of 8 days from the overall loan cycle time—from processing to closing—by over 44%, up 20% from the year prior.”
Ultimately, the increase in transaction speed “resulted in higher loan closing rates and $914 in average cost savings per loan—a $274 increase over 2022 levels.”
Amidst ongoing compression in financial industry margins, these savings “are driving real benefits to Blend customers.”
As a technology provider, Blend provides software “that delivers economic benefits to its customers, designed to streamline process flows and engineered to minimize transactional friction.”
The economic impact is “understood by deeply exploring the changes in process automation, cycle time compression and operational leverage.”
According to this survey, Blend customers experienced “an average ROI increase of 10.15x or $913.53 per loan, resulting in an average annualized ROI expansion of 18.93%.”
For Mortgage Suite customers, this translates “into lower costs of origination and profitability opportunities.”
The mortgage process is “composed of hundreds of discrete steps completed by originators, processors, underwriters, loan closers and other personnel to complete a transaction.”
As indicated in the study, Blend’s technology helps “automate and in some cases eliminate many of these process flows streamlining the effort.”
With full implementation, the Blend Mortgage Suite can “potentially eliminate up to 988 minutes of manual processes.” This is dependent “on which functions are deployed and the efficiency of a mortgage operation.”
The important facet from this year’s analysis is “the uptick from 9.09 hours to 16.47 hours indicating that the Blend Mortgage suite features delivered have a pronounced increased impact due to new feature enhancements.”
The cycle time for a mortgage loan transaction historically “has ranged from four to six weeks.”
Given process automation, it can materially “impact the business flow itself. Blend customers report the ability to eliminate about 8 days of cycle time.”
The independent impact of that time compression is “that loans can close earlier and are available for sale in the secondary market.”
It is important to note that “the degree of cycle compression improved 1.5 days year over year (6.90 improved to 8.41). Approximately eighty percent (80%) of respondents indicated that Blend speeds up the processing cycle and helps them complete more loans, up from seventy-one (71%) last year.”
Operational leverage Operational leverage is “an important component of ROI.”
By automating a manual process and changing “the business dynamics, it changes the game fundamentally. A borrower’s experience is mission-critical in keeping potential loans flowing through the mortgage pipeline (from origination to processing to closing).”
With Blend, customers move loans very quickly “through a traditionally cumbersome, confusing process. Blend customers report increased closing levels due to a highly configurable, more effective process.”
Blend customers reported “a 40% increase in closing rates—up from 37% in the year prior—by deploying technology.”
Ultimately, a better borrower experience “impacts the number of loans that pull-through. The financial impact of operational leverage is non-trivial—up to $545 per loan.”
All in all, Blend customers experienced “an average ROI increase of 10.15x or $913.53 per loan, resulting in an average annualized ROI expansion of 18.93%.”
For existing customers, there is an opportunity “to expand profit opportunities and streamline costs by continuing to implement Blend’s full suite of offerings.”
Methodology
The data referenced in this report was “received through a comprehensive survey and direct interviews conducted by MarketWise Advisors.”
The survey received 213 responses “across 104 companies, each of which had been using Blend for more than 12 months and had more than 500 completed loans.”
Respondents were split “between banks, IMBs, and credit unions, and were from all job roles.”
There was a strong emphasis “on outreach to mortgage originator staff/loan professionals this year to effectively understand the user experience.”