Finovate Alumni News

On Finovate.com

  • Coinbase Custody Helps Institutional Investors Securely Store Digital Assets
  • Kabbage Expands Small Business Funding with $200 Million Credit Facility.

Around the web

  • Overbond offers U.S. corporate issuers and institutional investors real-time access to its platform.
  • PayPal and Synchrony Financial expand strategic consumer credit relationship.
  • U.K.-based Featurespace to open office in Atlanta in November.
  • WealthForge Debuts Its First Regulation A Offering with New Investor Workflow
  • GoBankingRates features Blend, Unison, and Ellevest in its 10 Startups to Watch in 2018 list.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Finovate Alumni News

On the web

  • Braintree Powers RFID Payments for Eventbrite Attendees.

Around the web

  • Accion features Aneesh Varma of Aire on Medium.
  • Forbes: Blend Wants To Bring The $2 Trillion Mortgage Market To The Modern Era.
  • Seylan Bank selects Finastra (formerly Misys) for trade finance and corporate banking.
  • HSBC launches online data tool in collaboration with Xero, Sage and Intuit
  • TSYS President, COO Pamela A. Joseph resigns.
  • Actiance Announces Compliant Capture and Archiving Support for Microsoft Teams.
  • Blackhawk Network’s Hawk Incentives Launches Wallet-Enabled Prepaid Card for Promotions and Incentives.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Mortgagetech Innovator Blend Picks Up $100 Million Investment

Earlier this year, Finovate Senior Research Analyst Julie Muhn predicted that the continued rise of mortgagetech would be one of the biggest fintech success stories of 2017.

Today, with news of a $100 million investment in Blend, a startup that specializes in making the mortgage process easier for bother lenders and borrowers, it looks like her prediction is right on track.

“We’ve found a great partner in Greylock,” Blend CEO and founder Nima Ghamsari wrote at the company blog this week, “not only because they’re one of the top venture capital firms in Silicon Valley, but also because of their history of success in helping take technology companies to the next level.” Joining Greylock in Blend’s Series D round were Emergence Capital, Lightspeed Ventures, Nyca Partners, and 8VC. The funding brings the company’s total capital to more than $160 million and gives Blend an estimated valuation of $500 million.

 

Blend plans to use the additional funding to grow its staff, expand beyond the United States, and explore opportunities to bring its technology to other lending products. “The opportunity for our technology in the $40 trillion consumer lending market is huge, but the industry won’t change overnight,” Ghamsari wrote. “To realize our goals, we need to continue scaling and bringing together the best talent, partners, and backers to get us to the next level.”

Blend’s dramatic funding announcement comes with news that the company has partnered with Wells Fargo and U.S. Bancorp. Both banks will use Blend’s technology to speed the mortgage application process and better compete with rivals like Quicken Loans. U.S. Bancorp believes Blend will enable them to reduce the mortgage application process by as many as five days and that the timeline will eventually be “sliced in half.” Wells Fargo, which began working with Blend “late last year,” expects to introduce its new, Blend-supported, mortgage product nationwide in 2018.

Founded in 2012 and based in San Francisco, California, Blend demonstrated its Data-Driven Mortgage  solution at FinovateSpring 2016. The company has tripled its user base since January 2016 and processed more than $30 billion in mortgage applications this year alone. Last month, the company launched its native mobile app, making it easier for loan officers to manage requests and applications from their mobile devices. A member of CB Insights’ Fintech 250 list, Blend was featured in our look at tech trends driving mortgagetech earlier this year, “Digitization, Data, and Automation.” For more about the company, also check out our interview with Blend CTO Eugene Marinelli.

Finovate Alumni News

On Finovate.com

  • Mortgagetech Innovator Blend Picks Up $100 Million Investment.
  • Finovate Alums Among Top Investment Targets for Top European Banks.

Around the web

  • iSignthis inks deal to begin contracting merchants to ISXPay Australia for card acquiring.
  • Stripe to offer instant payments solution from Klarna on its interface.
  • ABA Banking Journal features receipt management solution provider, Shoeboxed.
  • Xendpay launches Pay Day Initiative with no transfer fees or payment transfer limits.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Blend Launches Native Mobile App

Blend, a startup that helps lenders make better mortgage lending decisions, announced a native mobile app last week. The San Francisco-based company’s launch of Blend Mobile aims empower loan officers to manage borrower requests and applications on their mobile device in order to facilitate communication between the two parties.

Founded in 2012, Blend has 30 clients and has raised $60 million. The company’s lender-facing system offers a digital, paperless mortgage application process. The customizable interface is designed to reduce friction in borrower interactions and aims to help loan originators close up to seven to ten days faster.

With Blend’s new native app, lenders can cater to borrowers by enabling them to complete a mortgage application when and where they prefer, with the ability to switch among channels. The app also leverages push notifications and alerts to facilitate communication between the two parties. For example, the app notifies lenders if they have a period of inactivity greater than 48 hours in order to decrease the time to close. The new app is available to all current and new Blend clients.

Blend demoed its data-driven mortgage at FinovateSpring 2016. The company was recently named to CB Insights’ Fintech 2015 list. Earlier this year, we highlighted Blend’s role in growing the mortgagetech scene and interviewed CEO Nima Ghamsari in a feature on Blend last year.

Finovate Alumni News

On Finovate.com

Around the web

  • BanqUP announces alpha roll-out alpha of SME fintech bank.
  • Flywire announces record results in payments processed and institutions and students served in the past year.
  • Expensify ships 5 new travel integrations.
  • Revolut’s new feature allows users to generate their own IBAN for Euro transactions.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

44 Alums Populate CB Insights’ Fintech 250 List

This week, CB Insights unveiled its Fintech 250 list. The research outfit selected 250 emerging, private companies in 17 sub-sectors of fintech that are changing the face of financial services. The roster includes 44 Finovate and FinDEVr alums that were selected using CB Insights’ data-driven process that analyzes company momentum, market participation, funds raised, and investor quality.

The list is in alphabetical order.

Algomi

AutoGravity

Avalara

Behalf

Betterment

Blend

Chain

Coinbase

Credit Karma

Currencycloud

CurrencyFair

Fenergo

Financeit

Gusto (formerly ZenPayroll)

Juvo

Kabbage

Kensho

Kreditech

Klarna

LendUp

Moneytree

PayNearMe

Payoneer

Personal Capital

Plaid

Quantopian

Quovo

Revolut

Ripple Labs

Roostify

Signifyd

SocietyOne

Socure

Tink

Token

Tradeshift

Transferwise

TrueAccord

Trulioo

VATBox

Wealthfront

Xignite

Zooz

Zopa

Digitization, Data, and Automation: A Look at Tech Trends Driving MortgageTech

Designed by Freepik

Digitization and innovations in workflow automation and data integration are among the biggest trends driving much of mortgagetech. Whether you are a process facilitator, making the purchase experience easier on the homebuyer, or a loan servicer looking to better target your lending efforts, the efficiencies and insights provided by these technological trends are transforming this growing space within fintech.

In some ways, these are the same trends that are sweeping through not just technology but industry, as well. It’s true that workers and consumers in the 21st century have developed a love/hate relationship with an increasingly digitized, automated, and data-dependent world. But at least with regard to mortgagetech, these innovations are likely to prove more boon than bust, relieving much of the friction and many of the headaches and inefficiencies that plague all sides of the real estate transaction.

Writing at The Home Story, Timothy Ahern quoted the quarterly Mortgage Lender Sentiment Survey produced by Fannie’s Economic and Strategic Research (ESR) Group in which those surveyed put “a need for digitization and automation” at the top of their list of technological innovations they would like to see in their industry. “Survey results suggested that mortgage lenders have a strong interest in a fully digitalized mortgage process,” Ahern added.

With this in mind, we looked at trends in digitization, automation, and data integration in mortgagetech through the lens of a pair of FinDEVr alums: a Bay Area startup founded five years ago called Blend (FDSV16) on one hand, and a loan origination specialist that has been in the mortgage business since 1997, Ellie Mae (FDNY17), on the other.

Blend and the Art of Adding Intelligence to Mortgage Applications

For mortgage application process facilitators, digitization has been perhaps the single most significant technological innovation. And while reams of paper are often still involved in the average real estate transaction, digitization has created massive efficiencies in the process. Describing the current mortgage experience as one that is “paper-driven,” involving “endless back and forth,” lacking in “transparency”, and overly manual, Blend co-founder and CTO Eugene Marinelli discussed last fall at FinDEVr Silicon Valley how his company “makes the process a lot more automated, and a lot more efficient.”

Blend_FinDEVr_stage

Pictured: Blend’s Eugene Marinelli, CTO & Co-Founder, during his presentation “The Data-Driven Mortgage by Blend” at FinDEVr 2016 Silicon Valley.

Blend, for example, engages borrowers with straightforward, “very digestable” workflows to provide basic information about assets, income, and other data that will enable the platform to complete the loan application for the borrower. Borrowers can directly connect their accounts to the platform instead of having to login to their separate bank accounts and export the information into the application. The solution also leverages optical character recognition (OCR) technology to read and extract data from uploaded documents such as W-2s and pay stubs.

Under the hood, managing workflows with less friction is similarly a matter of managing data. Blend, for example, houses application data, property data, and borrower data centrally in its data model. The goal is to “add intelligence to the application,” according to Software Engineering Lead Nivi Jayasekar. “How do we only ask the borrowers the questions they really need to be answering and how do we source that information up to them appropriately at her right moment?” she asked. The solution for Blend is “centralized rules,” which ensure that an independent contractor, for example, gets an application with different queries and has different disclosure needs compared to a salaried worker. This process also supports compliance needs by routing the borrower responses to create an audit trail as well as the centralized rules engine.

The tools of digitization, automation, and data integration are ideal for the challenge of mortgages, which Blend describes as “data-rich and insight-poor.” With automatic data extraction and the ability to leverage this data to develop business rules that create more personalized experiences and reduce costs, companies like Blend are helping make one of life’s most important decisions – buying a home – less complicated and more transparent.

“This is by nature very complex,” Jayasekar said. “Some of it doesn’t need to be and we do a good job of reducing that redundancy through the borrower experience and connectivity.”

Automation, Open APIs and Ellie Mae’s Innovation in Loan Servicing

Automating the mortgage process, as Ahern noted above, is a major goal for those firms that are directly involved in loan servicing. Ellie Mae, which made its FinDEVr debut this spring, produces the software that processes nearly a quarter of all mortgage applications in the U.S. The company’s innovations in mortgage process automation and its new focus on open APIs have positioned Ellie Mae as a firm to watch among mortgagetech’s loan servicers.

In February, Ellie Mae unveiled the latest version of its mortgage management solution, Encompass, which automates the loan origination process. The all-in-one package facilitates CRM, point of sale, processing, underwriting, closing, and funding, as well as post-closing and shipping. The platform helps ensure compliance and loan quality with features like automatic loan review and channel-specific workflows. Electronic document management includes automated auditing and intelligent document recognition. Reporting and analytic tools help lending professionals take advantage of the critical data flowing through the system to make real-time performance insights.

But during its FinDEVr New York presentation in March, Ellie Mae’s VP of Platform Engineering Jeff Collins emphasized the platform’s embrace of Open APIs. “We’ve grown really well. We’ve solved a lot of problems,” Collins said of Ellie Mae, adding, “but now it’s time to look for innovation and excitement and new opportunities from partners outside our own walls.” Collins showed how the platform’s developer portal features a “Try It” mode that allows developers to experiment with deploying sample loan objects into any of the various loan fields in a sandbox type environment without having to write the code first.

EllieMae_FinDEVr-stage

Pictured: Ellie Mae VP, Platform Engineering Jeff Collins during his presentation, “Ellie Mae Encompass Developer Connect,” at FinDEVr 2017 New York.

In addition to other features, like Pipeline that enables query APIs for loans that match specific criteria, the platform also supports webhooks, which are user-defined HTTP callbacks. Collins demonstrated the example of a how Encompass could send notification of a newly created loan product as a webhook that would enable Ellie Mae’s lender customers to integrate it into their data warehouse or into other services in their business. “Because at the end of the day,” Collins explained, “we are the system that makes the object that makes money for the lender. But that integrates into a whole bunch of other workflows including things like loan servicing, because when that loan is ready to go they may want to start asking for payments from the customer.”

To underscore Ellie Mae’s commitment to open APIs, Collins demonstrated an Alexa-based Encompass Loan Officer Connect voice app for lenders, querying the technology for the status of various loans, including upcoming rate lock expirations, as well as directing the app to “run product and pricing” on specific loans in order to find a better rate. “Anybody can plug into this platform and become part of the ecosystem,” Collins said, “The goal being that by working together … we can make borrowers’ lives easier, to lower the pain for them, to get more people into houses.”

This concludes our series on proptech and mortgagetech in fintech. In case you missed them, check out our review of proptech’s role in fintech and a closer look at real estate investment technology. For more proptech, come to FinovateSpring where we’ll showcase a variety of proptech, mortgagetech, and other fintech at the San Jose Convention Center.

Why PropTech and MortgageTech Are the Future of Fintech

If this is the first time you’ve heard the term proptech, it won’t be the last. Proptech (also known as real estate tech or REtech) and its subset mortgagetech have been around since 2014. Here’s why 2017 is poised to place proptech among the ranks of wealthtech, insurtech, regtech.

This year has already been favorable to mortgagetech and proptech companies. SoFi, for example, is about to close a massive, $500 million round, its competitor LendingHome topped $1 billion in mortgage loan originations last year, and RealtyShares has seen over $300 million raised on its platform. According to CB Insights, since 2012 the real estate technology sector has closed 817 deals worth $6.4 billion. Of that amount, $2.6 billion closed in 2016 alone, which represents a 40% increase from that sector’s funding in 2015.

In the U.S., there are a handful of reasons 2017 will be favorable to real estate. Interest rates are projected to rise for the second time, millennials are starting to buy their first homes, and investors are looking to diversify out of the volatile stock market. On top of all of this, regulations are slated to loosen under the Trump administration, and changing in regulation brings opportunities for innovation.

Players

The broader category of proptech can be broken down into four basic segments.

1- Mortgagetech
These are mostly B2B companies specifically focused on facilitating part of all of the mortgage application process. They do not lend or service the loan.

2- Digital mortgage lending companies
These online lenders facilitate the mortgage application process and service the loan.

3- Real estate investment tech
Companies in this category are focused on the investment aspect of commercial and residential real estate.

4- Pure property plays
These don’t have a fintech angle but play a role in the broader proptech industry. Since this category is out of scope for this blog, this list only encompasses a fraction of companies in this category. Check out CB Insights’ coverage of commercial real estate technology for more.

What’s ahead in 2017

  • Expect to see more mortgagetech-bank partnerships along the lines of Roostify’s recent deal with JP Morgan Chase. As banks try to gain a competitive edge for market share, more established banks will need to leverage mortgagetech offerings.
  • We’ll see more niche alt-lending solutions such as SoFi that facilitate the application process and save borrowers on closing costs.
  • Expect to see more players offering real estate investment technology, coupled with some consolidation in real estate crowdfunding companies.
  • Outside of fintech, we’ll see more platforms aimed at cutting out the middle person, the realtor; and more business models such as Knock and GoldenKey that make the selling process easier.

You don’t have to take my word for it

We posed the question, How do you see proptech/ mortgagetech growing in 2017? to these Finovate alums working in the space. Here’s how they responded:

BhatRajesh Bhat, CEO and cofounder of Roostify:

“We expect to see further widescale adoption of digital mortgage solutions – to the point where one should expect it to be table stakes in 2018. We should also expect to see more players emerge in the space as investors see larger market adoption and validation.”

 

Screen Shot 2017-02-23 at 9.52.53 AMLinda Schicktanz, Chief Advisor of CK Mack*:

“If there is one area ripe for fintech innovation, it’s real estate investing. Why put 30% down just to gain massive management headaches when you can now invest in rental cashflow online with very similar returns? Fintech and Real Estate are like peanut butter and jelly, they just go together!”

Screen Shot 2017-02-23 at 8.30.31 AMNima Ghamsari, cofounder and CEO at Blend:

“There is going to be an explosion in the use of data driving the mortgage process in 2017. Both Freddie Mac and Fannie Mae have announced their data initiatives toward the end of 2016, and lenders are starting to push consumer financial data aggregation into the core components of their customer experiences. This ties in nicely to the industry-wide push forward to a more digital, end-to-end process that started in 2016.”

Screen Shot 2017-02-24 at 4.07.54 PMJilliene Helman, CEO at RealtyMogul

“The impact of digital technology on the real estate industry and mortgage technology is still in its infancy, but I see both less experienced and more sophisticated investors, alike, moving toward a process that takes place entirely online. With over $250 million of capital invested and 100,000 registered investors on the platform, RealtyMogul.com is a testament to this change. The more that technology can offer real estate borrowers and lenders transparency, as well as the efficiency of process and convenience, the faster both sides will adapt.”


*Full disclosure: I’m related to Linda Schicktanz. Yup– she’s my mom.

FinDEVr APIntelligence

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On FinDEVr.com

  • Nubank Raises $80 Million in Series D Funding”

The latest from FinDEVr Silicon Valley presenters

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