Blend Labs, Inc. (BLND) Earnings Call Transcript & Summary

[Presentation] Hi, everyone. I hope you enjoyed that video and we're even a little intrigued by what you saw. I'm Cassandra and I'll be your MC today. I'm excited to welcome you to our special event. I'm joining you here from our HQ in sunny San Francisco. We'll be sharing some exciting announcements today that we believe are going to be a huge step forward for our industry. To start today's program, our Founder and Head of Blend, Nima Ghamsari, will kick us off. Then we'll be joined by Lili Sander from our product team, who will walk us through an exciting product demonstration. Finally, we'll be joined by a leader in our industry, Ken Meyer, Chief Information and Experience Officer at Truist, who will engage with us an insightful and unscripted fireside chat. Thus, my colleagues and I will be monitoring questions and conversations in the chat throughout today's session. So feel free to reach out to us any time, here for you. And with that, let's get the show started.

Thank you, Cassandra. Hello, everyone, and thank you for taking the time out of your day to join us. Many of you are joining us as existing longtime Blend partners. And for that, I thank you for the great partnership. I'm looking forward to continuing to work with you for many years, so we can continue to help meet your business goals. Blend's origins are rooted in the mortgage sector, and we continue to invest in making mortgage lending more efficient and more straight forward for everyone involved. Borrower self-serve tools and mobile tools for your loan officers have enabled your teams to serve our customers where they are and for you to be more efficient. Those continue to serve as trusted advisers rather than loan manufacturers. And we helped alleviate much of the back office processing and underwriting gains seen by non-Blend customers. In fact, our customers report almost 12 hours of time saved per loan as a result of using Blend. Helping them keep turn times down and generate a lot of new business simultaneously who are just getting started. At the same time, we saw there's still so much more that we need help with. The current economic environment has shown us that we need to be able to move even faster, collected. You're finding the lower origination costs, create competitive advantages that will help loan acquisition, deposit growth and retention. All of this while balancing resource challenges, both with new technology and business lines. After more than 10 years of working with you, you've told us over and over again about a constraint that you face, the complexity of your existing technology infrastructure we know that our customers have a vision for how to better serve their customers, but over and over again, we see their tech is holding them back. In-flexible banking technologies and legacy infrastructure are often riddled with technical depth and disconnected or loosely connected with other systems. That makes maintenance expensive, adaptation difficult and prevents you from being flexible and from being responsive to the needs of your customers when change is needed. As consumers demand more and more from all their providers, financial institutions must be agile enough to not just react, but to lead the way. That's why after 3 years of work, we've evolved plan to provide the capabilities that our industry absolutely needs and hasn't asked for and we call it Composable Origination. I'm delighted to announce that Composable Origination is finally a reality for financial services and is available today with the Blend Builder platform. It's not only a solution to today's challenges, but something we believe will be the way financial services will continue to evolve and serve their customers for decades. What is Composable Origination? Well, it starts with your existing infrastructure. The builder platform provides prebuilt integrations with all of the major technology stacks that are used in our industry. These span core banking systems, loan origination systems, CRMs, identity providers, online banking platforms and more. Next, it also provides a series of prebuilt modular components called blocks for financial services. These include blocks for decisioning, pricing, income verification, closing and more. And lastly, we provide a orchestration layer, so you can define custom workflows in a low-code drag-and-drop environment. You can experience proposal organization in a couple of different ways. You can leverage prebuilt solutions from Blend, covering products like instant home equity, deposit accounts, personal loans and credit cards. These are ready to use, reusable and purpose-built out-of-the-box solutions to be the best-in-class product workflow templates and integration templates so that you can get up running incredibly quickly and get a value as quickly as that. You can also build your own custom products using the Blend Builder platform. This is where the rich integrations, the modular blocks, the easy-to-use orchestration will help you break through the limitations of today's flexible architecture and Lili will take a deeper dive of the Blend Builder platform in our upcoming demo. We designed a platform for Composable Origination to address the problem that we knew we had to address for our customers to be successful. You told us, help us innovate, differentiate and say, told us you need competitive advantages that innovation needs to be accelerated, that ease and convenience for customers wins rate advance. The Blend Builder platform enables you to accelerate innovation, differentiate our products and reduce your costs. For consumers, this means receiving highly personalized experiences that are simple and delivered proactively. All of this is available today. Our initial focus for Composable Origination has been on the consumer banking use cases and the early adopter successes are significant. In fact, one of our banking customers out in the Midwest was able to deploy their business deposit services significantly faster than their in-house teams anticipated, while maintaining a focus on delivering a best-in-class differentiated experience. It also costs them less and enable them to dedicate more of their bandwidth to other high-value projects and activities. Composable Origination unlock innovation for them and can do the same for you. And this also extends to our mortgage customers. Our first use case in mortgage on the Builder platform has been to enable Spanish language borrowers to engage with our lender. Blend Builder will also eventually be the basis for our entire mortgage platform. So how does all this create value for you in practice? For your technical team using the builder platform is deploying days or weeks rather than months or years. It eliminates constraints presented by legacy technology platforms. With Composable Origination, services, workflows and product templates can be configured using modular drag and drop components that can be used across product lines and channels and trying consistent experiences and a single data model. It also reduces cost and complexity, enabling rapid implementation and delivery. Our business leaders looking to grow market share, deepen relationships and provide differentiated experience. Composable Origination provides the agility and speed you've always wanted to execute on their product strategies. It also provides you with the data insights to help perform decision making for you and your business going forward. And lastly, and most importantly, for your customers, you can provide elegant, intelligent and seamless workflows to move them through the origination process, all while maximizing conversion and maximizing customer satisfaction. These are game changing sets of capabilities that we've built into the Blend Builder platform, and they will enable you to accelerate innovation, to build and launch new products faster and easier than ever thought possible. You'll be able to differentiate your products and reduce your costs. For consumers, this means providing them with experiences that are highly personalized, simple and delivered to them proactively. Okay. I could talk about Composable Origination all day. Rather than having me talk about it, let us show you. I'd like to welcome Lili from our product team who will share a demonstration of the Blend Builder platform and how it unlocks Composable Origination.

Thanks, Nima. Today, I'll be focusing on the unique benefits the Builder platform brings to the industry. Here is a deeper look at some of the key pieces our Blend Builder platform brings to your institution. At the heart of the platform is the Blend Builder, a low-code development environment that leverages a drag-and-drop interface, packed with a configurable component library. Our ever-growing set of Builder Blocks include ready-to-use, reusable and purpose-built out-of-the-box products and workflows to help get you started right away. We have a rich set of integrated third-party and native Blend services, including verification of assets, income and employment, identity verification, pricing, decisioning and more. A configurable data model can be tailored for every one of your products to enable standardized reporting and data capture the way you need your data to be structured. And an integration manager supports an easy connection to your existing systems using open architecture principles like Kafka and restful APIs so you can choose to work with your own infrastructure when needed. Currently, your customers might be applying for a product without meeting your automated [ underwriting ] qualifications. Maybe their QualiFile score is too low or you're finding additional flags that fail your automated check and you might be denying them on the spot or referring them to a manual underwriting process. Now with our Builder platform instead of denying that applicant or moving to a manual review, we make it possible to seamlessly guide consumers into the right product fit without skipping a beat or moving through that redundant application workflow with the use of an easy-to-add counteroffer. Digging in a bit behind the scenes, we can construct dynamic workflows for every product that reflects your brand and visual identity within the application experience. To accelerate this construction we offer builder blocks, which can be reused across multiple products and experiences to help compose an origination story that suits your products needs. Blocks help you modularize key experiences and can include a UI layer, an integration layer, workflow logic and composite scopes. Now let's look at a builder platform example. Similar to the counter offer workflow you saw a moment ago, we can use something like a cross-sell block to do more with the onboarding service. In this deposit account opening product, if I want to drive the consumer towards a credit card offer at the end of the funding process, I can take this existing cross-sell block and drop it on the last application screen. This is an example of blocks we can leverage as we build out a form. And as you can imagine, a dynamic cross-sell block like this can surface personalized offers, making it usable across many different product types and consumers. But blocks don't just end there. As fraud and verification is an ever-growing area for concern, it's also right for consumer and operational efficiencies. You should be able to rely on having the latest and greatest technology when it comes to identity verification and fraud detection. Here, I'll turn the identity verification workflow from our deposit account product into a reusable block. I can grab these nodes and simply create a block to share with other products. This will allow us to update the block in one place as technology changes or we add new capabilities and push that change to each product that's opted in for the update. This allows us to drive consistency and ensure we're offering modern and compliant user experiences across every product. Now I'll navigate over to my credit card product. And before I add this identity verification block to this credit product, I want to highlight an important element that our platform offers. Here is what the data model looks like for this credit product as it stands today. You can see I've got a credit object, a decision object, an array of parties with authorized users, incomes and various personal information, all of which can be made available from our public API. Now I'll switch back to the workflow view, add this new identity block and connect it to my existing workflow. When I add this block to my flow, the data model was automatically updated. And now you can see we've got a new identity verification object with metadata relevant to the IDD evaluations. As I published this new version of the credit card product, the API is automatically updated and all of your consumers can access the latest version of your product. This is a great example of how pushing an incremental change takes just a fraction of the time with our platform. Now I'll go ahead and show you that new user experience and a sample credit card app. With our prefill and fast-forward capabilities, I can jump right into reviewing the terms and conditions of this product and kick off our new identity verification experience. [Presentation]

I'm using a test profile here to show off some of the power of this platform behind the scenes. And you can see this applicant has pushed to manual review even after the step-up verification process. As you can guess, I've done this on purpose because that identity block isn't just an experience for the consumer. Eventually, one side of your product experience should drive the other. We don't just define the applicant's journey with the Blend Builder platform. We can also create a back office experience that allows your bankers to drive the intake and review process, rerun integrations and update applicant information using the same technology you offer your consumer. As I open this application in the banker workspace, I can see the status of the application, why we've moved to manual review? And in this case, rerun identity verification after receiving updated information from the applicants. With this new run, the identity evaluation is approved, I can review the auto generated report and more importantly, congratulate that applicant on their newly approved credit card. What I've shown you today is just a slice of what the Blend Builder platform is capable of. With this modern infrastructure, we're enabling financial institutions to create, design, deploy and optimize new financial products with speed, scale and security. The power of our Blend Builder platform means you're not going to be looking for the latest and greatest technology in 2 to 3 years. With our constantly evolving platform, your products and experiences will never get stale. With that, I'll hand it back to Nima.

Thanks, Lili. And next, I'm so excited to introduce Ken Meyer, who is the Chief Information Experience Officer, Truist. Welcome, Ken.

Nima. Thanks for having me, Nima.

Yes. So maybe we can start Ken with what's -- you guys had a merger a few years ago. What's been the focus since then? I guess a lot of that's been merger work. What's been your focus since then?

Yes. I mean I think it's exiting merger where we're focused on conversions and making sure we're taking care of our clients. And then obviously, pandemic fund with trying to make sure that we were there for our clients throughout all of that. But now it's about what's next and how do we continue to advance our client experience, how do we make sure that we're providing the right products and services and offerings in their clients' hands in the way that they want to ultimately receive those and how do we really make sure that we continue to modernize our way towards the future.

Yes. I've always felt that you and I have been aligned on what the future looks like. But I don't know if you remember this, but we sat down pretty early in COVID together, and we said, here's all the reasons why -- how I need to see Blend evolve for us to really consider using your Truist and -- and I remember that conversation very well. And some of the things you told us was make this more composable, make this more API-driven. How do you think of that -- those kinds of concepts is fitting into your world of serving these seamless experiences for your customers? And why does that help you so much? Why was that so important you to mention to me a few years ago?

Yes. It's awesome that you actually listen to the stuff that I say sometimes [indiscernible] it doesn't always happen, but I appreciate it. And I think it is important. And when we think about architecture in today's world with technology and how it continuously evolves, architecture matters. And in the past, if you look at how a lot of the legacy technologies work, a lot of the banking world just continue to kind of take off-the-shelf technologies and start plugging one into the next. The next thing you know, you have this giant Frankenstein, if you would, of architecture. And when you think about the evolution of client experience and how those needs change, you want to be able to have those composable blocks where you can continuously be building and never finished, right? So if there's a new service or a new capability that your clients need, you want the ability to give them that service or that particular experience in the way that they need it. And if you've got to rewrite entire platforms all the time because you haven't been able to create that modularity in what you're doing, then the speed in which you can deliver those experiences to the clients, it won't keep up with what their expectations are. And so when we talked, we talked a lot about APIs, we talked a lot about being able to create that modularity in the architecture. We also talked a lot about being able to own the client experience, right, and differentiate. And we believe that where we want to build is where we can create a competitive advantage and really change the client experience versus we want to consume things that are more commoditized, but in an elegant way that allows us to integrate faster than we might have been able to do with software companies and others in the past.

Now let's talk about some of the -- whether it's internal legacy infrastructure that you all have built 10, 20, 30 years ago or for other software companies. What's -- I guess, what is it that's kept those things from being able to get you there? Is it the lack of flexibility? Is it written in old languages? And how do you work around those or those things you just hand to replace over time?

Yes. I think a little bit of all of the above. In some cases, it could be just the age of the technology itself, right? And when you end up doing a lot of times, if you can't replace it, you end up wrapping a lot of things around it, which creates more complexity when you look at your architecture and then how do you get to where you want to go in the future. So in a lot of cases, a lot of this technology that has aged over time has been wrapped multiple times by different layers of integration, by different bolt-on accessories or capabilities and it becomes really hard to unwind when it comes to actually moving in the new direction. So -- in some cases, we're able to look at the layer stack differently and focus maybe more on a channel experience before we get to that system of record. In some cases, we've been able to extract data in different ways and create different data stores and other things. So that way, we lessen the dependency on those downstream system of records that might be a little bit older in the stack. Talent is another thing, right? Our talent wants to work on the stuff that is available to them today, right? I mean it's difficult to find COBOL programmers these days. They don't hang out quite often looking for jobs. So I think it's a mixture of all the things, but at the end of the day, it really comes back down to strategy and the experience that we're trying to drive for our clients and making sure that we can unravel some of this stuff without creating unnecessary interruption to them because that's the other part. The -- a lot of this legacy tech also runs and it's run for a long time. So as you're making that change, you can't push that risk to your client.

Yes. I mean it's definitely -- these systems -- some of these systems are so complex. They almost got to take a piecemeal approach to going back to the blocks you mentioned, a piecemeal approach to shifting them or changing them or minimizing them or whatever it may be. You did get an early look at Composable Origination. And you've got nearly like a Blend Builder, Blend Builder platform a few months ago. I guess, what were your first impressions? And I know that I was just an early look and it wasn't a full deep dive, but what were your first expression? What excited you about and what things were still unanswered open questions for you?

My first impression was, "Oh my gosh, he actually listened to me, which was great." I mean, going back to that conversation we had, it was -- a lot of people -- we work with a lot of companies, Nima, and I'd say a lot of people talk about being API-first or having APIs. And then when you really start to unravel it and really look at it, they don't really have APIs, right? It's not as advertised. And I think you guys did a really nice job of creating kind of composable blocks, if you would, of services and APIs and elegantly putting them together and being able to not just string together workflow that makes sense, but also giving the client the ability to configure that workflow and make changes that are necessary for them. So again, we don't necessarily want to reinvent all the wheels, which with what you guys have built, you're putting together those services in really nice ways that allow consumers to consume. But at the same time, we don't want to be just like everybody else. So if we want to make some changes, if we want to add some additional services or some differences in the workflows, then that ultimately would allow us to do so.

Yes. And I think, speed, we're the first users of this platform. We've been using it for a year. So internally, building some of our out-of-the-box templates and blocks on that platform and see as something that's just -- it's just dramatically different when the changes don't all need to be coded and there's a lot of reusable components that are easy to drag and drop between product lines and have the work. I mean, just the speed -- I feel like speed is everything for this industry, and it's so hard to move fast with legacy technology.

Speed is the new currency, right? I mean when you think about why do teams change and why did people go from methodology changes of long waterfall cycles to smaller agile sprints and incremental type of approaches that way? I mean it's because they need to work faster because, again, clients -- the clients don't care how long it takes you to do something. They just want it. So -- and not only speed of that, but also what I liked about the platform is the fact that it didn't feel like a super complex platform that you couldn't even have your legal or your risk or your compliance or your business folks side by side and be able to visually understand the steps and how it actually works. So I feel like the ability to translate from the technical components, which there's a lot of tech underlying that platform, into a way that's consumable for all the different parties in the bank to provide that experience to clients was pretty impressive. So I think it's a great start that I commend you guys for looking at a different way to approach it.

Yes, I appreciate that. And yes, it's a few years in the making and still a long way to go. Maybe just to close out, what -- how do you think this could be used, whether it's within your company or in the industry more broadly in areas that we haven't even thought about yet or areas that we thought about maybe talk to you about, but you're just still not sure yet?

Yes. I mean, I think -- and we've talked a little bit about this. I think as you kind of understand the different channel experiences and the different types of users. And so not just the development communities and the application development teams that would be working with a platform like this. But who are the actual users, whether you're in operations or you're in sales or front office, back office, middle office and making sure that you've got the ability to really engage and integrate with those all the different roles. I think that's something that we're -- you've talked about, I think we're interested in learning more about. But also, I would just say the more that we get comfortable with understanding how to consume some of these types of services and be able to put the user experience that's ours on top of it and be able to get comfortable with the integration levels. If we think that it can do a lot of the things that we might be able to do, I think it's a huge accelerator in our ability to speed up our process but also start to blur the lines between what was traditional application intake with that origination platform. And it really helps understand that you really need the traditional app plus the origination platform to the servicing? Or can you start to blur the lines there? And I think that could be a massive disruptor to how we thought about software in this space before.

Yes. I'll tell you who doesn't care about app versus origination platform as your clients. They're probably -- they're like, "I just want the product, you can help me get the product as fast as you can. That's what matters to me."

That's right. It doesn't matter if it's 1 application or 30 applications, they just want it. So it will be -- we're looking forward to learning more and continuing to see the product continues to evolve and we'll see what's possible together.

Well, thank you so much, Ken, and thank you for the great partnership. It's been amazing working with you all. And it's great to hear your perspective on Composable Origination and Blend Builder and what those -- that concept and that platform can mean for the industry and for you all to Truist. So it's great to hear that from you, and we look forward to the continued partnership. So with that, I'll turn it over to Cassandra.

Thanks, Ken and Nima. It's great to hear your enthusiasm for Composable Origination and the Blend Builder platform. And thank you all for joining us today. We appreciate your engagement and questions throughout the event. We'll have the on-demand recording available and deliver it to all who registered. You can expect that in your inbox shortly. If you're interested in learning more about the Blend Builder platform and enabling composable origination for your organization, reach out to your account team or visit us at blend.com. We'll also be at CBA Live in Las Vegas in just a few weeks, March 27 to 29. If you're attending, come see us at Booth #1. And don't forget to check out our on-stage demos and breakout sessions where we'll dive deeper into composable origination and the Blend Builder platform. Thanks again for joining us. Have a great day.