Blend’s $ 360 million IPO shows fintechs are ready to challenge financial status quo


[Editor’s note: This is a guest post from Dmytro Spilka. He is a tech and finance writer based in London. Founder of Solvid and Pridicto. His work has been published in The Diplomat,, IBM, Investment Week, FXStreet, Entrepreneur and FXEmpire.]

Mortgage software company Blend Labs launched its IPO last week, generating $ 360 million and a valuation of over $ 4 billion. While these numbers seem impressive for a fintech startup still under 10 years old, Blend’s ambitions show that the fintech ecosystem is stepping up its battle to overtake traditional financial institutions.

Blend has made available 20 million shares at a price of $ 18 each and is listed on the New York Stock Exchange under the symbol BLND.

As a fintech specializing in using big data and automation to leverage end-to-end customer journeys for mortgages and other banking products, Blend is widely recognized in the real estate world. The company was named one of HousingWire’s 2021 Tech 100 Laureates and has grown since its inception in 2012 to become a industry leader in mortgage technology.

Blend’s white-label technology is what powers mortgage applications through the websites of major banks like Wells Fargo and US Bank – its offering was also integrated with CoreLogic in 2019 for an easier level of access to credit. borrowers.

(Picture: Initiated)

As shown in Q3 2020 data released by Insider, global fintech M&A activity has accelerated rapidly over the past decade to reach $ 233.8 billion in 2019, or $ 100 billion. of dollars ahead of the next best previous year. 2020 was also shaping up to be a very successful year at the time of data collection despite the uncertainty of Covid-19 dominating the first and second quarters of the year.

This exponential growth in the fintech landscape is already sounding big changes in the world of finance. As technology continues to mature and adoption becomes a natural process, we might see fintechs questioning the financial status quo. In fact, the data suggests that such changes are already underway.

The FinTech revolution

Ahead of the Covid-19 pandemic, Experian released a fintech market trends report which found that competition in personal lending between traditional financial institutions and fintechs was increasing as fintech companies more than doubled their share of market during four years at 49.4% – against 22.4% in 2015.

The data also showed that the unsecured personal loan category has grown rapidly over the same period, with new lenders accounting for 1.3 million volumes in March 2019 compared to 656,000 in March 2015.

In addition, the pandemic has affected the investment habits of retail investors. According to Maxim Manturov, head of investment research at Freedom Finance Europe, “The pandemic has provided additional reasons for the growth of the retail investment market. To support the economy, most countries have adopted stimulating policies, which have brought interest rates on loans and deposits to historically low levels. As an alternative to low-interest deposits, many have started investing their savings in the stock markets, which saw big gains last year despite the foreclosure and declining production ”.

Due to the greater ability of fintech lending options to accommodate greater complexities in borrowing, companies can not only reduce direct costs, but also ease the industry’s reliance on rating. credit as the main determinant of lending. This allows borrowers who do not have a credit score or bad credit score to access personal loans, whether they are guaranteed by traditional lenders or more modern digital lending platforms.

While this doesn’t mean that credit rating standards have been wiped out completely, it does mean that fintechs have the potential to comfortably judge claims on their own. broader merits. Today’s typical fintech borrower has an Experian View score of 650 – compared to the 649 FICOs held by traditional bank borrowers. While a lender with good credit may want to consider the credit options available to them – such as approving credit card offers with 0% purchases and balance transfers – the level of flexibility that is available to them. fintechs being able to generate users on an individual basis is an important step towards a fairer financial ecosystem.

(Picture: In search of the alpha)

Alpha data search indicates that the fintech revolution isn’t just about personal loans, with a clear shift from traditional credit cards to digital wallets and buy-now-pay-later payment formats already underway.

By eliminating the use of credit cards and fostering the adoption of digital wallets that can be stored on smartphones, fintechs have opened the doors to a vast world of possibilities for the public. Rather than having to go to a bank or complete an online application to access a credit or debit card, the entire process can be wrapped on a mobile device.

Payment innovation has seen companies like PayPal and Stripe change the way people do business, shop, and benefit from online transactions. The growth rate of fintechs over the past decade has somewhat altered the business models of major payment companies to facilitate professional payment tools for merchants.

The innovation that drove Square’s growth focused on bringing a connected online payment experience into everyday life with a point-of-sale system, helping to facilitate the integration of merchants of the same. way than PayPal. Modern fintechs have also made it possible for merchants to engage in a simple back-end system to run their business, whether they are focusing on payment acceptance, email marketing, customer loyalty programs. or employee pay.

As the decade progresses, we’ll likely see payment solutions disappear. more and more internally so that businesses become their own Stripe or Paypal. This new era of fintech can pave the way for companies in various industries, making their own payments easier and saving money by paying third-party service providers. It can also create new opportunities for more innovative customer experience models.

This unleashes the full potential of digital finance and even encompasses the possibility of higher levels of cryptocurrency incorporation into modern banking and lending practices. Even if Blend’s $ 360 million IPO seems like a strong statement of intent – this is just the tip of the fintech iceberg.


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