This interview is part of our new Blockchain In Real Estate series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and real estate.
In this interview we speak with June Ou, COO and Co-founder of Figure, to understand how her company is using blockchain to transform the real estate business, and what the future of the industry holds.
1. What’s the story behind Figure? Why and how did you begin?
JO: In late 2017, my husband Mike and I began a deep dive into blockchain and its ability to disrupt financial services. Aside from speed and security, blockchain also could eliminate rent-seeking activities that are so pervasive in financial services.
The strategy we landed on was to build a permissioned, public blockchain that would serve as a registry, ledger and exchange. His experience in financial services suggested it would take the industry years to fully embrace this new technology. The way to accelerate that adoption was to put the blockchain into production ASAP. So he decided to build a consumer-facing financial services company, and I focused on developing the technology platform.
We started with HELOCs as it was the perfect combination of a large and growing customer base, a product that no one had innovated on in decades, and a market that is expected to enjoy tailwinds as home prices climb along with interest rates.
We pulled together a fantastic group of co-founders, raised over $130m, and launched in October 2018. Our customers are raving about our HELOC (4.8 stars on Trustpilot), which features approvals in as little as 5 minutes and funding in as little as 5 days. The entire process takes place online, including the e-notary session. Our current monthly volumes of over $78MM make us one of the largest originators of HELOCs in the country.
2. Please describe your use case and how Figure uses blockchain:
JO: The traditional process for originating, servicing, securitizing, and selling home equity debt (primarily mortgages and HELOCs) is complicated, slow, and expensive. Remember 2008, when one of the problems in the financial crash was when bankers had a really hard time figuring out exactly what was in the mortgage products known as Collateralized Debt Obligations (CDOs)? That was primarily because data for each underlying mortgage was siloed in databases and across paper documents. So finding information about, and assessing the quality of, any one specific underlying mortgage was a very slow and cumbersome process. Now imagine our system, where every piece of documentation for our HELOCs is stored on Provenance.io, the blockchain we built for Figure. The underwriting and performance data for every loan can be readily accessed in real time and servicing is automated via smart contracts. We have already proven that we can substantially improve speed, heighten loan visibility, and reduce costs in just the originating, servicing, and financing activities. Customers and partners are coming on board quickly. Just a few weeks ago, we announced a $1b financing facility with Jefferies Group and WSFS Institutional Services.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
JO: We fund HELOCs every day for homeowners looking to access their home equity for uses such as debt consolidation, home renovation, and paying off student loans. In some cases, the homeowners have substantial self-employed income but have trouble getting approved by traditional banks. In virtually all cases, our customers know all too well the tedious 30-60 day process that banks use when underwriting home equity loans. You’re pulling together tax statements, pay stubs, and more. Some banks require you to fax all that—who uses a fax anymore? With Figure, we provide underwriting decisions in 5 minutes, and provide funding in as little as 5 days, and the entire process is online. One husband and wife recently told us—and we get this sort of feedback all the time—“We completed [the e-notary session] in a few minutes and got off the call and looked at each other and said, ok, what are we missing here?” Another customer who also gave us a 5-star review asked us, “why isn’t the rest of my life this easy?” On the institutional side, our blockchain provides speed, liquidity, and transparency of home-equity-backed loans that substantially reduces costs and increases value.
Washington, DC, experience the fastest HELOC on the planet! See how easy the application process is: pic.twitter.com/fBgAKE8uO3
— AskFigure (@AskFigure) March 13, 2019
4. What other blockchain use cases in real estate are you excited about?
JO: It is our mission to help homeowners achieve their life goals by providing fresh ways to understand their finances and enabling simpler, faster solutions for borrowing, investing, and growing their money. So home equity lending is just the start.
Our newest product is an innovative service for homeowners called Figure Home Lease Back. Figure buys your home, and rents it back to you for as long as you like. You get the cash upfront—to invest, pay off bills, put a down payment on a future home, or save for retirement. Figure takes care of the ongoing costs of homeownership including property taxes, homeowners’ insurance, and maintenance.
5. Where will Figure be in five years?
JO: Five years is a long time! We will continue executing our plan to be a modern, full-service, consumer-facing financial institution. And Provenance will become the core utility for the financial industry, saving institutions and consumers billions of dollars while improving liquidity and transparency of markets.