Investment banking firm Jeffrey saying a number of blockchain and crypto IPOs could hit the markets over the next few years, which could lead to a $1 trillion sector.
The Defi Trap integration is continuing to accelerate.
And we are keeping a close eye on the nation's capital with clarity at momentum remaining stalled with the Senate on recess at the same time sentiment has shifted back to fear as crisis see weakness while joining me live here at the New York Stock Exchange is Michael Tannenbaum, CEO of Figure.
Great to have you here.
Thank you so much for.
Joining me.
Thank you for having me.
Well, we did get a slew of US economic data this morning and we're keeping an eye on what this means for borrowing costs out there, especially as the Federal Reserve digests what's happening in terms of inflation.
But with your work at Figger Technology, tell us what you're working on and what this means.
So our marketplace is one that actually provides a network of around 380 partners like banks, fintechs that use our technology to originate mortgage assets and sell those into an embedded capital market.
And so of course there is macroeconomic variables that affect that and What we're doing is helping our partners lower costs, so our platform actually uses blockchain and automation to lower the cost of originating a mortgage from around 12,000 industry average to 1000.
And so because of that we are a partner that people turn to in times of robust, robust economic news and also in times of More challenging news.
So we actually have been growing throughout a number of different interest rate cycles and economic cycles, and we feel really well positioned about about the state of the market and the housing market today and are confident that we'll continue to add that value to our partners regardless of the environment.
So tell us about the how figure.
How are you actually doing this?
So we, as I mentioned, um, when we were started, we thought a lot about the world of nonbanks and how they use the capital market to sell loans and all of the pain and the checking and the confirmation that goes into that process, and we actually were able to cut out 80% of third party diligence.
Expenses when people buy and sell loans because normally when when when a company sells a loan they have to pay someone to go and check that loan and then refute any findings, right?
And so we actually eliminate, cut that all out with our blockchain based capital market because you can actually put the attributes of the loan on chains.
So I think that's one example, but another really interesting example, Remy, is around fraud.
And you've probably seen in the last couple of months, the biggest way people have been losing money in this space is through fraud.
Tricolor, MFS, First Brands, these were big examples where people were double pledging and double selling loans and lenders lost money.
And if you put loans on a blockchain, you actually track the loan as it moves throughout the capital market and you prevent that.
These are two examples where we use our technology to lower costs for partners, and that is one of the reasons why people are continuing to flock to us in this environment and actually when we when we had earnings about 2 weeks ago we talked about 90% top line growth and at 50% margin and the reason we're able to do that is because of this value that we're providing.
Yes, and Michael, we are talking about a space that is very heavy on legacy paperwork here.
So tell us about the technology you're rolling out and what this means for the industry.
Totally.
If you've gotten a mortgage before, you know it is a painful process.
Papers everywhere, people hounding you sign this doc, sign that doc, running around, and we've cut all that out and we've essentially focused.
And the reason we're able to do that is because we're both a technology and the capital market that work together.
So the technology, uh, without the capital market, it, it, it doesn't really solve any of the problems, and that's one of the reasons you see today that the cost to originate a mortgage, even with all this software, is $12,000.
Loans used to be done on pen and paper.
Now they're done with all this software, and that hasn't really changed anything.
It's still very.
And so we had to think through the process and kind of cut all this out and that's one of the reasons why we're really excited about AI as well, because AI is the next technology wave after software.
Software didn't necessarily lower these costs and if you just throw agents at a bad process, that's not going to lower costs either.
You need to reconsider how the loans are manufactured and you mentioned artificial intelligence.
We know we're all paying attention to this from both a technology perspective as well as an investment theme here, but when it comes to regulation, especially when we're talking about blockchain as well as AI, what are you watching in the near term?
Well, of course there's a Clarity Act, and that is, I think, something that will really catalyze the industry, particularly for someone like Fire, where we see we have a really strong track record of.
Partnering with traditional finance companies, banks, credit unions, fintechs that are not on chain and bringing them on chain, we're actually the market leader in real world asset tokenization.
We have 75% market share, so we've done a great job of partnering with people that are not in the bank, uh, in the blockchain ecosystem and bringing them on chain.
I think clarity will be a major catalyst for more people to come and do that.
And to get to your question around the intersection of blockchain and AI.
We have this phrase that AI is the brain, but blockchain is the nervous system, and what we mean by that, and it's getting back to what I was mentioning on cost to originate, is that if you just have more and more agents doing more and more things, you're just increasing costs.
You're not necessarily solving a problem and you have slop, as they say, and so we're really focused on verified inputs and using agents that are working with verified inputs on chain to deliver actionable low cost.
Efficient results and less than 30 seconds here.
So what are you doing to scale, especially on the heels of your earnings report?
We are investing majorly in specifically AI technology that is adopting third party assets and allowing them to take what would have been complicated schemas, Excel spreadsheets, simplify them, and allowing people to come as they are and get access to our marketplace.
Well, Michael, we will have to leave it there for today, but thank you so much for joining us.
I appreciate your time and thank you so much for your perspective.
Thank you, Remy.
Thank you.
