Impact of Method Implementation

• Grew total pre-approved HELOC offer volume by 3% 

• Boosted HELOC loan value by 11% for direct pay borrowers

• Saw ~2x higher funded conversion for direct repayment borrowers 

• Increased follow-on lending by 50%

Before integrating Method, our underwriting approach was intentionally conservative. While we knew that many borrowers used Figure to reduce their debt load, we were limited in our ability to verify that their existing debts were actually being repaid—so we couldn’t approve them based on that intent alone. As a result, those borrowers didn’t receive credit for those efforts in our underwriting models.

Incorporating Method into our application changed that. As a result, we increased eligibility, larger average loan sizes, stronger conversion, and ultimately better outcomes for both borrowers, Figure, and our investors.

– Brad Mears, Director of Product Management at Figure

About Figure

Figure Technology Solutions (Figure) was established in 2018. It is a blockchain-based technology platform enhancing efficiency and transparency in financial services. Figure was founded by former SoFi executives who noticed mortgage customers were taking out unsecured high-interest personal loans for debt consolidation when they could instead tap into their home equity to consolidate debt at a lower cost of capital. Figure built a digitally native home equity line of credit (HELOC) origination solution to address this need and help lenders do the same.

Today, Figure is the largest non-bank originator of HELOCs. The Company embeds its HELOC into more than 150 partners including lenders, home builders, banks, credit unions, and other financing institutions and also offers its products directly to consumers. With Figure, homeowners can receive approval for a HELOC in as fast as five minutes and receive funding in as few as five days.

Figure Connect, the company’s blockchain-based marketplace, connects loan originators and buyers, creating the first highly liquid private capital marketplace for loans. It’s powered by the Provenance Blockchain, which onboards all of Figure’s loans, and is the world’s largest originator of Real World Assets.

Challenge

In 2021, after the onset of the Covid-19 pandemic, Figure executives saw a growing opportunity to help more users pay down high-interest debt. Figure needed a seamless way to access accurate liability data, especially for unsecured loans and high-interest credit cards where credit reporting data could be up to 30 days stale, in order to provide prequalified offers sooner. By providing offers immediately after authentication, Figure gave itself and its private label business partners a competitive edge.

Figure also wanted to integrate a digital debt repayment option into its user flows and loan decisioning. If an applicant committed to paying down debt with their loan proceeds, Figure could reduce their debt-to-income (DTI) ratio, increasing loan eligibility. Second, Figure could guarantee the debt was paid off through Method’s repayment rails. Partnering helped Figure avoid the time and cost of standing up a PCI compliant debt repayment operation.

Figure needed a comprehensive, turnkey solution to address several critical needs:

• Surfacing near real-time balances for liabilities including unsecured debt

• Building repayment commitments into loan decisioning and presenting offers early in the application process

• Initiating debt repayment within seconds of offer acceptance

• Maintaining a seamless application flow without adding friction

• Avoiding operational and compliance overhead associating with managing payments

Figure conducted a thorough due diligence process before selecting a partner. While several API providers could address one or two key priorities, they required applicants to manually input account details—adding friction and reducing conversion rates. Method was the only provider that could deliver all the functionality Figure required. 

We were considering traditional players as well as newer fintechs, but Method gave us an all-encompassing suite of products that we could use for instantaneous liability identification and low friction repayment, all with minimal technical integration lift. 

– Brad Mears, Director of Product Management at Figure

Solution

Figure seamlessly integrated Method’s APIs into its user flows. Method’s intuitive documentation helped Figure engineers easily incorporate direct repayments. The first integration phase was completed in 3 months, and Figure can now onboard its partners in less than a week. The integration caused a dramatic, immediate impact. Today, 9% of all funded HELOC volume includes at least 1 direct creditor repayment. 

Grew volume of all HELOC offers by 3%

With Intellidebt, powered by Method, Figure applicants can pre-select debts for payoff, before Figure calculates their DTI. This has materially increased the number of eligible applicants without changing Figure’s underwriting criteria. Repayment certainty also allows Figure to issue loans with a higher lien position. Since integrating Method’s APIs, Figure’s total volume of pre-approved HELOC offers has increased by 3%.

Increased median direct pay HELOC value by 11%

Borrowers who choose to reduce their DTI with debt repayment can unlock more favorable loan terms including lower interest rates, reduced fees, and smaller monthly payments. Some applicants also qualify for higher loan amounts. The median HELOC value of Intellidebt borrowers is 11% higher than baseline.

Higher direct pay funded conversion rates by 2X

Expanded eligibility and larger, more personalized offers have contributed to higher conversion rates for Figure. Figure presents eligible users with compelling offers by the second screen of the application flow, as soon as they share their name and phone number–a feat only achievable with Method. Users see exactly how much they’ll save each month by paying off specific debts, like a credit card balance or personal loan. The funded conversion rate for Intellidebt HELOCs is 2x higher than baseline.

Substantially lower delinquency rate in direct repayment opt-in vintages

Figure has reduced risk by lowering DTI, improving their lien position, and reducing a borrower’s loan to value (LTV) ratio. Customers who opted into Intellidebt saw increased relative performance, specifically in regards to lower delinquency rate than those originated without Intellidebt. Intellidebt HELOCs often have a higher value on secondary markets due to relatively low risk values.

Increased follow-on lending by 50% 

With debt paydown, borrowers can avail of lower rates due to improved credit scores and macroeconomics factors. This has increased lifetime value, allowing Figure  to target refinances of the HELOCs they service. Figure has increased follow-on lending by 50% after integration Method’s APIs. 

Eliminating in-house payment operations for disbursements

Figure has also streamlined operations and reduced compliance overhead by leveraging Method’s direct repayment functionality. Method manages the sponsor bank relationship, obviates the need for PCI compliance, and handles payment operations. Method also adheres to all federal GLBA and state privacy regulations.

Serving 33 partners via white label business 

Figure began as a business-to-consumer lender. In 2021, as interest rates rose, the company began offering a white label HELOC origination solution to financial institutions. This business, which now represents 60% of loan volume, continues to grow. One key differentiating factor has been higher conversion rates driven by prequalified offers.

Today, Figure’s extensive network of partners leverage Intellidebt to help their customers qualify for HELOCs and to provide more favorable loan terms. Loan officers use Figure to help customers refinance high-interest HELOCs. Partners can go live with Figure’s Intellidebt in less than 1 week. 

What’s next for Figure?

Since launch Figure has enabled more than 3,500 users to perform direct repayments, facilitating $90M in high interest rate debt consolidations. With the release of Intellidebt 4.0. Figure adds the ability to pay off other mortgages and serve as a full cash-out refi alternative. With these new features, borrowers can now pay off and consolidate more types of debt, including secured mortgages, credit cards, personal loans, auto loans, and home improvement loans.