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‘Traditional banking might not be the right path for us’: Rocket CEO

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Vice-Chairman and CEO of Rocket Companies Jay Farner joins Yahoo Finance to discuss the future of the housing market, the company’s expansion into auto, and how Biden’s new vaccination policy could affect employees of Rocket Companies.

Video Transcript

BRIAN SOZZI: Rocket Companies has gotten into the red hot market for vehicle buying, launching online marketplace Rocket Auto. Let's dive in here with Rocket Company's Vice Chairman and CEO, Jay Farner. Jay, good to see you again here. So what brings you into the auto market game?

JAY FARNER: Yeah, good morning and thanks for having me. We're super excited about Rocket Auto. Remember, as the largest mortgage lender in the country, we have the opportunity to speak to millions of clients a month about their finances. And one of the things that we found is that, once people are refinancing their home or thinking about getting a mortgage, they are two or three times more likely to be buying an automobile.

And so it makes perfect sense to offer a marketplace where we can help our clients find those automobiles. And we're already selling thousands of cars a week with Rocket Auto.

JULIE HYMAN: Hey Jay, it's Julie here. To be clear, you guys don't offer auto loans, right? So I have to cop to being a little confused by this offering. Because it does seem like, are you planning to go into auto loans? It seems like it's sort of in a different direction for you guys.

JAY FARNER: Well, look, our premise is that we remove friction in complicated transactions. 2 and 1/2 million clients right now pay their mortgage to Rocket Mortgage. And we've helped them with real estate and mortgage for over 26 years. But one of those other complicated transactions is the purchase of an automobile. And so we already know our clients. We know their credit. We know their income. We know the type of cars that they like.

And so to partner with over 300 dealerships across the country and find the right car for them and remove the friction is really our mission. And then, of course, you've just mentioned financing. We've got our Rocket Loans business. And that's really a great streamlined white-labeled business, or the opportunity to be white-labeled, and so we can use that technology, that underwriting technology, for things like solar loans, personal loans, and, of course, maybe in the future, auto loans.

So making sure that we can differentiate ourselves by creating this marketplace and streamlining the experience was our first step. And then who knows where we can take it from here.

BRIAN CHEUNG: So Jay, it's Brian Cheung here. It sounds like there's kind of this ecosystem that you're building over there at Rocket Companies then in that case. So I guess, right now, is this kind of introductory marketplace a way to kind of aggregate data on the types of customers that you have to offer them other types of products that might be helpful? And I guess the next natural question is, why not just get a bank charter I guess, at some point, given how many places I guess you're in when it comes to the financial services space?

JAY FARNER: Yeah, that's a great question. And you're thinking about it exactly right. This is truly an ecosystem. We have this opportunity where we speak to clients day in and day out about the most complicated part of living, in many cases, which is home ownership. And so we build great trust there, as you're aware of our JD Power awards year in and year out. And so how do we grow that ecosystem? And we've done that with personal lending. We've done that with real estate. We're doing that with auto. We've announced solar as well. And we'll continue to do that.

Now, when I think about banking, I actually kind of think the other way, as we watch DeFi and all of the exciting things that are happening in that space. I wonder where banking is going. And I think of Rocket as a brand that people trust. I think of us as a cloud force, a sales force, a technology platform, great marketing, and how can we leverage those things to help remove the friction. I think banking will continue to shift and change.

And we're uniquely positioned to be that business that sits between a client and their needs and providing the service, but I think we'll watch and see where the future is headed. Traditional banking may not be the right path, at least for us.

BRIAN SOZZI: Jay, speaking of friction, the housing shortage, it continues in this country. It gets worse. Do you see any ending in sight, and why is this happening?

JAY FARNER: Well, we've had incredibly low interest rates. We've had a shift as people think about their work life balance and spending more time at home. And so we've seen great demand in the purchase market. In fact, we had our best quarter ever in Q2. We're set to become the largest purchase lender in the country in the next 24 months. And so we don't see that demand ending anytime soon. We do see inventory getting a little bit better. July was a bit better.

And we're also launching a variety of programs with Rocket Homes, our real estate arm, to help our clients have access to more inventory. So I think inventory will continue to increase slightly, as we get into the fourth quarter and to Q1. That'll make things a bit better for purchase. But purchase demand is going to remain strong here as we get into 2022.

JULIE HYMAN: Jay, I'm switching gears for a moment, apologies. I want to ask you about some news of day, which is President Biden's announcement last night that the federal government is going to seek to mandate that companies with over 100 employees require their employees to be vaccinated. And that's just spurring me to ask different CEOs, we're going to ask everybody today, what they're doing on the vaccination front. I know you guys have a few more than 100 employees. So what is your current policy, and does it have to change?

JAY FARNER: Well, we've been very fortunate. We've got over 26,000 team members across the United States, many here in Detroit, Michigan. And they have been incredible over the last 18 months or so, really getting everybody working from home the minute the pandemic started and continuing to grow our business. As you know, we had our largest year ever in 2020. And we're looking to have even a bigger year in 2021.

And what we've learned is that we can perform in an excellent manner, regardless of what's happening, whether people are working from home or working in the office. Now, for us and our culture, we want people in the office as much as possible. It encourages collaboration. And so we already rolled out a process very similar to what President Biden has asked for a few weeks ago. So our team members are either vaccinated or testing weekly before they come in the office.

So we're kind of ahead of the curve and people are accustomed to that. And so we'll continue to have people in and out of the office to make sure that we're supporting our culture but also keeping people safe. And it's working great. So, for us, kind of steady as she goes, based on where we've already been this summer.

BRIAN SOZZI: Good to hear it. Rocket Companies Vice chairman and CEO, Jay Farner, always good to see you. Have a great weekend.

JAY FARNER: You bet. Thanks for having me.