Dealing with a bank is often a tedious experience -- something anyone who has ever bought a house knows firsthand. A lot of paperwork, phone calls, emails, and people are involved in you finally getting the keys to your new place. It's also a very dated process, which is what Blend Labs (BLND -3.70%) is trying to fix.

The company's cloud-based software helps banks bring their old-fashioned infrastructure into the digital age and improve the customer experience. It's starting with mortgages, but it's not stopping there. Here are three reasons why Blend should be on your radar.

1. Blend does business with significant mortgage players

Blend's client pool includes many high-profile mortgage lenders, including Wells Fargo, U.S. Bank, and Opendoor. Overall, 31 of the top 100 financial services firms in the U.S. are Blend customers. These large lenders have massive resources that they could invest in developing in-house solutions to improve their mortgage businesses, yet they've picked Blend's platform instead -- a strong indication about the quality of its software.

Couple reviewing their finances on their banking app.

Image Source: Getty Images.

These large banks are helping Blend capture market share quickly in the mortgage space. In just two years, the share of U.S. mortgages processed on Blend's platform has grown from 4.5% to 13.5%, and another 10% of the market is processed by institutions that have signed contracts with Blend that have not yet launched.

Blend recently reported its third-quarter results; it grew platform revenue 26% year over year to $35.1 million. The company estimates that industry-wide, mortgage volumes were down 25% year over year. Its growth in a down market is a positive sign of how well Blend is executing; had the mortgage market been more robust, the company's growth could have been more impressive.

2. Growth opportunities through new services

Blend's strong adoption by mortgage lenders could set it up for cross-selling opportunities as it introduces non-mortgage-related add-ons to its platform. The company already boasts a net revenue retention rate of 149%, which shows that banks are increasing their spending with Blend once becoming customers.

The company is currently concentrated in the mortgage business, but has multiple levers to pull that could induce customers to spend more on its platform. For example, it just launched Blend Income, a tool to quickly verify the incomes of a bank's customers; more than 50 of Blend's clients have already signed up for it.

Blend already has products for consumer banking services like vehicle loans, credit cards, and account deposits. And just as it is building new integrations for its mortgage segment, it can introduce new integrations for these other services over time.

One could think of Blend's software as a new operating system for old-fashioned banks. Once an institution builds its consumer-facing systems on top of Blend's platform, it will have considerable incentive to stick with it. It would only make sense for banks to continue implementing new products as Blend develops them, as long as the platform keeps delivering tools that improve its customers' experience. Investors will want to keep an eye on Blend's net revenue retention rate to see that it stays consistent as it launches new products.

3. The stock is a bargain

This software-as-a-service (SaaS) company went public earlier this year, and the general market turbulence among growth stocks has helped drive it well below its initial public offering price of $18 per share. Analysts estimate Blend's 2021 revenue will be $366 million. Based on that, the stock is trading at a price-to-sales (P/S) ratio of just under 5.

That's a very low valuation compared to other SaaS stocks out there, some of which trade at P/S ratios of 50 or higher. One factor that could be impacting Blend's share price is the potential for the mortgage market to slow down further due to rising interest rates and already-sky-high home prices. Analysts are currently forecasting that Blend's revenue will be flat year over year in 2022.

But because Blend is gobbling up market share in the mortgage market, I see these headwinds as temporary. In the end, the need for mortgages will persist, and when loan demand grows again, Blend could see outsize gains. Therefore, for long-term investors who have the patience to wait for the mortgage market to rebound, this could be a good time to open a position in Blend.