How can mortgages be improved? FintechOS hosted an elite panel at FintechOS Annual Summit 2020 to explore the technology behind consumer property lending. All five agreed on one thing: when it comes to the digital journey, mortgages need a radical rethink.
Automation, digitisation, and throwing helpful new services into the mix will reshape the mortgage experience. The goal is to create an experience which is streamlined and stress free, and enriched with so many additional benefits that the relationship becomes “sticky” over the long term.
For the lenders that get it right this is a once-in-a-lifetime opportunity to dominate the market.
Automation is the first step. Simon McGuinness, head of customer and broker experience at Aldermore Bank, a specialist mortgage lender, sees a variety of easy wins: “You can automate identity and verification. We are still guilty at the moment of checking paper documents for things like income and expenditure verification.”
Self-service needs to be offered as standard. “At the moment we have very little self-service capability,” says McGuinness. “Which is a source of frustration for us as a business. Irrespective of whether a customer wants to amend a direct debit, or wants a conversation with us because they are struggling to pay their mortgage, at the moment they have no option but to call us. And clearly from the customer perspective and from our perspective, one of those conversations has much more value from a relationship perspective. So if we can digitise a lot of those lower end queries and questions in a digital interface not only will that relieve operational pressure from our perspective, it will enhance the customer experience from their perspective too.”
The concept of the mortgage journey can be expanded. All sorts of additional services can be included in a deal. Niall Corrigan, partner and head of digital at EY, suggests: “Look at add-ons. Maybe you could give customers a utility bundle. I remember moving into a house where I didn’t have Wifi for a week, it felt like I was devoid of oxygen. So how do you give those little nuggets to the customer?”
Advice is a key part of this expansion. Corrigan explains: “We’re seeing customers yearning for advice. They’ve gone into a world which is very digitised and very self-service. The question is, how do you digitally enable the journey with advice at the centre of that journey?”
Ionut Encescu, head of customer value at First Bank, is an evangelist for broadening the offering of banks to include all sorts of house-purchase related services. “The customer needs to go seamlessly from finding her dream house to obtaining finance and getting professional advice from an evaluator,” says Encescu. The assistance extends into the after sales process: “After buying the house, we need to integrate with merchants who help her make that house her own, such as furniture and construction companies.”
Encescu stresses these extra services must be included on the same platform. “You need to have one orchestration platform, that is paramount. Unless you have a great and intuitive business process management platform you clearly need to go to a new one. I would focus on one with great UX. This is where First Bank works with FintechOS, and this is what we appreciate about your platform.”
Another key area for improving the mortgage journey is re-engineering the way brokers work with lenders. Aldermoore’s McGuinness says the current fragmentation of platforms and tools used by brokers and lenders is holding up improvements. He explains: “The challenge for brokers is managing cases across multiple lenders, all of whom have different requirements. They’re trying to manage cases across multiple platforms, and that’s all really, really complicated.” Actions are duplicated. “They’re capturing information in multiple systems, rekeying lots of information, having to supply lots of documents, and it’s time consuming and cumbersome.”
A single framework across multiple lenders and brokers would be a huge leap forward. “It’s a little bit chicken and egg,” said McGuinness. “Lenders are reluctant to jump on board until there’s mass broker adoption. And brokers are reluctant to jump on board until there are a lot of lenders in that space.”
Broker-lender technology is a serious issue. Levon Khanikyan, vice-president of risk at Idea Bank, reveals around half of all mortgages at his organisation are sold via brokers. A strength of Idea Bank is to give mortgage brokers the same tools and technology as in-house staff, meaning there is a level playing field between the two when offering an Idea Bank mortgage. This transparency inspires confidence in the bank amongst brokers. “It’s played a positive role in expanding our sales outreach,” says Khanikyan.
The priority in mortgage transformation? You’ll only find out by asking the customers, advises EY’s Corrigan. “You’ve got to flip and become customer centric,” he says. “If you really understand your customers you might find that, actually, they don’t mind uploading documents. You might be very surprised by what you hear from the customers.”
It is clear, the next five years will see dramatic changes in mortgages. Our panel identify multiple touchpoints in need of improvement. This includes digitising the notary interaction (“my dream” says First Bank’s Ionut Encescu) and digitisation and integration of all documents until workflows are seamless.
We may see the total reinvention of the mortgage journey, re-conceived as a sequence of digital events. EY’s Corrigan explains his vision:
“I think every single element of the value chain is going to turn into a digital building block. And each of those will become a contract or a digital block that will create a data interoperability. That will lead to disintermediation. Innovation is going to drive a full digital transformation of mortgages end to end, which will therefore open it up. And I think that is the key thing that we’re going to see over the next year if we were all sitting here in five years time and that didn’t happen I’ll take it on the chin. But I do believe that’s where this is all going.”
The likely result will be hyper-personalised mortgage offers, supported by a dazzling spectrum of additional services, from furniture and decorators, to builders and utility packages. And naturally, the core offering will be seriously fast.
Aldermore’s McGuinness believes: “Fast forward five years and because of access to data, and transformations, you’ll get a mortgage approval within hours of application.”
Turning these lofty goals into reality is going to be a defining challenge for the mortgage industry.
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