In a world where technology has disrupted everything, the process of applying for a mortgage still hasn’t changed. Peter Veash talks about what traditional banks need to do before disruptors get there first in an article for Finance Direct.
In Mortgages for Millennials he observes “Yes, some disruptor banking brands including digital-only, technology-led banks with trendy names like Atom and Starling have spiced up the current account market. But for the most part, mortgages have refused to move with the digital times. Those more nimble challenger banks have used their technology advantage to make the customer experience more appealing, but it seems that the whole mortgage experience is such a complex trail of paper and credit scores that they haven’t wanted to touch it at all.”
Outlining the time-consuming on and offline process necessarily undertaken by every potential mortgage customer, even the most digitally-savvy, he says that the traditional players need to take this opportunity while it lasts and prepare for disruption before the mortgage equivalent of Uber enter the field. “Banks still expect digital savvy consumers, who rely heavily on comparison websites and peer-to-peer recommendations, to search by mortgage rate and then make an in-branch appointment and endure a time-heavy meeting in which their spending habits are scrutinised and outdated profile information is most likely used to assess their ability to repay a loan. This experience could hardly be described as ‘effortless’, and in the worst case scenario might even leave such a bad taste in consumers’ mouths that they go running elsewhere.”
Finding appropriate products, tracking mortgage applications, managing your account online and help with the physical process of moving house are all cited by consumers as pain points that could be lessened with the help of digital technology.
High street banks are in a strong position because they have customer relationships built on long-established trust and loyalty – crucial for people entering into a mortgage agreement and likely to be particularly important to nervous first-time buyers. Peter comments “If they decided to invest in making the mortgage application process a cleaner, smoother more customer-focused digital experience, their loyal customer-base would be far more likely to forgive any initial upheaval for a longer-term high street banking solution.”
This in turn has benefits for the banks themselves, freeing up call centres and speeding up processes. He finishes by saying that taking this approach “will certainly put them on a more secure footing when the inevitable disruption from challenger banking brands finally comes”.
There’s already been inroads from online mortgage advisor Trussle, who are working with Zoopla to launch a digital service that joins up finding a mortgage and finding a home, calculating what buyers can afford and then using that information to power future searches. With Atom becoming the first challenger bank to push into the mortgage market in December 2016, traditional banks clearly need to act fast on updating their mortgage processes.
Read more from Peter Veash on the digital demands of millennials and the transformation of the banking industry in Tech is now tap, swoosh or touch.
BIO’s Chief Strategy Officer Justin Small talks about the possibilities for the estate agent of the future in his blog post The Disruption of the Real Estate Agent: Extending the Service Footprint with Digital.
The BIO Agency has worked with Lloyds Banking Group and TSB on their mortgage transformation programmes.