Financial Services

Getting banks smarter with mortgages

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Leading a revolution in the mortgage market

Choosing a mortgage is one of the most important financial decisions most consumers ever make. It can also be a difficult one to get right. The days of the 20-year mortgage taken out with the family bank is receding; customers are shopping around for the best deals, both at inception and renewal. But the marketplace has not kept pace with technological change. Applying for a mortgage is still overly complex, time-consuming and paperwork-heavy.

The mortgage process is ripe for revolution, and the technology is there to make it happen. The smartest banks are looking to the future, finding ways to meet customers on their terms.

New market entrants have sprung up to offer an alternative to financially aware, digitally savvy customers. In theory, all consumers should be able to quickly renegotiate their mortgage terms every few years, just like they do with their broadband and car insurance. But alluring as this sounds, many aren’t quite ready to put their faith in untested competitors; the familiarity of an established brand with a building on the high street goes a long way when we’re making big financial commitments. The large percentage of mortgages that are still completed using a broker shows that customers are reassured by the presence of an “expert”.

Most established banks have already ventured online with their mortgage processes. But the FCA’s Mortgages Market Study (2018) found that there are “limitations to the effectiveness” of current tools available to help consumers choose a mortgage; it proposes that the development of new and innovative tools could provide consumers with opportunities to better compare products, get support and apply for a mortgage.

With this in mind, large banks must seize the opportunity to provide efficient, delightful mortgage experiences that appeal to digital natives and long-standing customers alike.

Banks should take a tiered approach, as follows.

1. Create a frictionless human experience

Experience shows that customers still like the personal touch when it comes to mortgages. For those who visit a branch in person, the face-to-face process should be simple, seamless and informative. Advisers should be on hand with tablets to capture and pull up information that gets them quickly to the next stage.

2. Create a beautiful digital experience

Online search and application processes for mortgages are currently patchy, at best. Users have to enter the same details repeatedly, jump around to find answers to simple questions and navigate conflicting sources of advice. Banks should prioritise the user experience above all else and take a design-led approach to their application portals. They should create slick, beautiful online experiences that allow the customer to confidently complete the process in one short sitting, or easily return to the application later.

3. Use AI as a mortgages concierge

A logical extension to the beautiful digital experience is the AI-enabled chat agent. Where customers need help, explanations or just some reassurance, digital assistants and artificial “avatar” advisors can step in as expert companions, handing off smoothly to a human representative when necessary. Beyond this, the entire renewal process could be done through a conversation with a virtual assistant that captures customer details, confirms eligibility and values properties in real time.

4. Move it onto the blockchain

From deciding to move to collecting a new set of keys, the whole process of buying and selling a house is cumbersome, drawn-out and risk-ridden. A host of professionals, from estate agents to solicitors, must be selected and instructed to handle individual parts of it, at great cost. It all descends into a black-out period in which no one knows what’s happening. During the black-out, essentially, everyone is checking each other’s numbers and generating stacks of paperwork in the process. If every piece of information could be entered onto a distributed ledger and validated through a smarter contract, the process would be secure, transparent to all and, crucially, fast.

By using new technology to provide a more customer-centric mortgage process, banks will ensure their own relevance and profitability in the future marketplace. If they fail to act, more radical digital disruptors will pick off their customers and leave them with nothing to offer but capital. Banks must leverage the trust they currently have among consumers to shake off this competition and lead the mortgage revolution.

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IBM has deep industry expertise and practical experience in the mortgage space. Wherever you are on your journey, we can partner with you to guide strategic planning, map out customer journeys, implement new technology – and everything in between. Talk to us at or visit our website.

Associate Partner - iX Financial Services

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