Author: David Webber
75% of surveyed consumers want to manage their mortgage online, and 56% want to apply for a mortgage online. The mortgage market is ripe for a digital upgrade, and here’s what it should look like…
The last 15 years has seen a revolution in our services and utilities. Seemingly everything has moved online, from bank accounts, tax returns and house insurance to wills, phone bills and meter readings.
But as this tide of modernity has rolled over our lives there has been one notable hold-out – our mortgages.
Mortgage application is an antiquated process
The process of finding a mortgage has all the trappings of a 21st century service – there are comparison sites, best buy tables and calculators galore. But that stops as soon as you make your choice. Applying for a mortgage today still looks much as it did when telephones were still attached to walls with cords.
Applicants enter a world of ‘wet’ signatures and paper documents where solicitors write letters and data capture means having a brown envelope large enough to hold all the papers.
Mortgage applications are slow, linear and filled with long pauses as each stage of the process completes its round trip through the mail.
Why it should still be this way when everything else has changed? Maybe financial service providers were prudently waiting for the Mortgage Market Review to complete, or perhaps their old habits just die harder.
Whatever the reason, it’s impossible to imagine a modern online retailer like Amazon or Apple designing a process like this. That’s our yardstick because those are the kind of companies setting users’ expectations for how things should work.
The further the industry falls behind that yardstick the more inviting this gap becomes for disruptive new entrants.
Users are ready for things to improve. In our recent survey of building society and mutual customers we found that 75% of respondents wanted to manage their mortgage online and 56% told us they wanted to apply for it online.
So what should an online mortgage look like? I think there are four key features:
1. Go paperless
In a world where financial institutions store and transfer all of our data electronically, waiting on the exchange of documents by post is an anachronism. The two parties concerned – my bank and my mortgage provider – should need nothing more from me than my permission to talk.
Perhaps we will have to wait for the UK government’s midata program to mature before pure, hands-off, electronic data sharing is common but in the meantime I’ll settle for being able to use my phone camera to photograph my documents so I can send them instantly.
And if hard copies really are required, take a leaf out of the online car insurance playbook and make them a condition of final acceptance.
I still have to provide physical proof of no claims when I buy car insurance but I can send it after I’m insured so it doesn’t hold up the application process.
2. Provide self-service progress tracking
A large proportion of the calls made to mortgage lenders are made by people trying to find out what’s happening with their application.
An online mortgage that gave applicants a way to see where they are in the mortgage process, how much of the process is complete and what they need to do next would reduce both customers’ anxiety and the costs of administration.
3. Offer low cost, low friction communications
Providers should also look to pre-empt incoming calls by actively updating applicants with frequent, bite-sized push notifications, emails, text messages or tweets, particularly when the status of the application changes.
When users do have questions for their provider they should be offered online chat as an alternative to using the phone. Online chat reduces the cost of serving customers and gives customers a way to ask questions quickly, without having to find a phone, find a number to call, working their way through a phone menu and then answering a number of security questions.
4. Account management
Once the application is finished mortgage holders who applied online will expect their digital relationship to continue. Customers should be able to view statements, change their address or payment date and even re-mortgage online.
This would make customers lives easier, reduce administration costs and open up a raft of opportunities for analytics and automated workflows.
Progress is inevitable
One thing is for sure; sooner or later somebody is going to do this. That somebody is going to price their mortgage cheaper and get to the top of the best buy tables, and when they get there their automated processes will allow them to cope with the volume it brings.
The only question is, will it be a traditional mortgage lender or an aggressor from outside the industry who steps in to meet customer demand?
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