The Online Financial Services Revolution
We all know that digital technology has re-written the way we interact with financial services providers in recent years. Indeed, the global fintech market was worth $127.66 bn in 2018 and is expected to rapidly grow.
Banking is arguably the financial services sector that is leading the way when it comes to digital interaction with customers. Wall Street giant, JP Morgan, has announced it is to launch a new digital bank in the UK, operating under its consumer brand, Chase. It will be the second major US lender to enter the UK retail banking market, since Goldman Sachs started offering Marcus-branded digital savings accounts in 2018, and joins the British digital upstarts including Monzo, Starling and Revolut, which are also disrupting the market away from the six largest lenders.
However, it is not just banking that has undergone an online revolution – far from it. Our ability to buy car, home and even pet insurance 24/7 from a certain group of online meercats, or from a moustachioed opera singer has removed the need to visit one of the traditional high-street insurance brokers that were once dotted throughout every town centre.
Even more niche financial services operators, such as motor finance providers, have made massive strides forward – it is now commonplace for customers to research, arrange finance and sign agreements fully remotely without even visiting a dealer.
Mortgage Lenders and Digital Functionality
You would think that mortgage lenders would be following this same pattern. After all, today’s homeowners are enjoying a boom time in the housing market. The return of 95% LTV mortgages, the government promoting stamp-duty holidays and excellent short-term fixed deals from two to five years in duration mean that buyers have the option to chop and change finance providers on a regular basis.
Surely mortgage lenders have recognised that a strong digital capability, making it easy for their customers to re-apply for further fixed deals, fully online, will enable them to keep their customers for a further period, thus preventing them from having to pay expensive commission to source brand new customers?
However, in an age of digital advancement, mortgage lenders are trailing far behind and are losing the battle when it comes to customer service levels.
When it comes to liaising with customers who are nearing the end of their fixed-term deals to “persuade” them to remain with them, many lenders are forced to use antiquated systems and pay staff to follow onerous, time-consuming procedures.
Such systems typically involve teams of customer services representatives speaking to the customers themselves on the telephone, or in person, for anything up to a couple of hours to go through all the options open to them. The lender will then usually put together various options and scenarios. There will then usually be a secondary call – again, often up to a couple of hours – to go through, again involving time and outlay from the provider.
Updating Old Systems
Legacy systems can remain the bugbear of many a business trying to figure out how to kick-start digital transformation. To overcome these complex and antiquated systems, and improve the experience for customers, lenders should look at modernising and updating their systems. Updating old technology can be a challenge as most of the legacy systems are extremely large and monolithic . However, it is a challenge that can be overcome – with excellent results.
Decoupling the front end with the backend system provides a great alternative to help drive change and innovation at pace. Having a modular and flexible digital experience platform which empowers the business to introduce new functionality against a change timeline the business requires.
Customers expectations are high due to the Amazon effect. Being able to start a journey on a mobile device is now expected and having instant support and guidance through a chatbot or direct contact to an agent is the new norm.
The winning benefits include increasing customer engagement and experience, providing next generation features such as biometric authentication and live chat, and helping customers to self-serve.
It is apparent that mortgage lenders have some way to go when it comes to their ability to digitally interact with their customers. There is, of course a caveat here, with evidence of work having already been undertaken, and some providers are indeed investing in technology as we speak. However, when it comes to matching the status quo achieved by banks and insurers, much effort still must be made.
For those concerned they are only starting their digital transformation today, it is still better than starting it tomorrow. Deploying digital mortgage functionality is not the vast and expensive undertaking it once was. Bespoke solutions can be created in as little as 8 weeks, resulting in a level of service that will propel the UK’s mortgage providers into the digital stratosphere.