Everyone with a mortgage has experienced the frustration of needing to fill in the same information multiple times, often wondering why the various providers can’t just communicate with each other.
With the rise of digital mortgage brokers like Habito and Trussle, that question has a solution: to not use the traditional route if you want to cut out the hassle of filling in the same information for everyone.
But estate agents provide a very valuable link into getting a mortgage – after all, they sell over 95% of homes in the UK.
So how can estate agents make the process consumers experience more modern – and claim a larger share of the estimated £1bn of annual mortgage procurement fees?
Step in Eligible, a new proptech company offering to make any estate agent offer a Habito level of service.
Eligible co-founder Rameez Zafar says their solution called MortgageWatch starts by plugging into an estate agent’s existing customer data to “very quickly determine if there’s an opportunity for a customer to save money – including if they are eligible for the product”.
Zafar states the product is “in beta with several large networks” of mortgage introducers. [EYE heard a rumour that LSL are involved in the beta trial, but neither Zafar or his PR would confirm this.]
With a background in trading ‘structured credit’ for HSBC, Zafar comes at this problem from a technical standpoint of efficiency and speed of service.
Of the company’s origin, Zafar said its central philosophy “is about auto-filling and removing layers of data-gathering”.
On the importance of agents in this, he says: “The journey begins with the property – the mortgage is just a financial product that sits alongside and is something to which people attribute a lot of stress and paperwork.”
He adds: “Seamless integration is good for the entire industry.”
It means, he says, that a broker can dispense with re-quizzing for basic information and “focus on adding value”.
Zafar started the interview by referencing how consumers are “now accustomed to Uber and checking bank statements online” but that people still want to talk to people because “mortgages are a big deal”.
With £1bn of revenue to compete for, embracing software that empowers agents and brokers, Eligible could be what people actually want from the mortgage industry.
“The following piece about Eligible appeared in CEO Today on 12th February 2018. Click here to view the original article.”
The technology behind client retention
In virtually all industries, repeat business typically represents the highest quality business at the lowest “customer acquisition cost”. The mortgage industry is no different, where in many instances, the highest margin business is advising existing clients on remortgaging – because it’s those clients that cost the least to acquire and require the least amount of time and effort to complete.
Yet the institutional and systematic support for retaining – or, even better, maintaining – these clients’ relationships is often lacking. Technology, and a new breed of service providers to the mortgage industry, is developing quickly to overhaul the means of retaining these existing high-value clients.
Current house price trends are increasing the importance of remortgages
The importance of remortgaging business to advisers and lenders is being accentuated by the current house price dynamic, particularly in London and the Southeast., Remortgages have become a bigger part of the mortgage market as house price appreciation has slowed and the number of transactions has fallen. In fact, in the first quarter of this year, remortgages overtook “house buyers” as the largest category of borrowers.
Rising interest rates may prove a catalyst to remortgage
At the same time, interest rates remain near record lows, meaning many borrowers would benefit from remortgaging – although the tables may be turning…
Recent indications from the Bank of England suggest that it will increase its Base Rate before year end. Swap rates, upon which mortgages rates are typically based, have already increased substantially to reflect this: 5-year swap rates have moved from 0.5% to 0.75% over the past two months . Rates remain extremely low by historical standards, but they have begun to move higher – providing a catalyst for borrowers to remortgage now.
As interest rates have kept falling in recent years, despite repeated proclamations that they are “as low as they can go”, consumers have perhaps felt that it is their interest to wait to remortgage. However, if the current uptick in interest rates continues and particularly if it is spurred on by a high-profile move by the Bank of England to increase its Base Rate, consumers may see rising rates as a catalyst to remortgage “before it’s too late”. In short, the friction created by changing interest rates is likely to spur demand for remortgages.
The increasing impact of technology
The conclusion from all of this is something that the mortgage industry – indeed many industries – has always intuitively known: customer retention is important!
The good news is that technology, when deployed properly, can provide transformative support to client retention. From ad-hoc digital engagement that keeps an existing client “warm” to systematic, timely prompts so advisors know when to proactively re-engage customers that would benefit from remortgaging, technology can help efficiently harness this pool of high-quality, repeat customers.
Many of these approaches draw on lessons learned in similar industries, like financial advisors or wealth managers, including some of the tools associated with robo-advice. “Fintech” service providers now entering the mortgage industry are focused on digitizing parts of the industry that will benefit from the efficiency gains of increased automation.
But it’s not just about providing customer management services to advisers and lenders. Technology is here to improve the customer journey: to make the interactions with the providers of mortgages more impactful – and simpler. As customers utilize better, more digital experiences in other industries, they will come to demand of it of mortgage arrangers and providers. The mortgage industry must meet that demand, or incumbents will be challenged by new entrants that will.
The human adviser will remain at the heart of the relationship
One-to-one advice and a tailored product offering based on a true understanding of a client’s needs are best achieved under the direction of a real person. The technology is here to make that person’s job far more efficient than it has been in the past.
By utilizing the appropriate technology, advisors and lenders are able to craft an appropriate hybrid approach: one that encompasses both the efficiency gains of technology and the unique benefits of the human touch.