ARTICLE
Are your mortgages welcoming to today's consumers?
How lenders can win in the age of customer experience
22 October 2024
The way mortgage lenders interact with their customers has dramatically changed.
Driven by convenience and choice, potential homebuyers are using websites and apps to find and secure their loans. To stay competitive, mortgage providers must deliver more personalised products and smoother digital experiences - and that means modernising their core lending platform.
For most people, a mortgage is the biggest financial commitment they’ll ever make. The process of purchasing a home often fills them with excitement. However, too much friction in the lender’s mortgage process can cause unnecessary stress and anxiety.
As more borrowers use digital tools to research and secure their mortgages, they expect fast, efficient and seamless experiences. Delays, over-complexity, or lack of relevant products can cause them to reconsider their options. That’s why modernising mortgage infrastructure and processes is crucial for any lender looking to stay competitive.
Modernisation must start and end with the customer
Over the past decade, many mortgage providers have embarked on core modernisation journeys to reduce manual processes, handle increased regulation and to improve their operational performance. These efforts are often driven by a focus on efficiency and cost-control – but to truly succeed, modernisation must keep the customer at its heart.
Building a great experience is especially vital in hyper-competitive mortgage markets like the United Kingdom, Ireland, Australia and New Zealand. Although home ownership is a key aspect of national identity and an aspiration for most individuals in these countries, there are continuous challenges related to:
- Housing affordability, lack of supply and excessive demand.
- Fluctuating interest rates which require variable rate mortgages that can keep up with these changes or else fixed-rate options to help customers stabilise their budgets.
- Increased legislation and regulatory oversight which is putting even more pressure on lenders to ensure responsible practices and consumer protection.
While the industry pivots from product-centric strategies to a more customer-centric approach, traditional banks and non-bank lenders now face constant pressure to innovate.
Enhancing customer experience through technology
To prevent churn and maintain growth, lenders must target high-growth and underserved segments, meeting customer needs, exceeding borrowers’ expectations and raising the bar on satisfaction.
The future of mortgage lending lies in digital transformation, automation, and intelligent processes. With innovations like APIs, AI, analytics and cloud technology, lenders can offer more customised solutions to a broader audience while making the experience simpler and more rewarding for consumers, brokers, and lenders alike.
These tools are fast becoming the differentiators between lenders that are thriving and those struggling to keep up with changing markets and consumer behaviours.
The latest trends in mortgage technology and how they help deliver better experiences:
Improved experience
Artificial Intelligence
Helps to automate processes, removing the burden of document processing and simplifying the UX and CX.
Greater choice
Open APIs
Contribute to efficiency by allowing parallel processing and use of best in class vendors, to add value through additional services.
Increased personalisation
Data analytics
Determines behaviours, optimises solutions, and boosts conversion by offering the right products and services for specific audiences.
Better service delivery
Cloud infrastructure
Provides a low cost, fast and hyper-efficient processing environment at scale to offer more competitive and seamless services for the customer.
The industry is moving to self-service and open finance
Digital-savvy consumers are increasingly demanding self-service mortgage options. They no longer want to visit a bank branch in person for every interaction. Technology is transforming their expectations, allowing for more seamless access to mortgage advisors and advice via digital and mobile channels.
Open banking has already transformed financial services - allowing regulated websites and apps access to transaction data from bank accounts and payment services. The same step-change is happening in mortgaging. Using open APIs, third-party developers can now build applications and services for mortgage institutions. This not only speeds up processes but also eliminates bias by providing more accurate, real-time data for onboarding, management, and customisation.
For borrowers, this type of ‘open finance’ ecosystem means easy-to-use tools that help them make informed decisions, regardless of their financial literacy. By simply logging into an app, it’s now possible to manage all aspects of their financial lives, including their mortgage.
Report
Revolutionise mortgage lending with cloud-based tools
How switching your lending core to the cloud can help you build innovative new mortgage lending solutions without compromising financial performance, outpacing skills or incurring high infrastructure costs.
Cloud platforms like Mambu are at the forefront of the technological shift
With an API-first architecture, Mambu helps drive external processes and supports open finance-style mortgage services that enhance the end-user experience.
Our resource-lite, flexible cloud banking platform ensures back-end efficiency and accessibility, making digital lending infrastructure and mobile apps more user-friendly for mortgage servicing.
With Mambu, mortgage lenders can connect to multiple best-of-breed providers over the cloud, through a single API. This helps them enrich their offerings, integrating added value services without additional complexity or heavy lifting. At the same time, seamless orchestration effectively breaks down data silos, enables faster internal data sharing and enhances the overall customer journey.
Building a strategic roadmap to modernisation
For lenders looking to accelerate their strategic modernisation, there are three key factors to proactively boost success:
- Invest in proven innovation: Be an advocate for strategic investments in innovative technologies and partnerships that can streamline your servicing operations. Look for solutions providers like Mambu that have recognised experience in migrating core lending platforms and that can expand your service ecosystem with the right connections.
- Build a customer-centric culture: Use training and development to encourage the adoption of a customer-centric culture within the organisation. Use your borrowers as the starting and end point for every functional, product or strategic decision.
- Measure continuously: Ensure you have key performance indicators (KPIs) and use these to regularly measure customer experience and operational efficiency, to track improvements and identify any gaps e.g. application approval times and rates, average origination value, loan profitability, etc. Where possible benchmark these with your competitors to ensure targets are realistic and that you are performing competitively.
As the mortgage industry continues to evolve, technology holds the key to delivering more personalised, efficient, and customer-centric experiences. Embracing digital transformation and focusing on customer needs, will help mortgage providers to thrive in today’s competitive market. By building your back-end lending core in the cloud with Mambu, it’s possible to raise front-end engagement and deliver a more welcoming service – whatever the channel.
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