The finance industry – in the shape of day to day banking - has led in digital transformation and innovation with apps and instant transactions. The mortgage sector has been behind the curve for some time, but innovators and disruptors believe technology can bring significant change, especially for the customer’s homebuying experience.
The property industry faces several challenges, including customers not fully understanding the homebuying journey, poor collaboration between industry stakeholders and the sheer volume of information and length of time that buying or selling a house requires. An estimated one-third of all of property sales fall through, failures which in many cases could be avoided through upfront information sharing between customers, sellers and other stakeholders.
The information gap
The decision to buy a home is among the most momentous a person or family can make in their lifetime, yet there is a shocking lack of support for those embarking on this journey. First-time buyers, especially, have no idea where to start, nor whom to trust. Technology has much to offer the homebuying process, but the customer journey can’t get going unless people – buyers and sellers – know where to begin.
The buying and selling property information guide (BASPI), ‘a dataset designed to be the “one source of truth” when it comes to upfront information about a property’, comprises over 200 essential pieces of information that potential buyers and sellers need to know. For example, before visiting property portals to view potential homes, buyers should engage a broker – even a few years before they intend to purchase. Before advertising their houses for sale, sellers should engage a legal company as their first step. The Property Trust Framework aims to make BASPI more accessible to the public as well as industry players.
Another major obstacle lies in the number of times a customer must submit the same information to various bodies. At every stage, multiple stakeholders demand identity verification and checks on personal, financial and credit backgrounds. For the customer, this is time-consuming, confusing and frustrating.
Many lenders would like to be able to make instant mortgage decisions, but a lack of information to support these decisions earlier in the customer journey makes this difficult. Better collaboration is needed in the lender-broker relationship to address customer needs and experience – both groups need education to better understand customer perspective.
A quality mortgage service should hold the customer’s hand throughout the process, providing accurate and consistent advice – and stakeholders throughout the industry need to work on this. Communication is key: homebuyers often find themselves in the dark as to the progress of their customer journey, from mortgage application to offer status and beyond – even once an offer has been accepted, homebuyers don’t receive regular updates.
How tech can improve the customer journey
Only around 65% of households in England own their homes – and the younger the demographic, the lower this percentage. Ninety-six percent of households have access to the internet and 76% of people with a bank account use online banking. In other words, the UK is primed for a suite of technological solutions that will speed up processes and shorten the customer journey from inception to purchase.
From an efficiency perspective, AI-driven decision making enables faster and more accurate underwriting, combining multiple data sources whilst freeing people in the mortgage industry to review exception cases where human intervention is needed. Robotic process automation (RPA) automates people-intensive and/or complex processes that could take weeks or months if tackled manually, while optical character recognition (OCR) automatically scans and extracts data from evidential documents to eliminate the need for manual review. Property intelligence provides a robust resource of upfront data to help lending decisions and reduce ‘drop outs’.
On the customer information side, blockchain provides evidence of asset ownership and traceability, speeding up the conveyancing process. This technology makes available a common dataset, including verified identity, to which all stakeholders have secure access. It can facilitate informed decision-making and removes the need for customers to provide key information multiple times to multiple people.
Open data can pre-verify both the customer and the property through APIs, while digital identity verification provides electronic proof of the customer’s identity that can be referred to throughout the customer journey. E-signatures are used with confidence in many contractual areas – for agreements with utilities and broadband providers, etc. This technology could easily be applied to the mortgage process.
Lastly, open banking makes it quick and easy to verify income and shed light on complex situations, but it is not well-used in the mortgage journey. While this has been a tough sell, educating customers to a comfort level at which they are prepared to share their data, has meant that open banking registration surpassed 5 million users earlier this year.
Clearly, greater collaboration is needed in the mortgage space, but technology has the potential to vastly improve customer experience.