The Voices of Mortgage Digitalisation

Alex Beavis
Head of Mortgage Products - Skipton Building Society

If you've attended one of the many excellent mortgage conferences recently, more likely than not you'll have heard about the 'digitalisation' of the mortgage industry. And rightly so.

Compared to other areas of financial services, much of the mortgage value chain remains securely anchored to the past. Whilst the relative size of the anchor, it’s dragging effect and the rustiness of the value chain varies considerably, few in our sector would disagree with the vast potential offered by digitalisation. However, listen close enough to the debate and you’ll soon discover that amidst the digital clamour, much can also be gathered from what remains unsaid, and more importantly, by the one voice conspicuous by its absence from debate.

Returning to the conference then. From incumbent lenders, you’re likely to have heard recognition for the need to change and an encouraging willingness to embrace new technology but tempered by the constraints of historic processes, legacy systems and established ways of working.

From the challengers, you’ll have heard lots about Agile methodologies, growing customer numbers, API capabilities and instant mortgage offers, but less about funding challenges, capital constraints and eyebrow raising P&L performance.

From the fintechs, the disruptors wanting a piece of the action, you’ll have heard (the often louder) claims of ‘seamless integration’, ‘paradigm shifts’, the Open Banking panacea and the general heralding of the ‘digital revolution’. Absent from these slides though are the significant investment costs, the impact on operational resilience and the quite real risk of ‘seamless API integration’ with the Betamax of the mortgage sector.

And then there’s the regulator. Whilst, you’re much less likely to have heard the cautious and measured tones of the regulator amidst the commotion above, the more studious out there with the time and inclination to read the Mortgage Market Study and subsequent consultation papers will note the encouraging nod towards ‘market-led solutions’ and the need to avoid ‘ the unintended consequences of intervention’ but also a clear and categorical call for ‘real progress’ and ‘comprehensive solutions’ for the market.

So what of the missing voice? If you haven’t guessed it by now, the point I’ve been labouring towards is the absence of genuine customer focus within the digitalisation debate. We’ve heard so much about process efficiencies, Execution Only, an integrated and multichannel experience, cost reductions, the benefits of Open Banking and use cases for robo-advice. But are these really what customers want? Have we even asked? Will the customers of tomorrow value the same things as those we serve today? After all, it’s an undeniable truth that customers only value speed, efficiency and a slick experience as a means to secure a mortgage – itself only really a necessity for the true goal of home ownership.

As an industry we need to remember from whence our bread is buttered. We can’t afford to be distracted by shiny user interfaces and distracting bells and whistles. Whilst the potential powers conferred by open banking, machine learning, API connectivity and block chain are undeniable, we need to remember, like Peter Parker, that with great power, comes great responsibility. As we unshackle the mortgage value chain from the anchor of the past, we need to be careful not to tie it around our own ankles but to secure firmly to the touchstone of consumer behaviours and demands. We need to think about people, not just processes. About needs, not just choices. About outcomes, and not just channels.

Ferdinand Porcshe once said that ‘the perfect race car crosses the finish line in first place and immediately falls into pieces’. Forget the customer in our own rush to realise the efficiencies of digitalisation and we risk the same outcome.