Originally published in the spring edition of Society Matters magazine
By Stuart Anderson, Commercial Officer, Target Group
Target recently launched The Mortgage Hub, a fully digitalised mortgage platform which aims to transform the mortgage application process. Stuart Anderson discusses how customer needs have evolved and continue to do so - and the need for lenders to lead the way.
Technology has already radically redefined the way we access financial services. Many providers are innovating and offering products and services to suit the needs and demands of the modern consumer.
Let's take a look at the emerging trends that are driving the evolution in lending.
Digitisation v digitalisation
When it comes to mortgages, there are many parts of the process that have been successfully digitised, from mortgage comparison sites to online application forms that can give a decision in principle in minutes. The technology is out there. It has been for many years. But its potential is not yet being maximised.
Digital solutions have been developed to address specific challenges but there has never been an end-to-end, fully digitalised solution. As a result, lenders have relied on slow, outdated systems. Today’s consumers are expecting instant decisions and paperless processes. Where this isn’t available, customers face a poorer and longer drawn-out customer experience.
Agility enabling success
To look at the mortgage process from start to finish is daunting. An agile and efficient way of taking on such a project is to componentise it. By breaking down the whole lifecycle into parts means that lenders can approach digitalisation in a lower risk and capital-light way. They can test solutions in a live environment, without interfering with legacy systems, ensuring good levels of resilience. This is what we’ve done with The Mortgage Hub. We’ve built it using modules which can be switched in and out to suit, and to create a high-performing solution.
The emergence of platformification
Platformification is a growing trend in the sector, completely reshaping the industry and giving more choice to consumers, as well as much needed additional revenue streams for lenders. But, it’s also blurring the lines between financial services and the rest of the market, creating new and unwelcome competition, with retailers, fintechs and players like Amazon and Google all getting in on the act.
Lenders and their competitors are increasingly adopting this platformification model, providing a hub to allow third parties to access, integrate and share customer data. This is bringing much needed revenue by offering customers more than just traditional savings and lending services. Using insight into individual consumer behaviours, coupled with slick automation and a great customer experience, lenders will be able to generate revenue by offering relevant and timely products from a range of partners.
In the coming decade we expect a rapid evolution of a new ecosystem that enables consumers to benefit from an interconnected network of services, solutions and products delivered at the point of necessity rather than the point of request.
We expect this will be a very large ecosystem, with many participants creating a lending product, distributing that product and servicing customer needs. The most notable shift will be the complete destruction of the traditional one-to-one customer-to-lender relationship that has been steadily diluted in the past few decades. In its place we expect the formation of a much broader one-to-many relationship model.