4 ways tech is disrupting the mortgage industry


Written by

Luke Medlock

State of play

Disruption. It might sound negative but in tech it’s anything but.

It’s kind of like saying, ‘Out with the old. In with the new’.

You’ve probably seen the headlines; colourful new fintech startups challenging the status quo and staking their claim to a piece of the pie. They do things differently and use tech to help them provide a more attractive service to customers.

The mortgage industry has been slower than some to adopt new technology but things are changing. Global upheaval and changing consumer trends caused by the Covid-19 pandemic have only increased the growth of fintech innovation in this area.

The housing market is set for a good year

The old ‘bricks and mortar’ isn’t going anywhere and seems as healthy an investment as ever.

The housing market is set to flourish in a post pandemic world with many lenders predicting a surge in prices, as demand for homes (and home working) increases.

It’s going to be essential for companies offering mortgages to integrate tech into their service. And we’re not just talking about having a nice website. After all, in the age we live in, that’s essential. The true disruptors in this field are using tech and design at every stage of the mortgage process.

Here’s how it’s making a difference.

1. Self-service is removing barriers

Amazon has changed the way we shop and the biggest universal shift in retail could be summarised as a ‘greater ease of access to products’.

This has already happened with consumer goods and has only become more relevant during the pandemic. Well, now it’s the turn of financial services and digital banking apps to make it easier for the customer to make a buying decision.

First steps online

Most buying decisions made by millennials (who account for the biggest chunk of homebuyers) are made online first. It’s no different with mortgages.

Millennials will gravitate to companies that have a strong online presence because it allows them to make an informed decision at their own pace, without having to talk to an advisor.

Modern fintech websites will provide a way for the customer to find out what they need to know and onboard themselves.

If you’re a first-time buyer, the chances are you probably feel out of your depth, so there’s an added level of anxiety that can come with walking into a shop to discuss a mortgage.

Sure, most mortgage brokers are probably quite happy to answer any questions you have, but the consumer is going to feel much more comfortable browsing online first.

Chatbots get the conversation going

You’ve probably seen more and more of these floating around and they’re pretty much a guarantee for fintech companies.

That’s because chatbots can be a great lead generation tool for the vendor and provide the customer with an easier option than picking up the phone. But it’s not just about having them sitting there. Automating helpful and realistic responses and thinking extensively about making the customer journey easy, are key to getting the most out of this tech.

Easy to use digital onboarding

Getting a mortgage is never a quick process, regardless of how streamlined it can be. It’s highly possible that borrowers will come back to your site a number of times before actually going to the next stage.

Providing a simple to use and well designed onboarding process which remembers them and their information is essential for a good banking customer experience.

Rather than a bank clerk having to sift through personal data in order to repeat previous conversations you’ve already had, the best sites will allow users to save and come back later, resurfacing exactly where they left off.

2. Disqualifying leads saves time

Providing customers with easy-to-use self-service also has a major benefit for the lender or broker.

Time is money and if you can help visitors make an informed decision about their needs before they get in touch then you free up time to spend with paying customers.

This could be done through a real time questionnaire on your website or app, that establishes whether the borrower is actually in a position to take out a mortgage right now.

From the front page of the Tembo website, visitors can find out whether the product is for them and start their journey (or not).

Digital verification tools

Even if you’re already in contact with the borrower, there are still ways of speeding up the process.

Establishing whether someone is in a position to take on a mortgage used to involve a large amount of paperwork. This would need to be looked over and verified before the lender could establish whether or not to go ahead.

But tools like this one from Fannie Mae have been used for a while now to make this bit simpler. Now customer details can be passed on without the need for large amounts of paperwork and borrowers can be qualified much quicker than before.

As time goes on more tools like this will be used at each stage of the process to make it less time consuming and paper heavy.

3. Helping the borrower save money

Something that never fails to make companies stand out is saving the customer money. Because, you know, when is that not a selling point? But how is fintech helping the mortgage industry to do this?

SaaS and tiered payment plans

The increased use of the SaaS (Software as a Service) model is down to a number of things. One of the main reasons for its popularity are the tiered payment plans, making services more affordable.

The customer can choose a plan that suits them and the vendor has a regular source of guaranteed income.

The mortgage industry may not be selling software as such but some lending platforms have certainly adopted the tiered payment plans that SaaS has made popular. Disruptor SoFi offer a number of fixed payment plans that will suit different borrowers.

Middlemen reduce fees for the customer

A lot of these platforms, including Mojo (one of our clients 🙌) don’t charge fees for using their service.

Whereas traditional lenders have a fee for helping the customer get a mortgage, these brokers get paid by the lender to bring them business. As such this cost is removed from the customer.

As an added bonus, because the broker’s fees are coming from the lenders, there is an extra drive for them to get the mortgage across the line, so it’s a win-win.

New startups that free up funds for buyers

All sorts of problems are being solved by innovative and nifty startups these days.

For some people a barrier to getting on the property ladder is that their parents have invested in property but can’t use this investment to help their children.

Tembo is a really interesting fintech startup that helps people in this situation free up the finances needed to put down a deposit on a house. Check out their amazingly designed and easy to use product (we would say that though, as we designed it 😉) to find out how they do this.

4. Back-end automation making your life easier

It’s not all about the front-end customer experience though. Tech is having a big impact in the office too.

Tools like those we’ve mentioned above that help with qualification and underwriting are just some of the things out there, helping mortgage companies to do their job better and provide a more streamlined and efficient service.

It doesn’t matter how snazzy your website looks, if the process of actually getting your customers a mortgage is a drag, then it’s not going to make you very popular.

Document processing, data verification, remote notarization. All of these things can be streamlined with a dedicated tech stack.

Another important feature that goes hand in hand with digital onboarding and the like is the ability to deal with people’s personal data safely and securely. If you’re handling all of this you need to have a system in place that keeps this secure… Which isn’t a filing cabinet.

Change is here… Are you on board?

Fintech is booming as more people head online to sort their finances, manage their wealth and get loans.

Mortgages are no different and although there are some things that can’t and ideally won’t be done remotely (seeing the house for one), there are major areas where tech is changing the way people buy houses.

The question is what are you doing to make it easier for your customers to take out a mortgage with you?

Maybe you need some game changing banking or financial UX design? We can help with that. Hit us up if you want to know how.