Post-2008, many smart lenders, funders and servicers were quick to adapt to the “specialist” opportunity, and the many guises and directions this could take. Here in the present day, the consumers that fit into the specialist category are becoming the majority.
In the unsecured credit markets, meanwhile, there exists a similar cohort of lenders, funders and servicers - who have succeeded by methods less unfamiliar than we might think.
Here are five examples of how the mortgage sector can borrow best practice from our neighbours in the unsecured lending space, and successfully apply those aspects to secured credit.
And finally, this opens up the possibility to make servicing more personal – as more and more customers expect the ability to view their accounts and make adjustments via their own self service portals, this is naturally becoming standard in the mortgage space too.
As specialist lending becomes mainstream, old-fashioned set-and-forget 30-year products are being outnumbered by short and mid-term loans such as bridging, developer and second charge.
Any system that was built to handle unsecured loans will therefore inherently have the functionality to cater for much more fast-moving and fast-changing mortgages. A bridging loan for example can be a 9-month product, but within that time a lot can happen.
Everybody in mortgages is talking about this frictionless process: the ability to offer a loan that goes straight through automatically without any intervention.
And even in specialist mortgage lending, if your system is geared up to deliver 80% of your business by automation, this frees up more resource to handle the 20% that needs it.
Today’s customer is slowly but surely becoming more aware and savvier about finances, and with interest rates where they are now, people take more of a concern in managing their own affairs.
As online and mobile banking become ever more intelligent and interwoven in people’s lives, people in turn are becoming more attentive and information hungry. They want a real-time dashboard and the ability to manage and configure their accounts themselves, without needing to wait on hold for a helpline.
This is already the norm with current accounts, car loans, credit cards and so on – and inevitably mortgages will follow. Mortgage customers will want to consume more information and will expect the same sort of self-service portals as a minimum.
This is by no means bad news for the industry. By giving mortgage customers more ability to see and do more of the basic functions for themselves, we can reduce a lender’s operational overhead, again freeing them up to focus on the more complex cases that require human intervention.
And with contact centres struggling so much post-Covid, there has never been a more important time to shift to a better way.
Given, for example, the ever-increasing likelihood that a home buyer will either be self-employed or contracting, our definition of good and bad risk has had to change rapidly.
Of course a mobile handset and a house purchase are not the same, but the customer often is.