Equity release was already becoming a prevalent option for later life financial security. Figures from the Equity Release Council reveal that £1.06bn of property wealth was accessed via equity release products in Q1 2020 alone, up by 14% from £936m a year earlier. While we don’t yet know the full extent of COVID-19’s economic impact, low interest rates, coupled with a global recession, could see demand rise quickly in the near term as parents seek to provide financial support to family, look to secure themselves against future instability, or seek to replenish lost value in their pensions.
Lenders have a real opportunity to differentiate themselves within the equity release market, first by recognising this demand, and second, by ensuring they have the technologies and processes in place to create value for both new and existing customers. Gearing up now will also help overcome the challenges the market will face in a post-COVID-19 world.
Encumbered by legacy systems, they need to think strategically about how they can bridge between their existing infrastructure and the ability to deliver new, consumer-centric service offerings and products, all while ensuring they are keeping on top of operating costs. Integrating API-led technology into their existing systems will enable mortgage providers to simplify these complexities through increased process automation.
In the immediate term, adopting technologies that enable digital services and operations helps to fill the gap imposed by social distancing, which has made traditional face-to-face advice model that has long underpinned the mortgage industry redundant. With equity release advice likely to move to online or telephone-based services, working with a partner that can provide an outsourced loan servicing offering, combining specialist, experienced personnel, FCA compliant processes and an open technology platform will enable lenders to upscale capacity and ensure they are providing their customers with the support they need from the outset.
Granting customers access to digital self-service environments, built on API-led technology, where they can manage their own accounts will create both internal efficiencies for lenders and give customers added reassurance that they are in control. Such platforms can also support family members in managing the repayment of equity release following a death, where lenders may need to be flexible to accommodate difficult circumstances.
They can also ready themselves to launch new, consumer-centric services enabled by artificial intelligence (AI) and open banking data.
To support an anticipated increased market for equity release, lenders should begin reviewing their existing technology today, and look to specialist partners who can tailor agile solutions quickly to help them meet evolving market needs. The right partner will not only enable mortgage providers to service their later life customers but will also arm them with the tools they need to get ahead of the curve and transform their operations across their entire mortgage portfolio.