The news that Lloyds bank, the UK’s largest mortgage provider, is to close 200 branches, is explained by the company as a reflection of changing customer behaviour. The rise of online banking and various other digital innovations are continuing to make a mark on the traditional landscape of financial services. Earlier this year the first ‘digital-only’ mortgage broker launched in the UK, and traditional players are increasingly looking to adapt to this digital model.
However, consumers still crave face-to-face interaction when making a long-term financial decision, and 50 per cent of customers still visit a bank branch to take out a mortgage. The traditional banks, facing tough financial markets, may be tempted to close branches as part of their changing business model. But when it comes to their mortgage services, firms such as Lloyds must turn their focus to driving efficiencies in back-end processes. These efficiencies can give hard-pressed firms the freedom to invest in the customer interactions that will set them apart.
The top UK providers are in particular need of this kind of differentiation. The most recent figures from the Council of Mortgage Lenders, released only a day after the announcement from Lloyds, reveal the growing strength of challenger banks and specialist lenders. These newer providers have seen their gross lending surge upwards by 56% in the past year, which translates to a 2.9% increase in their collective market share. Over the same period, established retail banks were only able to increase their gross lending by 4%.
What the top lenders have on their side, however, is brand recognition and a strong existing customer-base. By embracing the newest technological possibilities – from workflow automation tools through to next-generation CRM and innovative analytics – these companies can compete with the digital capabilities of their newer competitors. More importantly, this enables them to turn their attention to the task of developing the important customer-facing operations which contribute to their long-standing brand.
The changing market realities for the British mortgages sector requires providers to take a truly ‘end-to-end’ view of their mortgage service. Taking stock of the entire process, from origination to termination, to consider where technology can make the biggest impact and where the human touch will be most necessary to customers, decision makers can ensure that technology is deployed appropriately and to greatest effect.
The transformations that are possible may be surprising. In our experience, one leading UK bank was able to reduce the time to approve a mortgage application from 11 days to just 48 hours. Efficiencies like these may be the difference between expanding or reducing the face-to-face customer service on offer, a game changer in the changing mortgage market.
Bhupender Singh is CEO of Intelenet Global Services