Creating an ecosystem to improve the home ownership cycle
Matt Shaw (pictured) is director at Synechron Business Consulting
Last month the Bank of England revealed mortgage approvals had reached the highest figure since 2017, driven by low interest rates, stagnant house prices, a strong labour market and more innovation from lenders to provide solutions for borrowers.
In light of political uncertainty, this data is positive for the housing industry, however two questions still remain: Has the digital mortgage process evolved? And are home owners actually seeing any benefits from their lender once they have the keys to their new home?
Buying a house is one of the most significant assets purchased during a person’s life; however, today’s mortgage loan process is cumbersome, complex and requires customers to deal with multiple players.
It is still largely paper-based and provides a poor customer experience compared to other fintechs across the financial services industry. The digital mortgage strategy of today is focused heavily on making financing a home faster, but it does not create any sustainable value or tangible outcomes for the home owner.
We are still seeing home owners having very transactional relationships their bank, insurance company and various services companies during the home ownership phase; this is creating a significant amount of friction for all of the parties required to effectively manage a home.
For new and existing home owners, it is difficult to centrally manage all the banking, maintenance, community building, and lifecycle experiences related to home ownership.
Similarly, banks also experience issues from an engagement perspective. The bank has to wait years for the customer to come back, spending a lot of money along the way to try and re-engage with its customer.
The same can be observed with insurance companies where the relationship is only activated when something has gone wrong in the home like a flood, broken hot water heater, or roof damage that requires filing a claim.
The industry needs to look at how they can move beyond this stagnant cycle. Banks already have the tools to succeed: they have an established position in mortgage lending, extensive knowledge of customers’ financial habits and digital banking capabilities.
Leveraging this would be an opportunity to improve the entire housing journey for customers across buying, living, selling, and renting.
In order to achieve this, there is a need to create an open ecosystem with a shared infrastructure where the customer is at the centre. By having an open ecosystem, partners can collaborate and utilise data, and importantly create constant engagement with the customer.
This will allow participants in the ecosystem to reinforce a direct to customer strategy with an end-to-end approach that embraces many more aspects of home ownership; this will result in the industry finally moving away from outdated transactional operations in a digital age.