But the process is disjointed, fragmented and inefficient.
Zoopla claims that it can take between six to 12 weeks to buy a house, but the reality is as long as six months. Applying for a mortgage itself – plus the conveyancing process – can require at least 20 different documents to be scrutinised by multiple parties, proving income, identity and more.
No surprise then that only 42 per cent of house buyers are happy with their service, according to Somo’s latest report Repairing the Broken Mortgage Journey, surveying over 1,000 British consumers who purchased a new home within the last two years with a mortgage.
And when you compare the mortgage application process to other experiences in our lives, it’s easy to understand why.
Just look at millennials – digital natives who have come to expect automation of payments between bank accounts, electronic documentation, remote identity verification and simplified comms channels, all of which are present in modern banking. Almost.
So, why not with home buying and mortgages?
House buyers want digital solutions
Challenger banks and streaming services have proved they can seamlessly access a desired product, showing the business landscape what a frictionless digital experience can be.
And even though Somo’s research revealed that a lacklustre digital journey is only a major issue for five to seven per cent of consumers, those numbers will definitely rise as digitally-savvy cohorts enter the mortgage market.
House buyers already want all parties involved to offer more digital solutions, and roughly a third of the survey respondents were frustrated by a lack of digital service from their broker (31 per cent), estate agent (32 per cent) and conveyancer (30 per cent).
But thankfully, there are clear routes to increasing the efficiency of the mortgage process for both consumers and providers, such as e-signatures, with Adobe research revealing the potential for an 80 per cent reduction in clerical errors, saving organisations 22,000 hours per year.
Digital IDs a must for the mortgage sector
Digital banking services now offer ID validation technology to verify a user’s identity via their smartphone camera. If applied to mortgages, the application experience could be so much better.
And there’s good news for UK mortgage seekers, as the government announced in March 2022 that there would be an Office for Digital Identities and Attributes to create a framework to make digital identities as secure as official passports and driving licences.
Similar systems have significantly accelerated the mortgage application process in other countries such as Estonia – one of the world’s most digitally advanced nations offering virtual meetings with notaries so long as you have Estonian ID, digital ID, mobile ID or an e-Resident’s digital ID.
India is also implementing mobile-first Know Your Customer (KYC) protocols to reach customers in the most rural areas virtually. Fraud prevention includes AI-assisted face match and verification of official documents against government databases.
In the meantime, mortgage providers can implement customer portals, for instance, where users pass through a one-time verification process to access their sensitive information in a single place. There’s really no reason not to.
Artificial intelligence is just as critical
Not all information in a mortgage application is simple, structured data. Survey reports and property photography are just two items that benefit from AI to help underwriters quickly understand the context of the application.
AI can also reduce human error in multiple ways, from affordability to discrimination. A study from the National Bureau of Economic Research found that AI systems were found to be 40 per cent less biased than traditional approaches to lending, for example.
But to implement any of these emerging technologies, mortgage providers must adopt a holistic view of the entire customer journey while going beyond the obvious ways a tool can improve the process.
Sainsbury’s does this brilliantly by offering products such as home insurance, low APR loans and discounts based on their Nectar loyalty programme. These offers are integrated with a sleek, seamless experience via their app which mimics many of the UX/UI features introduced by challenger banks.
Sure, mortgages are more complex, but we’ve shown that digital can radically expedite manual processes across multiple industries, so there is no excuse. It’s time to modernise or start losing customers to the competition, many of whom are already eyeing up the opportunity.
