Speaking to Mortgage Solutions about the possible impact younger borrowers would have on the mortgage market, Thomas Chaplin, head of product for mortgages in EMEA at Ncino, said the influence of Gen Z was “undeniable”, adding that they would be the “first digitally native demographic”.
He said this generation, who are currently aged between 12 and 27, would demand banking and mortgage services that are digital-first and optimised for mobile devices.
He said they would also seek interactive platforms that provide feedback in real time.
Chaplin said transparency was key for this generation, adding that for Gen Z consumers, “speed is paramount”.
He said that, looking at research, this demographic would need “empowering, in terms of being able to actively participate in the decision-making process with clear advice and guidance”.
“They prioritise efficiency and good use of their time, and that might lead to lenders to rethink the lengthy processes that they have today.
“They’ll probably gravitate towards those lenders that have the perceived kind of offering of digital solutions that might include challenging a change to maybe traditional propositions,” Chaplin added.
He said a lender’s ability to influence Gen Z was probably tied to how well they could meet those challenges and have a “streamlined, digital-centric mortgage that can take minutes or hours to get approval instead of weeks”.
Making progress and collaborating
End-to-end banking and origination platform provider Ncino works with lenders to replace and update legacy technology to introduce new capabilities and functions. Chaplin said he was already seeing a desire from lenders to focus on customer-centric propositions and journeys.
He said most of the firm’s clients were addressing high-volume, high-value, intermediated business first, before thinking about the direct-to-consumer (D2C) offering.
Chaplin said: “That is something that is on our clients’ roadmap that they want to be able to address, and then our role in that will be to work with them to make sure that they meet the needs of a demographic.”
When asked what more lenders could do to drive change and speed processes up, Chaplin said there were firms “pursuing partnerships in the mortgage ecosystem”, but without the necessary technology estate, this still involved a lot of manual processes.
He said the positive thing was that, in all parts of the mortgage process, there was “someone in that space trying to challenge”, as seen in the conveyancing and energy-efficiency sectors.
Chaplin added: “It’s really good that there is an ecosystem of vendors who are out there trying to challenge the status quo, but I haven’t seen anyone take ownership to control the entire end-to-end mortgage ecosystem.
“Everyone’s selective in the parts they choose to do, and I imagine that links to strategic decisions, the ease of which they can do these things, as well as budgets and constraints.”
Chaplin said if someone was to take control of the end-to-end process, they would have “quite a compelling proposition on their hands”.
Reimagining the advice process for Gen Z
He said Gen Z would continue to value advice, but catering to them would require streamlining the overall process so they could get to the advice stage quicker.
People may not want to sit in a branch for 45 minutes going over their circumstances if there was a way of doing it from home, Chaplin said.
He added: “Get them to validate that information as quick as possible and then get into the conversation about whether a two-year fix or a five-year fix is the right answer.
“That is the crux of the conversation.”
Chaplin said Open Banking could help facilitate this.
Considering rising house prices, people getting onto the property ladder later in life, and longer borrowing terms, Chaplin said there were “low-hanging-fruit” solutions such as changing internal processes and procedures regarding affordability, like Skipton Building Society’s Track Record proposition.
He said people would continue to rely on the Bank of Mum and Dad.
Chaplin said the overall cost of borrowing would be an “eye-opener” to Gen Z, as it was “never front of mind for a lot of people”.
“Given some of the financial challenges that some Gen Z demographics will have witnessed, I do think there’s an opportunity for lenders to give them the ability to make overpayments so that, over the course of their lifetime, the overall amount they pay back is significantly less,” he added.
Chaplin said firms could make use of tools to demonstrate the benefit of making overpayments, for example.
He said: “I just pay my monthly mortgage payment, but I could easily make overpayments if I had some sort of calculator at hand within my mobile app experience that gave me a nudge to say, ‘did you know an extra £10 per month would knock this off?’
“And I think there’s something in there. I have seen a few UI [user interface] designs for lenders who are pursuing that as a possible kind of avenue.”
