These are just three words that can arguably be applied to the state of the UK’s mortgage market over recent months.  

With rates at their highest for around 15 years, the recent news pages have been filled with stories of lenders pulling and re-introducing them at increased costs with alarming regularity. As a result, when fixed-term mortgage deals come to an end, homeowners are much more likely to shop around for the best deals. With around 70 per cent of UK mortgages sold on a fixed rate deal, this can lead to an increased headache for lenders who would surely rather have their employees focus on customer retention than administrating customer departures. After all, it costs on average five times less to retain a mortgage prospect than it does to acquire a new one.  

Against this background, it’s understandable why mortgage providers are increasingly looking to launch a dialogue with their existing customers.  

Digital vs. traditional 

Software is now readily available for mortgage providers to enable their customers to easily manage mortgage product switches, allowing them to review, compare, and renew without the need for time-consuming paperwork, branch visits, or phone calls. It can be dovetailed to a lender’s website, with secure sign-in functionality using unique customer data and a one-time passcode. This enables the provision of personalised illustrations, real-time process monitoring and the provision of SMS and email updates.  

Compare this to some of the more traditional systems, still in use by some lenders. Typically, these would involve teams of representatives speaking to the customers by telephone, or even in person in a high-street branch, for anything up to a couple of hours to go through all the options open to them. The lender will then usually put together various options and scenarios. There may then be a secondary call – again, lasting for a substantial amount of time – to go through these options.  

Cue expense and outlay from the provider, and frustration and a perceived “long-winded process” from the customer. Even after all these processes have been done, the customer may still decide to go elsewhere, meaning all efforts and time outlay have been in vain.  

The move to modernise

To overcome these complex and antiquated systems, and improve the customer service levels for customers, lenders need to look at updating the processes that they use. However, it is not always this simple. Rather like placing a small sticking plaster over a gaping wound, some lenders might look at streamlining just a small part of the overall process and think that they have “modernised”.  

However, successful mortgage lenders are increasingly overhauling the systems and processes which matter, with some of the more thoughtful applying various levels of automation to reduce the burden and expense of previously slow and antiquated systems.  

Robotic Process Automation (RPA) is certainly one of the best things that lenders can implement as a vital part of any digital transformation. The caveat is of course that lenders must know the intricacies of data and processes involved, but if they work with the right technology partner there is absolutely no reason that even the most ancient systems cannot be replaced with something much more agile and more focused on customer experience.  

The next level involves applying intelligent automation, where customer data is processed not merely by replacing tasks with automation, but by enabling machine learning to “learn” and “understand” the data and output it in a way that makes more sense. It also improves business efficiency by freeing up the workforce to focus their talents on more productive aspects of the business plan. 

The theory of mortgage switching 

While the technology is, of course, vital for lenders to enable their customers to easily switch, it is just as essential to understand why such efforts need to be made.  

The average mortgage provider will not experience a smooth, predictable switching rate. In fact, they are much more likely to see substantial peaks and troughs of maturity windows, either because of seasonal factors or hundreds or thousands of borrowers reaching fixed term maturity at the same time. With most providers not being lucky enough to have either an elastic office space or workforce, the ability of software to cope with changing demand will solve multiple issues.  

Any retention strategy also needs to provide a frictionless experience for both customers and operations staff. By removing a previously chaotic combination of core systems, data extracts, spreadsheets, marketing/email automation systems, web pages, web forms, and shared email inboxes, large steps will instantly be taken to promote such a frictionless experience for all concerned.  

Together these will inspire customer confidence, minimise the time and effort required by customers, leverage the willingness to self-serve, recognise that many customers fear commission-led advice, and earn and use customer loyalty. The overall benefit of doing all of this? Lenders will be a step closer to achieving the holy grail – boosting customer loyalty, retention, and acquisition. 

A carbon footprint reduction 

Another issue caused by antiquated mortgage processes is that they are incredibly energy inefficient. Legacy systems often include filling in multiple paper forms, travelling to attend meetings and engaging in long telephone conversations or video conferences. These methods tend to involve the use of substantial fossil fuel resources, such as electricity powering the offices, and oil powering the engines that convey people to meetings. 

This is very much at odds with the current overall business commitment to improving ESG standards and an over-arching promise of looking after the planet. Additionally, other vital components of the mortgage supply chain, including the essential brokers, are now actively looking at their own ESG activity and are increasingly likely to favour lenders who are prioritising the reduction of their own carbon footprint. 

While updating old technology can be a challenge, it is one that can be overcome – with excellent results. Decoupling the front end with the backend system provides a great alternative to help drive change and innovation at pace.  Having a modular and flexible digital experience platform which empowers the business to introduce new functionality against a change timeline that the business requires can be effort that is well spent.  

Jerry Young is chief executive of ieDigital