Many banks and financial institutions (FIs) have transformed their services over the last few decades, keeping good pace with a world demanding more digital experiences. For customers, opening an account, moving funds or applying for certain services are now achievable far quicker and more conveniently through their smartphones.

But there’s still a lot of room for improvement, with the mortgage market lagging behind in particular. According to a recent report from GlobalData, in the UK, traditional incumbent banks still control 77% of the mortgage market, with long-established building societies continuing to play a huge role. The key issue these organisations face is that their mortgage processes and customer journeys haven’t changed for years.

Increasingly, fintechs such as Molo are emerging as players in the UK mortgage market. Their business models are focussed on saving customers’ time, with simple, digital applications. Research backs up the promise these companies have shown. According to GlobalData, 70% of first-time buyers in the UK are millennials, 57% of whom said they would likely choose a digital channel if applying for a mortgage today.

Pressure is building for traditional banks and building societies to digitally transform their customers’ mortgage experiences. Digitising the journey will increase application and retention rates, as well as reduce operational costs by freeing up employee time spent on non-value-adding tasks. However, there’s a reason FIs have been slow to modernise in this area; mortgage processes are complex and involve multiple actors. As companies race to implement digital strategies, a number of challenges are being experienced.

Challenges and opportunities

Currently, digital mortgage journeys are fragmented. Legacy systems and manual processes cause friction as existing customers need to fill in duplicate personal information and visit a branch to finalise applications. In the UK, most customers source mortgages through an intermediary. Aligning all sides so that everyone receives the same information at the same time is a challenge. In addition, the opaque nature of traditional mortgage journeys means that customers have little visibility of the status of an application, resulting in high call volumes and lengthy completion times.

Still, mortgages are not suitable for full automation. “Mortgage journeys are one of the most complex financial products in retail banking. Due to the complexity, uncertainty and importance, most customers want to speak to human beings during the process. This needs to be facilitated in the digitised journey. Digitisation and automation are not the same thing – digitisation can and should enhance interpersonal relationships,” explains Frank Uittenbogaard, Regional Vice President Europe at Backbase, creators of the Backbase Engagement Banking Platform.

For most banks, decades of legacy systems, broken processes and silos make it extremely expensive to develop a true digital mortgage journey. This is further exacerbated by the fact that most banks and building societies consider mortgages and other product areas in isolation. This means that when they digitise account opening (for example), they can’t reuse those capabilities for mortgage origination, and vice versa. Uittenbogaard adds: “Banks need to focus on reusability and scale. This is possible with a platform strategy, where a unified platform orchestrates value to both customer and employees and is crucial in terms of providing reusability across product lines for banks and building societies”.

The strategic approach

To transform previously substandard customer experiences, personalisation must be incorporated into an FI’s digital strategy. Each mortgage journey can be personalised to the buyer depending on key factors such as age, whether this is their first property and their individual financial circumstances. Transforming the digital mortgage journey to improve the customer experience through personalisation is essential to lowering operating costs, increasing efficiencies and retaining customer loyalty over a lifetime.

A holistic engagement platform strategy will help FIs digitise all customer interactions over time, rather than in isolation. “An engagement banking platform provides a seamless customer experience across all touchpoints and interactions. It empowers employees to provide a superior customer experience and helps them gain a 360-degree view of each customer and all of their interactions with the bank,” explains Uittenbogaard.

Digitisation has been slow in the mortgages market, but engagement banking platforms are here to help banks and building societies achieve a seamless, digital-first approach. The goal shouldn’t be to do away with personal interactions. Rather, by simplifying certain processes and digitising communications, more time can be spent interacting with customers, thereby deepening those relationships and encouraging customers to keep coming back over the long-term.