The Expert View: Driving Successful Transformation in the Mortgage Sector

In the mortgage sector, companies want to make customer journeys smoother, get products to people more quickly and ensure they are complying with regulations. To make that work, businesses are working towards digital transformation - but they are not finding the path easy.

That’s partly because they are looking at the problem the wrong way, said Thomas Chaplin, Head of Mortgage Product, at nCino. He told attendees at a Business Reporter Breakfast Briefing at the Goring Hotel in London that digital transformation is not a technology issue, but a people issue.

A people problem

A significant aspect of the challenge with people is whether the organisation has enough of them. Some attendees said that a major obstacle to their transformation plans is that they don’t have enough people to run the transformation program and manage business-as-usual (BAU). Obviously, in these situations, BAU gets prioritised and the transformation program struggles.

Another challenge is getting support for the project. The mortgage process can be long-winded and unwieldy, said one delegate, but it isn’t broken. Since most consumers experience the mortgage process infrequently, they are usually willing to tolerate it. That makes it difficult to convince senior management to prioritise transformation in mortgages over other projects that might seem more urgent or impactful.

One exception is for mortgage brokers who, unlike consumers, work with the mortgage process every day. They are very keen to see the process accelerated and simplified so that they can work with more clients.

Starting small  

Mortgage brokers are not the only segment who might appreciate a transformation of the process. Mr Chaplin pointed out that there is a tendency to assume a one size fits all approach is what’s needed, and therefore that transformation requires modernising the entire process. Companies should try to avoid allowing the difficulty of modernising everything stop digital transformation for those segments that want it.

This is what one attendee described as ‘small t’ versus ‘capital T’ transformation. It can be enough to pick a segment of the market, perhaps consumers who are comfortable with a self-service process, and deliver change for them. Starting small makes the project more likely to succeed and creates a foundation for further transformation in other areas.

Even these small changes depend on a bold vision. Having a clear end-to-end picture of what the whole journey will look like is the best way to ensure success. Transformation projects are most likely to go wrong when there’s no clear goal.

A business-led process

Once the vision is in place, the technology piece is straightforward. The technology works and has been proven both in other sectors and by the most forward-thinking businesses in the mortgage sector. The business might still think technology is complicated, however, and allow the IT team to lead the project. This should be resisted, those at the briefing agreed, because projects led by IT often go wrong.

The business should lead the project because they have the best understanding of customer needs and how the existing process needs to be changed. The ideal is that the IT team also has a deep understanding of the business side. That is the recipe for the fastest progress. Even then, the business should lead the project.

Attendees also raised the importance of involving key parts of the business, such as legal and compliance, from the outset. This ensures that design decisions will be aligned with the requirements of the whole business and prevent the need to adjust or rethink things at the end.

Tech savvy versus financial savvy

There’s little reason to think that customers will struggle with the technology once the transformed process is rolled out. Customers are fairly tech-savvy, thanks to their experience of banking, shopping and generally running their lives from a smartphone.

Indeed, consensus was that the biggest risk to digital transformation in mortgages is not poor digital literacy but poor financial literacy. Many people still want a person to help them during the mortgage process because they are uncertain about how it should work, whether they are getting the right deal for them, and so on.

There is a limit to how much mortgage providers can do to improve financial education, ultimately, so they will have to shape their digital transformation projects accordingly. One attendee said his company had found that 70 percent of self-service banking customers still wanted personal advice on a mortgage. Even so, that leaves a significant minority who would be happy with a more independent process.

The key, said Mr Chaplin, summing up the briefing, is that mortgage providers do not lose sight of the value exchange for the customer.

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