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Digital lenders indicate mortgage industry blind spots

A neobank and two fintech lenders have pointed to problem areas in the home loan process, which they believe are holding the industry back.

During a CoreLogic-hosted webinar on Tuesday (16 November), a panel of fintech representatives reflected on where they see gaps in the mortgage industry.

For Joseph Seychell, chief risk officer at Athena Home Loans, the sector is ripe for disruption around how customers switch providers – with the executive criticising the “complex process of reapplying for loans” and the need to traverse through multiple components.

“I’ve got a loan, I want to move to a lender who’s given me a much better rate, a much better deal. That’s just got to be easier than this now complex discharge process where customers are being harassed… and all sorts of processes to frustrate them,” he asserted.

“Really, as an industry, I think we’ve got to move to the point where customers make the decision to move and that just moves just like you’re moving phone numbers.”

He also stated that lenders could expand their service offerings around mortgages.

“It would be interesting to give people real lifetime positioning of where their equity stands today, with live feeds of data and what choices and options that consumer can take as a result of that, and looking at that and saying, ‘how can I really better myself with this decision,’” Mr Seychell stated.

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“And I think as more and more data becomes freely available and integrated into application data, then the better consumers are positioned with any credit provider. I think the provision of that data to the consumer will present choices that could really help again, kick this industry to another level.”

Similarly, Melissa Christy, head of lending at 86 400 pointed to a need for data insights, stating no provider is yet to perfect the post-settlement customer experience.

“No one, I don’t think, has really nailed the whole self-serve from the app, after settlement piece. And I think we all have call centres where people ring to make changes to their loan,” she said.

“I think there’s a big opportunity to get all of those maintenance and things you want to do with your loan, as well provide insights about your property and your loan, [which] will give you information about changes you might want to make to your loan in your app.

“I think that’s something that’s next on the agenda.”

Open banking is expected to open up access to data and to present opportunities for the sector to some degree, according to Shaun Lordan, chief product officer at Nano Home Loans.

Allowing third parties to initiate payments from customers’ banking accounts will be “really interesting”, he said.

“Having a customer that we know has a $100,000 sitting in a savings account with a mega bank, less than 0.5 per cent [interest]. And it’s been sitting there for a while, we could prompt them, to say ‘Do you want to move those funds into your offset account to save x per cent,’” Mr Lordan said.

“Right, that [is] actually helping customers become more financially savvy and more financially aware.”

He also noted that greater data access could boost the “time to yes” for loan applications.

The panel also pondered how they could influence further digitisation of documents in the property industry, such as contract of sale in purchases.

Mr Seychell stated contracts should use “simple English” and be more understandable for consumers.

“Many things for consumers in the past, would have perhaps signed and not really understand,” he said.

“But if you’re driving simplicity and transparency to the consumer, that’s the pathway you need to take, to pretty much advocate for the industry to simplify those contracts so that consumers can understand more directly.”

Meanwhile, Mr Lordan noted companies are working on blockchain as a pathway to standardisation, stating Nano would look to integrate with a third party to add the capability to its platform.

[Related: Volt, Frollo partner for white-label banking app]

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