Will tech giants disrupt the mortgage market?
25 July 2022
25 July 2022
Esther Dijkstra, Director of Strategic Partnerships, Lloyds Banking Group
They have the scale, data and ability, but do technology firms have the appetite to enter the mortgage market?
It’s no secret that technology is a powerful force, disrupting markets and finding ways to make customer journeys better, easier and quicker. There’s long been discussion about whether or not the tech giants – such as Facebook, Google and Apple – have an interest in entering the UK mortgage market. At Lloyds Banking Group we’re always looking at where disruption will come from, analysing which businesses have the ideas, appetite and the scale to do it. That means looking at incumbents, challenger banks and smaller lenders of course, as well as existing tech companies in the mortgage space. But we also look further afield because the tech giants have form in entering completely new sectors and taking a large market share when they do.
Disruptors at work
Amazon is a great example of a tech giant disrupting a market through Amazon Web Services (AWS). Who’d have thought Amazon would become a provider of great business platforms, by repackaging its own market-leading services and selling them as cloud computing services to other businesses to buy and use?
A huge number of organisations now benefit from Amazon Web Services; much of Gov.uk are hosted and managed by AWS, for example. AWS now offers over 200 products and services, enabling businesses to grow online.
Netflix is another famous disruptor. It started out as postal service for DVDs, in competition with video shops, such as Blockbuster. Then it moved into online streaming, creating an entirely new market. But it kept looking for new opportunities. Now it uses the data it collects to create the content most suitable for its audience – it already knows what will be a blockbuster before its even launched and is now one of the biggest movie creators in the world.
Will they enter the mortgage market?
Nobody (except them) knows whether or not the tech giants are planning to target the UK mortgage market.
But never say never.
They’ve already dipped a toe in the financial services sector: Google bought Beatthatquote.com over 10 years ago and piloted a mortgage comparison site. Amazon partnered with Mortgage Brain in 2018 to enable borrowers to ask Alexa to search for a mortgage; and Apple recently acquired UK fintech Credit Kudos, which helps businesses use bank data to make lending decisions.
But even if they don’t want to become lenders or brokers, they could obtain and keep the client, cutting mortgage firms out of much of the process.
Client acquisition in the intermediary market is not as straightforward as it once was when your customer came to you through word of mouth, or an estate agency.
Now they start their journey online and it’s much earlier, with comparison sites and other digital tools, so tech firms have a head-start in terms of interacting with them.
No room for complacency
At Lloyds Banking Group we’re never complacent and we recognise the disruptive potential of the tech giants. They know your spending habits, what you’re searching for online and where you go, and they’re used to handling vast amounts of data in a way that dwarfs what even the largest banks do. That’s why we are always trying to learn from them. In fact, it drives us to keep thinking about the end customer and create experiences that are brilliant for our users.
Know your client
It’s important that lenders and brokers build relationships with our clients and use data to build insights into what they want. Tech business are constantly nurturing their relationships with customers and so should we. At Lloyds Banking Group we’re working hard to capture data about our customers, analyse it and learn about their changing behaviour and needs. Then we adapt to offer what they want. Obviously, intermediaries aren’t data analytics experts, but you can also evolve your proposition to meet your customers’ changing needs, from boosting your digital capability to offering video meetings if your clients prefer that. Could you better use technology to onboard your clients, for example, collecting information and documentation before your meeting to speed up the process for them, and you? Make sure you know your clients better than the competition, and never stop changing to meet their needs.
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