Innovation has been the hallmark of the banking industry in recent years. From the rise of challenger banks that offer high-levels of customer experience to the growth of banking-as-a-service and advanced forms of customer authentication such as biometrics; there seems to be no stopping the wave of innovative products, solutions and services on offer in the industry.
Yet, not all areas of the banking and finance sector have seen the full benefits of digital transformation. When it comes to the mortgage process, a great deal of space remains for improvements to be made.
For example, compared to opening a new bank account with a start-up bank, applying for a mortgage is an extremely drawn-out process that requires many manual processes to be completed that slow down and complicate the mortgage journey.
Forward-thinking firms in the mortgage space are working to bring digitisation to the mortgage process. Earlier this year, Hinckley & Rugby Building Society partnered with Australian business PEXA to complete the first digitised remortgage transaction in the UK.
Fintech PEXA is already a major player in Australia, with the firm estimated to have facilitated over eleven million property transactions worth around AU$2 trillion in the country. After entering the UK housing market, PEXA is working to transform the outdated mortgage process and enable a truly digital service for customers that reduces friction for lenders, conveyancers and customers.
According to research from PEXA, while the remortgaging process normally takes six to eight weeks in the UK, in Australia the same process takes an average of just 15 days, with some remortgages taking just a single day.
Potentially massive reductions in the time it takes to complete the mortgage journey are directly attributed to the ability for new digital platforms to create a system that can see a property transaction completed entirely digitally, without any physical documents being handed over.
The impacts of the pandemic forced lenders to switch almost overnight to digital solutions, with many continuing to search for ways to use digitalisation and automation to enhance the process. HM Land Registry is also pushing for a fully digital property market and is supporting it by moving forward with regulatory changes that enable digital conveying and make Local Land Charge search results available within seconds, helping to reduce all to common delays.
Digital identity solutions play a central part in the future mortgage process, with e-signatures on deeds and proving identity using a digital ID being essential to move away from paper ID that causes slowdowns.
As the process is only as fast as the slowest part of the chain, moving the entire process online can improve collaboration between the different parties involved in the mortgage, including lenders, brokers and lawyers.
It may be some time before it becomes common for mortgages to be completed fully digitally. But thanks to a combination of developing banking infrastructure and growing customer expectations, major improvements to the conventional mortgage process are not long away
Hear more at this year’s FTT Building Societies
Written by Finbarr Toesland, Editorial Contributor, VC Innovations