Digital mortgages are on the rise, but lenders are still lagging behind

Buying a home is one of life’s biggest milestones. You’re not only acquiring space to live, but also building the foundation for your future—building a space for your loved ones, your children, and maybe even the generation after.

Unfortunately, the journey to buying a home is often difficult and—in many cases—stressful. Choosing the right neighborhood, finding the perfect property and transforming it into your dream home. There are a lot of decisions to make and aspects to think about. All these little things add up, and on top of this you need to think about how you’re going to finance everything.

If you recently applied for a mortgage, you probably experienced a service that has not changed significantly in the past 20 years. Despite rapid technological change in most other industries, the process of closing a home loan is still similar to how the generation before us experienced it: An overwhelming amount of paperwork combined with inefficient communication between you and your bank. The journey from the initial contact with your lender to the release of funds to buy your property is still long and cumbersome.

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Customers expect an Uber-like experience when applying for a credit

“I can process an order from my favorite Italian restaurant with my iPhone, can follow the delivery route of my €10 pizza in real time and can pay the restaurant without even touching my physical wallet. But when I want to buy a €600k property, I have to take a day off just to bring documents like my ID to my bank. And when it comes to negotiations about the pricing, it delays the processes even more. Some things are not very aligned here”

Summarizes Peter, a 33-year old marketing manager who recently bought a house and partly financed it via a mortgage from his bank.

Peter’s comparison shows quite clearly where the expectations of generations Y and Z lie and how traditional approaches do not work for them. These consumers, and the generations to come, expect mobile-first digital experiences in every aspects of their lives, and are often met with disappointment when taking important steps like buying a home.  

This gap between existing processes and consumer expectations is backed by the latest research, as a study conducted by the Boston Consulting Group shows that 80% of recent home buyers would have liked to use a digital tool to close their mortgage.

While the traditional mortgage market is growing only slightly, we are seeing exponential growth in digital mortgages. It is just a matter of time until new entrants will enter and disrupt the market, as we’ve seen with online banking (N26, Revolut, etc.).

For traditional banks, it’s now enormously important they rethink their existing mortgage offerings and processes in order to make the necessary changes today, so that tomorrow’s customer will not be disappointed.

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How Oper helps banks create world-class credit experiences

Oper was founded for a reason. Our vision is to enable any mortgage offering to become available through digital channels. We provide our clients with best-in-class financial technology and integrate it seamlessly into their existing IT landscape. We believe, that a bank should do what a bank does best – fostering customer relationships. Oper takes care of the rest, so lenders can focus on their clients.

If you want to find out how Oper can add value to your organization, don’t hesitate to contact us for a demo.

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