The Digital Decision In Principle (DIP)

In most areas of life, digitisation is synonymous with the move to self-service experiences. Financial services have been navigating this wave for the last 5 years or so and have seen some transformative changes.

One such area is in the onboarding of customers for current accounts. A process that used to take days and be laden with manual paperwork can now be done in under 5 minutes, with the help of a variety of point solutions and digital KYC.

So, why hasn’t mortgages seen the same level of disruption?

In my opinion, one reason it’s due to a slight misunderstanding as to what a digital mortgage should look like. Ironically, as many businesses move toward a fully self-service model, the percentage of UK mortgages acquired via a broker has actually increased slightly. It’s clear that, when buying a home, its complex and important enough that buyers prefer that personal touch.

But, are ‘personal touch’ and ‘being digital’ mutually exclusive concepts?

The ‘Decision In Principle’ offers a unique opportunity for lenders to fully automate with digisation. Allowing them to make a meaningful offer to a prospective customer in a few minutes and with little friction, before offering them a variety of hybrid engagement models and advice.

The ‘Digital DIP’ allows the bank to:

• Smart data: Use embedded third-party tech like digital KYC, Open Banking, and a variety of others to validate high level information. This means that the DIP will be more robust and have a far higher percentage of those that go on to be eligible – over 90% - as well as requiring significantly less manual keying of information than before.
• No double-data entry: How many times have you been asked to provide the same information within a customer journey? Siloed systems are often to blame, forcing the user to patch the gap in poorly implemented technology. A good digital process gathers high quality data once and makes it available for reuse throughout the process.
• Seamless handover to the advisory process: With the DIP decision made near-instantly, lenders need to provide a digitally-enabled next step. “Call us on this number” really isn’t good enough. It’s important to capture and convert the buyer in-the-moment and give them an opportunity to move forward by booking an appointment.

Ultimately, Financial Services is fortunate. The road for better digital customer experiences has already been paved by other industries, like retail ecommerce - we don’t need to look far for inspiration on what to do next.

The Digital DIP is something that mortgage providers can -and should - adopt immediately. It can be easily and cheaply delivered and connect, with existing underwriting systems without the need for wholesale transformation.

Low-hanging fruit like this needs to be grabbed with both hands!

Digitising the full mortgage process has a few more complexities, some of which are different between European markets, but I’ll explore the remainder of the digitisation of mortgages in our next articles.

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