Despite massive shifts in the personal finance market, mortgages are still subject to tight regulation and bureaucracy, making life difficult for new buyers.
But with a growing number of alternative digital service providers and increasing demand from millennials for smarter and more automated processes, this is changing. In accordance with reports, One in four households in Europe now have a mortgage, and online mortgage platforms are largely responsible for this shift.
Molo is the first purely digital mortgage provider in the UK. How difficult was it to get this service up and running?
As a business, we have faced many challenges of all shapes and sizes. However, I would say that this biggest problem has nothing to do with the technologies underlying our service. Most of all, we tried to change the mindset in the mortgage industry as a whole. The industry hasn’t changed in forty years, and there has been very little innovation or disruption. Today we live in a digital age, so there is no doubt that this sector should develop in accordance with the preferences of potential home buyers. Given the strict rules that we must adhere to in the industry, the trick is to try to balance innovation with traditional practices.
The digital online mortgage sector is growing – what are the main drivers of its success?
The driving force behind the success of digital mortgages is the growing demand. Our largest segment of customers are millennials who have grown up with this kind of web-optimized mobile technology. As a result, this demographic of clients is demanding an alternative to the traditional paper model of bulky mortgage applications. Most of their areas of life have been digitalized, from online shopping and banking to communications, and the mortgage industry needs to evolve and keep up with the times.
Since traditional mortgages are notoriously difficult to obtain, does digital mortgage services make it easier for customers to buy a home?
There is a lot of skepticism about digital mortgages as the mortgage industry has seen little change or innovation in nearly half a century. The business at Molo takes a radical approach. The traditional approach to mortgages requires applicants to answer hundreds of potentially unnecessary questions as they do not form an appropriate home buyer profile. At Molo, our drive to innovate focused on how we could make the process easier and easier for our customers.
What are the main benefits of using a digital mortgage broker?
Convenience, convenience and convenience. Using a mortgage broker is a great idea as they will do all the work for you! They can compare hundreds of mortgages and evaluate them based on the financial situation of the clients to find the best deal. Therefore, the time savings are undeniable. However, there is usually a cost associated with using a conventional (non-digital) mortgage broker. It is also wise to do your own research before meeting with a physical mortgage broker, as their interests may not align with yours in terms of getting the best deal.
What impact will digital mortgages have on traditional providers?
While competing banks and other fintech companies are making strides in this sector, traditional banks are not going anywhere – whether we like it or not! However, traditional banks simply cannot innovate internally as fast as their fintech counterparts. Too much bureaucracy. I have heard stories of banks taking a year or more to deploy features in their applications due to the rigorous procedures they have to go through.
I guess we will see more partnerships between fintech companies and big banks. For example, banks can connect via API to Molo’s product with Molo’s lending facility so that customers can take advantage of an automated online service that is optimized and customized. It can also be customized for use by large banks and adapted to suit their lending policies. This will force banks to open their doors and partner with innovators. Ultimately, this will allow the market to flourish and provide the best possible service to customers.
What impact will digital mortgage brokers have on the housing market?
As we move further into the digital age and the mortgage application process becomes more accessible to digital lenders, this will allow more people to own their own homes. In theory, this should open up the housing market to more, not fewer, people. Traditional lending mechanisms often have very strict rules and only consider black and white. Consequently, under the current system, the majority cannot own their own home. By comparison, digital mortgage lenders use automation and artificial intelligence to address gray areas. The data collected can give lenders a more complete picture on which to base their decisions.
Natalia Roshchupko is an expert in leading and managing large cross-functional teams to meet technical, operational and business requirements. She was previously the Head of Engineering at Glint and prior to that was the Head of Development (Mobile and Web Development) at WorldRemit.
Image Credit: Molo