I heard countless anecdotes about online mortgages over the past few years and to be fair I felt that people were fundamentally right about things, that the mortgage market would go to the web to a large degree the way so many other things have.
Dunnes Stores strongest growth area is Internet shopping and I think Tesco would likely say its a big growth area as well, no need for retail space, people can browse as they see fit etc. so surely the same thing would happen across countless sectors? Right? Even finance?
Wrong… Well, not fully right anyways. If you look for an online-mortgage the likelihood is that you will be asked to fill in some information and ultimately a human being will still contact you and you will then send in documentation to them etc. it won’t be ‘online’ in the sense that buying a plane ticket is ‘online’ (i.e.: zero requirement for human interaction/intervention), however in this article I will outline the possibility for mortgages online and how I think the successful players will approach it.
Firstly in a mortgage over the web there will need to be at least some form of working your way through the myriad of questions that a human might ask a person in determining their mortgage needs, computers are great but they still lack actual intelligence of being able to look at soft data and opinions and then turn that into a human like solution. So the ways around this are few. A company could use videos, a series of pre-recorded videos could perhaps help the user go through the options and then base this on an algorithm that is tree-shaped, so the videos link into questions that the user answers and depending on the answer they give the next short video in the procedure will play appropriately.
For example: video 1 – are you a first time buyer, an investor or looking to refinance?, (user clicks on a button saying ‘refinance’ and this queues the second video) ‘you answered ‘refinance’, so are you looking to xyz etc.’. This would take out any intelligence and base all mortgages on an assumed algorithm, it might work ninety percent of the time but not 100% and anything short of that is not a successful web application. Another option would be to have the person fill in some of the extensive forms and then it would go to a person who would make a decision based on the information provided and email them back their choices, if they wanted to actually talk to this person they would call a 1550 number and pay a euro a minute and in this respect it would imitate the way low cost airlines sometimes work where any time you call them its on a premium rate line and costs you.
Then there is the possibility of using technology like web-cams so that you can have a consultation over the web but that will require a fully skilled up person on the broker side and the idea of using the web to its full effectiveness is that you don’t have professionals heavily involved in the process. Perhaps it is something that will only appeal to the very educated (in terms of mortgages) client who knows what they want and are simply using an online mortgage to achieve that end.
From a providers point of view there are a few issues: proof of identity and address, people would have to send original passports to the provider if they wanted to get an online mortgage, this is currently the way its done for online banks such as Northern Rock or Rabo, the strict money-laundering requirements placed on financial institutions means that the system can work no faster than the statutory requirements placed on it. However, assuming that a person did send in the required documentation in a prompt manner and you get a mortgage loan offer online there is the final peg, Solicitors, and try as I might I can’t figure out a way to get their service supplied via the web so for 2008 at least I’m confident that we won’t see rapid progress in online mortgages, 2009 may be a different story though!