Mortgages are a key area of competition for UK banks and building societies, but they’re becoming less and less profitable. Technology could hold the answer.
Retail banks are facing significant challenges maintaining margins, due to compliance/ regulation costs, low interest rates and emerging competition from new players who have identified a gap between customer mortgage expectations and reality.
So far, many banks have been unable to deliver convenient borrower experiences due to complex processes and fragmented systems. The only options available to preserve market share has been offering bundled discounts and cutting interest rates, further reducing margins.
The rise of open banking provides a chance for banks to correct some of the historic issues that have plagued mortgage lending including:
• High cost
• Manual processes • Lack of tailoring
• Profitability
• Slow processes
• Fraud