While surfing the BBC website, online consumer spending data provided by market research company Verdict caught my eye. The research reports a 33.4% increase in online shopping last year, a market which is now worth 10.9bn.
Verdict predicts online sales will almost triple over the next five years, with faster and cheaper internet access and growing consumer confidence in the use of online technology identified as the main drivers.
What is puzzling is that the mortgage market seems to be lagging behind. The life and pensions market has a much better record of providing e-commerce facilities for consumers to transact business. Online investors can buy shares, unit trusts, annuities and most classes of insurance.
But trying to buy mortgages online is more difficult. Most internet mortgage activity re-volves around lead generation. A large proportion of consumers browse for information on products and best buys, but when they provide their personal data to get competitive quotes, all too often the information is emailed by lead generation companies to their broker partners to follow cases up over the phone.
Even the most popular websites, such as moneysupermarket.com, provide little in terms of transactional capability. The truth is that the technology to give online borrowers a fast e-commerce experience is available but no-one has grasped the nettle yet.
I have reported before on internet systems that offer consumers interactive presentations of products and comparisons of rates and terms. These can lead to online fact-finds and Key Facts Illustrations. Once borrowers have selected products, most lenders have automated decision systems that can deliver acceptances in principle instantly. These systems could be integrated into consumer-facing mortgage sites to allow borrowers to self-serve.
Online support can be provided by interactive software that allows contact with consultants at any point in the process. Online conveyancing is now well advanced and can provide consumers with information and up-dates on the progress of their mortgages.
So the systems exist but we have yet to see the investment needed to put it all together.
One of the driving factors for change could be the need to reduce distribution costs in the regulated environment. Lenders want to find ways to reduce such costs and are keen to use technology to provide faster services to consumers. Therefore, it won’t be long before we see new initiatives in this area.
So the technology is available to drive a consumer-led e-commerce revolution and the mortgage environment is changing to make this more likely. Those companies that have a clear vision of e-commerce’s potential impact on mortgage transactions will seize the day.