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How to deal with the next generation of borrowers

Millennials, Generation Y, Screen-Agers. They go by a number of labels, but they’re largely accepted to be late teens to early 30s and looking for the first or second step on the housing ladder.

Mike Wood Unisys

They live in a world of real-time updates and don’t want to talk to real people.

They’re mobile and don’t have time to log on to a PC. In fact with the proliferation of mobile devices, they probably don’t even own a PC!

As a number of research studies have pointed out, they also have low attention spans, are poor decision makers and, importantly, need to be hand-held and reassured throughout a sales process. Having a friendly iPhone app, a twitter account or your witty You Tube interpretation of ‘Harlem shake’ isn’t going to cut it with this demographic.

How to win with this group?

It’s surprising what we can learn if we look at how other sectors are engaging with this demographic. Take eBay for example:

  1. It provides regular updates on purchases sent as ‘notifications’ via mobile, email & online

  2. The customer is regularly reassured throughout the sales process and knows what’s coming next

  3. It’s a purely automated customer communication with no silence

  4. Payment is made online with digital accounts and e-invoicing so there’s no paper

  5. The customer is updated on carrier status from dispatch to delivery

  6. The customer can leave feedback, report the experience to their friends and share via social media feeds.

So why would they and others not want to buy a mortgage in the same way (as far as regulation will allow)?

Here’s a scenario for Mortgages:

Borrower receives an agreement in principle so it’s off in the process to completion.

The Agreement in Principle is sent out, the valuation needs to be done, documentation needs to be signed and payments to be made.

It’s a lengthy process and one this demographic isn’t used to following, with likely responses being “I’m too busy to go to your branch, I haven’t got time to phone the contact centre, I want to get electronic notifications of progress so that I know where things are and, by the way, what’s all this paperwork jamming up my letter box?”

Lenders and brokers need to get smarter if they are to attract these borrowers – they need to be flexible enough to meet the expectation of these new customers who are very different from the generations that preceded them. It’s not just about differentiation, but survival.

And a step further…

In fact, you should engage these customers as part of the process. While social media is good for conducting a conversation, it isn’t the ideal platform for signing up customers, tracking them and retaining them.

As a result, the strategy to target this generation must integrate all parts of a lender or broker including their back office systems, business intelligence and their risk and compliance infrastructure. Some examples would be allowing them to send documents to you electronically (e.g. phones have cameras), allowing them to communicate in a secure way electronically (e.g. in-app messaging or video calls), allowing them to pay for fees through a mobile (e.g. with digital wallets), all as part of a seamless experience.

The same principles can apply to servicing a mortgage; managing the customer throughout the entire relationship lifecycle – all done through the same self-service platform.

As well as having significant benefits to the customer, it should also appeal to, lenders and brokers themselves.

They’re unlikely to be contacted by anxious customers wanting to know the latest on their finances, freeing up the more expensive channels that can focus on delivering new revenue for the business.

In addition, it’s easier to comply with record retention regulation using centralised electronic documentation while also removing the cost, human error and duplication of manual processing.

Don’t hang around

Research by Unisys & IDC suggests that many organisations are still not preparing themselves to expose back-office services to digital channels.

The answer is not just having a decent mobile app or an active Twitter account either; the customer experience needs to be integrated across all channels. So whether starting in a branch, picking up the phone, checking online, looking at an app – borrowers should be able to find the same information consistently.

In summary

History is not a good barometer for the future, so don’t rely on those traditional channels alone. Blockbuster, Jessops and Comet paid the ultimate price having failed to engage the new generation of customers – their tardiness to join the party with token gestures of innovation, left them irrelevant and sadly now extinct.

Instead, find new ways to interact with customers, using low-cost and automated processes throughout the full customer lifecycle.

The branch or telephone will never be replaced and the value of brokers and lenders offering a direct interaction is highly valuable for both parties. So look for opportunities for automation, self service and straight through processing across the end-to-end life cycle with the customer. Even when sales are advised, there are large parts of the application process which are open to self service.

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  • Bernard 3rd August 2013 at 7:03 am

    About time! Great article, I just hope this becomes reality very soon. The whole process needs a good shake up & hopefuly this will speed up applications as well as cutting out some of the costs too – here’s hoping!

  • Graeme 25th July 2013 at 1:00 pm

    Interesting article, I do wonder though whether this type of automation will become a negative as in its simplest implementation it would surely try to corner people into a “one size fits all process” and forget about those who do not conform, conveniently placed into the “too difficult” camp.
    This is where I think the difference is, with something like a mortgage applications we need to cater for people’s circumstances, which in the world of mortgages are far from black and white, as opposed to an on-line purchase on a physical product from an on-line retailer such as ebay. So I find myself agreeing that it’s not so much about automating the process, but ensuring the user experience is efficient and effective, in that is caters for me and my situation. Crack that as I can see it working.

  • Graeme 25th July 2013 at 12:59 pm

    Interesting article, I do wonder though whether this type of automation will become a negative as in its simplest implementation it would surely try to corner people into a “one size fits all process” and forget about those who do not conform, conveniently placed into the “too difficult” camp.
    This is where I think the difference is, with something like a mortgage applications we need to cater for people’s circumstances, which in the world of mortgages are far from black and white, as opposed to an on-line purchase on a physical product from an on-line retailer such as ebay. So I find myself agreeing that it’s not so much about automating the process, but ensuring the user experience is efficient and effective, in that is caters for me and my situation. Crack that as I can see it working.

  • Dennis 25th July 2013 at 10:59 am

    Good points, well made…

  • chris gardner 19th July 2013 at 12:50 pm

    apply for a mortgage via the post office and speak to nobody from beginning to end. The future is here already. fortunately for brokers the regulations are about 25 years out of sync with the digital world so the good times will roll in a sea of paper and nonsense.

  • Louis 18th July 2013 at 7:53 pm

    Some good points here. It’s years since I bought buy books or CDs in shops and I’m sure there are many like me so no surprise that HMV, Blockusters etc went out of business.
    I’m sure it won’t be long before people expect to buy mortgages on-line and those banks that refuse to change could go the same way.

  • Jezza 17th July 2013 at 11:52 am

    This is definitely the way to go, as it will save on sales cost, and will also improve the customer experience for people who choose to use the social media channel

  • Flo 17th July 2013 at 9:29 am

    Who ever reads Terms and Conditions online?

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