Data and customisation: Redefining mortgages for tomorrow’s economy

As the pandemic weaved its way through the global economy this year, 2021 unleashed extraordinary levels of innovation and growth in tech across the mortgage and lenders space.

Data and customisation: Redefining mortgages for tomorrow’s economy

Jerry Mulle is UK managing director at Ohpen


As the pandemic weaved its way through the global economy this year, 2021 unleashed extraordinary levels of innovation and growth in tech across the mortgage and lenders space.

Nevertheless, as the fog of COVID-19 continued to darken the economic landscape, so too did numerous market challenges, from increasing interest rates to the termination of the furlough scheme. And all this while society evolved slowly but surely away from the traditional ‘9-5’, veering towards a gig economy structure for an ever-larger proportion of workers.

Now, with 2022 on the horizon as we ease our way into a new style of digitally-driven living, mortgage providers and lenders must modernise with the rest of the economy if the sector is to tackle the challenges that the future will present.

With this in mind, I believe there are two key areas upon which the industry must focus in the new year: evolving consumer circumstances, plus the customisation and digitalisation of mid and back office IT systems.

Multi-faceted changes are set to impact the lending market at speed from 2022, ushering in a period of opportunity and progress for lenders.

A growing gig economy and increased workforce mobility mean consumer circumstances are becoming more complex.

From a fiscal and monetary policy perspective, ending furlough will change the nature of businesses’ servicing capabilities, while the first significant interest rate hike in a decade will increase mortgage repayment costs.

The pandemic’s long-tail impact therefore calls for more payment flexibility and crucial arrears management from lenders. This poses a challenge – yet preparation involves but one key ingredient: modernisation of processes.

Lenders can acquire the configurability required to cater for interest holidays and arrears management, as well as strong forecasts of consumers’ financial situations through AI and a data-led approach. Taking this tech plunge may seem daunting at first – but it’ll prevent even bigger risks and problems in the near future and can be done in bite sized pieces.

To answer this crucial need to advance and streamline processes, there is one resource in particular which is absolutely critical to harness if we are to modernise and future-proof the industry’s services: data.

The sheer abundance of data has grown exponentially during the last two decades, and its potential to make operations more efficient and adaptable for the increasingly volatile business world is impossible to ignore, with mortgages and lending being no exception.

A data-driven, digitalised approach to serving customer needs will be the only means of protecting both consumer and lender from 2022.

Arrears management, for example, provides a prime opportunity to leverage this digital-first strategy. Currently, lenders without an effective approach to arrears simply transfer all financially-vulnerable customers to interest-only mortgages – hoping they recover and pay their debts.

Yet in an economy where the traditional 9-5 approach is waning and the number of small business owners, independent merchants and gig economy workers is booming – this idea simply won’t work for everyone. Segmenting customers and building appropriate solutions for individuals, based on their unique circumstances, is therefore critical. The key to this tailored approach is leveraging all data sources available to lenders, through a suitable tech partner, to create individual consumer profiles. This will help lenders quickly identify customers that are financially vulnerable, helping them address any issues before they drastically escalate, using a balance of tech and human consultation.

In sum: simple excel spreadsheets as tools behind successful arrears management processes will no longer suffice in 2022.

All in all, leveraging technology to utilise the amazing data sources we have in real time will be key in adapting to increasingly fluid consumer circumstances, enabling lenders to forecast the financial situations that will affect their customers.

In this way, consumers will benefit from increased financial stability and tailored help whilst lenders benefit from more nuanced and efficient systems to deal with credit and arrears management processes at scale.