UK mortgages & savings: witnessing a digital transformation

There is a clear demand in the UK market for a proven technology provider

Over five months on from the initial lockdown, and the UK banking sector is coming to terms with the coronavirus pandemic. While the government and regulators have reacted quickly by introducing payment holidays and support schemes to help many of those consumers affected, the lenders, brokers and technology providers that work within the sector have also made changes.

The last few months have witnessed huge numbers of product withdrawals. Moneyfacts research reported that between 23 March and 5 August, a total of 2,532 mortgage products were withdrawn from the market. While the average mortgage rates have fallen to record lows for low loan-to-value (LTV) borrowers, those looking for higher LTV tiers continue to see a jump in costs.

Savers continue to face a challenging market as the number of savings products available continues to hover around the lowest level on record with average rates continuing to tumble. Despite the fall in average savings rates, research carried out by Aegon has found that since the start of the coronavirus crisis, 12% of consumers have set up a new savings fund.

The outlook for the savings and mortgage markets appears uncertain and providers will need to continue to adjust their positions when dealing with an inevitable influx of queries. This perfect storm has seen savers look for new options, brokers looking further afield for their clients and specialist lenders gaining traction.

While consumers have been driving digital change for many years, the impact of COVID-19 and the changes it has caused has seen providers react and accelerate plans for transformation. Events of the last few months has seen widespread acceptance of a multi-channel approach and the rate of digital adoption has accelerated.

Face-to-face meetings used to be considered essential – but now virtual meetings with brokers and customers have grown in number and levels of sophistication, quickly becoming the new normal. Distancing restrictions have seen an increase in the use of alternative valuation methods (AVM), such as automated and desktop options ensuring the continuation of applications.

The industry has reacted quickly and the speed at which banks and providers have implemented digital change has been impressive. To retain market share with a customer base and intermediary network that now expect digital interaction as standard, providers must push ahead on their transformation path, or indeed accelerate their internal strategies and engage with a technology provider.

COVID-19 may have accelerated plans for change with some providers, but others have already enhanced their consumer platforms. Customer feedback from Saffron Building Society revealed that they wanted alternative ways to access their savings through a range of channels. To ensure that this could be achieved effectively, there was a need to deliver cost reductions without sacrificing the service its customers receive.

By launching the DPR white-label Savings mobile app, Saffron was able to fully brand and personalise its look and feel, whilst offering rich functionality to its customers. Since launch, Saffron has reported increased customer demographic reach with 52% of app downloads coming from customers within their target segments and an encouraging 19% increase in online banking customers. These outcomes highlight how trusted technology providers are meeting the rapidly changing demands that both the mortgage and savings markets face.

DPR has a proven track record in the UK and continues to grow. Having transformed Cambridge Building Society to a leading digital society and launched Redwood Bank, we fully understand the challenges faced across the all-important project and launch phase. Offering solutions for customers and staff, transforming established UK brands such as Hanley Economic Building Society and Saffron Building Society, and supporting new entrants such as Castle Trust, DPR is driving digital change.

An established savings and lending provider (and soon-to-be bank), Castle Trust, plans to launch a savings proposition to retail customers. By using DPR’s Savings Solution (with integrated Origination and Servicing) it will be able to manage a range of retail savings products, including individual savings accounts (ISAs), and serve customers across multiple distribution channels. “We have bold ambitions to grow and scale the business. This is why we have chosen DPR. Its solution capability, experience, migration expertise and depth of market understanding is second to none,” said Martin Bischoff, CEO at Castle Trust.

Demand for change will continue to be high with savers seeking more competitive returns across product types and terms and borrowers dealing with Stamp Duty and Help to Buy amendments as well as additional interest in holiday lets and equity release.

To be best positioned to make the most of the opportunities moving forward, the key is to embrace automation and there is a clear demand in the UK market for a trusted technology provider such as DPR that highlights the choices and options that are available.