The sector can be a rollercoaster ride for all stakeholders but certainly these first six months have seen more ups and downs than most. For a market that, in the five or six years following the Credit Crunch, was more renowned for lenders closing their doors rather than opening them, 2015 has been something of a breath of fresh air with a number of new operations coming to market.
In amongst the new breed of (by and large) buy-to-let and specialist operators such as Fleet Mortgages, Foundation Home Loans, Pepper Homeloans, and the like, we recently had a very notable future mortgage market entrant, Atom Bank. Firstly, this is an intriguing start-up because it is a new bank, rather than just a lender, and secondly, because the Bank of England has granted its banking licence based on the fact it will be a digital-only operation.
In layman’s terms, this is a banking operation that exists on your mobile phone, your tablet, your desktop, or any other available device, but it has no high-street presence, no branches and no bricks and mortar to speak of, apart from its head office. The last major new banking entrant to make a splash was Metro Bank and, while it has made much of its differences with the traditional operators, it has still followed a similar path in terms of opening branches and providing those traditional banking services over the counter.
Atom Bank is therefore a different proposition entirely and the hype has already begun as it sets itself up as the “first real alternative” to those on the high-street, stressing the fact it doesn’t come with the baggage and legacy of its older competitors. Now, while the provision of services digitally is nothing new, the fact this is all that Atom Bank offers is somewhat unique; no doubt the high-street will be quick to point out that they have been offering such personal and business banking products online for many, many years and they offer the best of both worlds for customers who want to conduct their affairs online, but also want to walk into their local branch. However, in a world where branches are more likely to be closed down rather than opened, one can’t help but feel that the future of banking is a digital one.
In that sense, the use of technology will be intriguing because, quite frankly, if Atom come to market with a ‘me too’ version of what’s already available, then one can presume that it’s not going to be a huge turn-on for potential customers. The fact that it is entirely based online might be intriguing, but what is it going to offer that sets itself apart? From a technology basis it will be interesting to see the systems it uses and the way it interfaces with its customers – but will this be enough? At the end of the day, it is also going to have to marry up this technology with the quality of its products – if they don’t stack up then there’s really no reason to use them.
This will certainly be the case when it comes to its mortgage offering – advisers will know only too well that a fancy lender system with all the bells and whistles might be nice, but if the products, criteria and service levels are not there, then they’re not going to be used. In the mortgage market at least, we are still not at a point where the vast majority of people are happy to conduct their mortgage business entirely online - one wonders whether Atom will be looking at the intermediary sector in order to secure volume? I can’t imagine it will look anywhere else and just rely on mortgage customers coming direct.
So, while this is an interesting development and it’s great to see competition in the marketplace, we await to see the strategy Atom Bank will employ. Technology for technology’s sake is not going to cut the mustard and it needs to be married up with a range of other services and benefits to deliver business. Mortgage advisers will be keenly aware of this, utilising technology to have a more seamless interaction with customers and lenders, but also having to make sure they can secure those customers and relationships in the first place. Technology can be a true enabler but there will need to be other positive elements in the mix to make the whole proposition work.
