Last week in this blog I flagged up Radio 4’s The Bottom Line’s interesting debate about the impact of fintech on the banking scene. If you had time to tune in, you will also have heard Anthony Jenkins, former CEO of Barclay’s Bank talk, in almost apocalyptic terms, about the accelerating fall in branch traffic. He quoted customer traffic as falling by 15% per annum and said: “If you walk into a branch in central London now, you can see the tumbleweeds rolling through the aisles.”
Banking is Changing
In January, the Clydesdale and Yorkshire Bank announced the closure of 79 branches, representing a third of the bank’s branch network. The bank attributed the move to the trend towards electronic banking and gave a statement that said the bank was committed to embracing digital innovation, while continuing to invest in a more sustainable branch network.
At the end of last week, RBS announced the closure of 180 branches and in a statement commented that the changes were due to a “dramatic shift” in retail banking with more customers increasingly banking online.
It seems the tumbleweed is not just rolling through the aisles of branches in central London!
And it’s clear that going into a branch is not the way people want to manage their financial business any more. We are living in the digital age. We have been shopping, planning holidays, socialising and dating online for years. We like to do things fast, efficiently and possibly most importantly – we like to them in our own time.
The Future of Mortgages
At Castlight, we are working with some of the UK’s biggest banks, who anticipated this zeitgeist, and were quick to recognise the kind of fintech products that would help them deliver what their customers want. We are partnering with these banks and mortgage brokers on our Affordability Passport, so that they can provide their customers with a 10 minute loan or mortgage, without having to spend a typical 2 hours in a branch. The Affordability Passport allows lenders to offer their customers a secure platform through which they can share transactional data from their bank accounts which, merged with credit performance data, reveals accurate, categorised costs and credit commitments and of course, the bottom line of a monthly disposable income. This provides the lender with 360 degree analysis of the customer’s ability to afford and manage the loan. And all this, in just a few minutes. Efficiently. And in the customer’s own time.
Two hours is currently the average time it takes to process a mortgage. That’s actually quite a long time. It may not have been in the past for such a life changing transaction. But as the banks are so clearly recognising, today’s digital savvy customers aren’t used to straightforward business transactions taking so long and the tumbleweed is moving in.
We’re used to doing a lot with a two hour time slot. I can think of half a dozen European cities you can fly to in 2 hours.
In fact, there’s an idea! Why not fly to the Barcelona sunshine, order paella and a cerveza, whip out your laptop and get a mortgage agreed – in the same time it would have taken to sort in your High Street branch.