The $1.9 trillion digital battleground in home loans

The mortgage industry is finally disrupted with a data-driven, tech-led business that is fast, simple and fair.

Industries are now expected to deliver on experiences demanded by customers which are digital, instant and transparent.

Accelerated by COVID, digital transactions are becoming the norm and are now a base requirement to win business. The retail and travel industries have been providing customers with “one-click” solutions for years. The mortgage industry should be no different. 

Buying a home is one of the biggest purchases of anyone’s lives, so why in a digital age, should people wait for weeks to secure a home loan.

Many traditional lenders claim to offer “digital” lending, but they are just masquerading by simply tweaking part of their existing application process with a fancy website. This simply means that these “digital” mortgage businesses are limited to a front-end, customer-facing portal, while at the back-end processing remains manual. 

An independent analyst report from E&P Financial Partners (2021) referred to this approach as “digital lipstick” - where banks are building a digital front-end that is entirely disconnected from its legacy technology, simply “wrapping” their existing legacy systems in a digital front door.

The result is an industry that is unable to innovate and deliver long term sustainable, innovation for customers.  

 

Reimagining the home loan experience

Turning the $1.9 trillion mortgage market on its head, Nano is here to reimagine the home loan process making home loans fast, simple and fair.

As a tech company that knows how to harness the power of data, Nano is taking on traditional lenders and their outdated legacy systems and slow approval processes.

In fact, our true digital mortgage positions us to drive what we’ve witnessed in the US, where 30 per cent of mortgages are digital. Here, we see a $100 billion plus market opportunity for Nano.1

By overcoming the patchwork approach to digitising mortgages, our full end-to-end digital mortgage tackles the customer frustrations, delivering faster approval and processing times.

We have had one customer reach unconditional approval in just 9 minutes and 41 seconds, which is game changing in the industry where it can take weeks or months.

This is made possible because our proprietary technology which automates property valuation, credit assessment, serviceability and identity checks, thus eliminating the need to provide paperwork, and allowing borrowers to refinance anywhere, anytime, on any device.

The re-bundling of financial services

We envision that the industry will be disrupted and re-bundled. That is why we can offer them everything they need to manage their day-to-day finances. Our home loan product comes with a free offset sub account, instant payments and transfers, a Nano Visa card, Apple Pay and Google Pay; everything you need day-to-day, with no Nano fees, from our Nano app

We had one customer tell us that he plans to wean himself off his traditional bank, as he realised that Nano provides him everything he needs. He now gets his salary paid straight into his Nano offset sub account, so he always has money available, while offsetting the interest on his loan. We also allow customers to create Vaults within their offset sub account to meet specific goals such as travel or education, all while 100% offsetting the interest paid on their loan.
 

Bringing transparency to an opaque system

Opaque pricing is typical in the mortgage industry. Customers don’t understand the true cost of their loan and are sometimes made to believe they are getting the best deal possible based on the advertised rates and honeymoon offers. Therefore, it is not surprising that over 60 per cent of mortgages are written by mortgage brokers given their role in helping customers understand the different prices offered by lenders. If the mortgage industry was simple and transparent, borrowers could engage with lenders with more confidence.

Unlike some traditional lenders with their loyalty tax, Nano’s policy is to always offer the same low rate for new and existing customers. With no overheads such as outdated branches and large and expensive head offices, Nano passes these cost savings directly to our customers. On average Nano homeowners can save $79,0002 in interest savings over the life of their loan.

It has been a fantastic journey so far since we began in 2019. Nano is now a team of 75, with extensive experience across many industries including financial services, technology and consumer goods. This diversity is also providing us with the ability to think differently about innovation. In fact, our team was deliberately built to think differently and deliver game changing products that are fair and simple for customers.

Nano will continue to reshape the industry, driving innovation and change to benefit the customer. The industry will have to respond to this new digital reality and service standard or face and extinction level event.

 

Footnotes

1 Based on the value of net new flows in the Australian home loan market roughly at $340 billion – if Australia follows other markets with 30 per cent of the market being digital in 3-5 years.
2 Weighted average of existing Nano customers based their previous home loan interest rate prior to refinancing to Nano as at August 2021.
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