This article is a continuation from our previous article on generating mortgage leads "Looking to safeguard mortgage leads in the digital new normal?", in which we looked at how to leverage partnerships, service enhancements and the right marketing-mix to generate new mortgage leads in a post-COVID world with more digital touchpoints. We presented an example of a client, Tim, who wanted to buy a house and had not yet found the right lender. In this article, we look at another client, Maria, and her journey to renewing or refinancing her expiring mortgage.

The Swiss mortgage market has been under pressure for the past decade. Low interest rates reduce lending margins, and new entrants looking for stable returns threaten to squeeze profits further. Lenders have historically focused on attracting new clients and supporting them in the house buying process, while renewals were mostly left to the existing mortgage provider.

Around 14% of the Swiss mortgage volume (CHF 150 bn¹ in 2019) comes up for renewal every year, compared to just CHF 30bn of new mortgages. Even if around 90% of clients choose their current mortgage provider to renew their mortgage, it means that a third of the total mortgage lending in the market is refinancing. With greater market transparency and easier refinancing processes, this proportion is likely to increase in the future. Mortgage brokers, platforms and online comparison sites are just a few examples of how the process of renewing or replacing mortgages has changed.

So how can lenders generate mortgage leads in this new landscape that offers opportunities to compete directly with current mortgage providers?

Generate new insights by developing relevant client personas

It is not easy to win a new mortgage client from an existing lender considering that you have to replace an existing client relationship. It is made even more difficult by the information advantage held by the competitor. In fact, you may not even be aware of the existence of these potential clients.

Lenders’ strong focus on the mortgage market for new home buyers often leads to missing out on other opportunities. In Figure 1 we introduce the example of Maria Müller who is renewing or refinancing her mortgage. Understanding the needs and challenges she faces can help financial institutions to tailor an offer that will attract her.

We have identified two relevant client sub-segments that Maria may belongs to:

1. New client: Maria has not yet established a relationship with the financial institution.
2. Existing client without a mortgage: Maria has an existing relationship with the institution, but her mortgage is financed by a competitor.

Figure 1: An example client persona for refinancing a mortgage

Maria’s journey provides few touchpoints for interaction

Figure 2 illustrates Maria’s journey to renew her mortgage. The mortgage refinancing cycle is much shorter than the process of obtaining a new mortgage. Price-sensitive clients such as Maria simply gather information, ask for quotes, compare the offers and then choose the cheapest option. The process is even quicker for loyal customers, who ask for and accept an offer from their current mortgage provider.

Given the short mortgage refinancing cycle, lenders trying to target renewal clients should try to interact with clients not only during the refinancing cycle process, but also at earlier stages in the ’owning-a-property journey’ (shown as a grey arrow in Figure 2). Maria needs not only a loan, she is also open to advice about renovation and maintenance, personal taxation, or general advice on handling her finances. These needs can be addressed before the actual mortgage renewal process begins.

Figure 2: The initiation of the renewal process interrupts Maria’s business-as-usual

Increase your leads by pulling the right levers

Figure 3 lists a variety of levers to get Maria’s lead along with the effort involved and its likely success.  As Maria is already experienced with mortgages, a suitable marketing mix is essential to persuade her to even consider a mortgage offer in terms of price and ease of access. A search engine optimization/advertising (SEO/SEA)-campaign or a referral system can help to attract her attention. Partnerships with external service providers can create visibility so that Maria finds an offer in a wider context around the whole property-owning ecosystem.

Data analytics can also be used to identify clients that already have a mortgage from another provider. Knowing that Maria is a property owner presents the financial institution with an opportunity to meet her adjacent needs while the competitor remains ’only’ the mortgage provider. Existing clients may leave traces in their relationship (e.g., in their payments transactions) that indicate the possible existence of a mortgage with a competitor. However, the opportunity to leverage client data in this way may be missed fail due to a lack of analytics experience and know-how.

Figure 3: Example of levers to improve your lead generation

Successful examples illustrate the potential from applying technology:

• Mortgage brokers: Mortgage comparison and brokering platforms generally deliver simple and intuitive interfaces to compare mortgages from different lenders. Clients receive preliminary personalised quotes within minutes. Through matching algorithms and a large selection of banks, clients can be matched to the best offer in the market. Market leaders have started to partner with house owning service providers to integrate the mortgage renewal cycle into the wider ’property-owning ecosystem’.

• Platform solutions: The integration of the whole client journey by building a service platform for the ‘ecosystem living’ enables the gathering of high-quality leads that would have been missed without a platform. Building a service platform enables the integration of the whole client journey and gathers leads along the way. Clients can buy, insure, manage, maintain and sell their property on the platform which creates a new ‘all-finance’ product providing all services around the needs of property owners. Such platforms gather data and enable new analytics possibilities to tailor the offering to individual clients.

Maria’s client journey represents a price-sensitive client segment. Mapping the path to owning a property and the mortgage renewal process is a crucial step in identifying new touchpoints and opportunities to attract clients in this segment, at an acceptable cost. Given current market trends and experiences from other European countries, it is likely that Maria’s client segment is going to increase in importance over the coming years.

For further information or discussion, do not hesitate to contact our experts at Deloitte to support you in boosting your mortgage leads.

Sources: ¹ https://moneypark.ch/news-wissen/hypotheken-und-zinsen/hypothekarmarkt-schweiz-stetiges-wachstum-um-drei-prozent/

Key contacts

Dr. Marc D. Grüter - Partner, Lead FSI Transformation

Marc is a Partner in Deloitte’s Risk Advisory practice and a member of the Financial Services leadership team at Deloitte in Switzerland. Within Deloitte Switzerland, he oversees Risk, Regulatory, Compliance and Transformation topics for Financial Services. Marc holds a PhD degree in Bank Management, Finance, Risk & Regulatory Management from the University of Basel. He has over 18 years of experience in the global Financial Services sector, as well as a solid background in Strategy and Management which he gained from working at several leading global Consulting firms.

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Vlad Ciocan - Senior Manager, FSI Transformation

Vlad has over 15 years’ experience, mostly in financial services and consulting. He joined Deloitte from a leading Swiss comparison site where he managed the mortgage business and acted as CEO of their mortgage broker. Before that he worked for a major Swiss universal bank, where he was responsible for the digitalisation of loan processes, focusing on residential mortgages and unsecured corporate loans.

His consulting experience pre-Deloitte includes a broad range of industries (e.g. travel, retail, consumer goods, and automotive) and subjects (strategy, reorganisation, restructuring, marketing and sales).

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Patrick Steiner - Senior Consultant, FSI Transformation

Patrick has over four years’ experience in risk management, and retail and corporate banking, as well as research. He guides clients in their digital transformation journey by combining his strong data analytics expertise with his experience in front office roles. His project focus lies on digital transformation, client analytics and lifecycle management.
Prior to joining Deloitte, he worked as a real estate economist/data analyst in risk management, assistant relationship manager and successfully completed the Junior Banking Program (Swiss Banking certified).

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