Online Mortgage – Design of a Digital Mortgage Extension and Transfer Process

Topic

This study focuses on the development of design principles for an online journey for mortgage extension and transfers, which can be completed independently by private customers. The objective of this study is to streamline the mortgage process by integrating digital services that enhance the user experience and efficiency. The research employs an inductive qualitative research approach, utilising exploratory semi-structured interviews, to investigate the practical requirements and challenges of the implementation of fully digital mortgage processes. This study employs the Design Science Research (DSR) framework to create design principles that address the research topic in context of the Swiss mortgage market.

Relevance

This study highlights the significance of mortgages for Swiss financial service providers, anticipating that through demographic shifts amongst property owners, the relevance of digital services will increase. In particular, a reduced need for client advisory services in the context of mortgage extensions and transfers is present, which exhibits an opportunity for digital transformation. The study poses the question of what design principles define a user-centric, self-serviced online journey for mortgage extensions and transfers. The findings aim to assist financial institutions in transitioning from traditional processes to efficient, fully digital systems, thereby enhancing customer satisfaction.

Results

The study findings indicate a clear preference amongst customers for fully digital mortgage processes, in which they perceive greater convenience and efficiency. Furthermore, there is a demand for omni-channel offerings that integrate digital and face-to-face interactions. It is significant to gain an understanding of customer behaviour, in order to design effective digital journeys. Four main requirements for a user-centric online mortgage journey have been identified: omni-channel availability, automated data collection, automated credit decisions, and fully electronic closing. From these findings, ten design principles were derived with the objective of streamlining and enhancing the digital mortgage experience.

Implications

1. Enhance Customer Experience: Financial institutions should prioritise the creation of user-friendly digital platforms that streamline the mortgage process and ensure a seamless and intuitive customer experience.
2. Adopt Omni-Channel Strategies: Financial institutions should consider hybrid models, which combine digital services with traditional face-to-face interactions to meet diverse customer needs.
3. Enhanced Efficiency: The implementation of automated data collection and real-time analysis tools can significantly reduce processing times and operational costs for financial institutions.
4. Competitive Advantage: The introduction of advanced technologies such as AI and digital document management enables financial institutions to position themselves as leaders in digital innovation.
5. Scalability: The design principles facilitate the scaling of mortgage services and enable the addition of an increased number of users without compromising service quality.

Method

The study uses an inductive qualitative approach, with exploratory semi-structured interviews serving as a primary source for data collection. The research methodology is aligned with the principles of DSR. Building upon existing literature, this study focuses on the initial four stages of the DSR process. The validation, iteration and transfer of the field are not within the scope of this study and are therefore proposed for future research. The objective of this study is to derive design principles based on existing literature and the exploratory interviews without validating or iterating them.