The Role of Digital in Mortgages

1. Deliver a better borrower experience

2. Increase transparency

3. Remove pain from the mortgage process

4. Deliver digital compliance

5. Deliver cost savings

2

Need to Change the Paradigm

Systems-out View • Compare• Pre-qualify• Apply• Qualify• Complete

Experience-in View• Dream• Shop• Buy• Move• Live

“Too many mortgage lenders take a systems-first, customer-

last approach to serving mortgage borrowers”

3

The Interested Stakeholders

• The Banks

• The Middlemen

• The Alternative Lenders

• The Portfolio Builders

• The Alternative Advisors

• The Customer Enablers

• The Transformers

4

The Banks- ING competing through a separate entity

• Lent €16.1bn in 2015; 93k mortgages • 400 banks, building societies, savings banks and insurers• Germany’s best Mortgage Provider per €uro magazine for past 10 years

• Interhyp accesses and calculates thousands of different mortgage rates. • Customers can choose the best mortgage offering.

5

“the world’s first integrated, end-to-end digital platform for real estate”

servicing portfolio of $369bn and 2.3m+ customers.

The Banks- Nationstar Integrating Home Buying Value Chain

• One of the largest selections of real estate owned, short sale, foreclosure, and luxury properties for sale at online auction.

• Find your perfect investment home, rental property, or vacation home, use our exclusive "Own It Now" to purchase pre-auction.

• Get your keys faster with our Express Close Program.

6

The Middlemen- The role of traditional brokers is changing

• Marketplaces and brokers assist potential borrowers shopping for mortgages and the best mortgage rates.

• Marketplace mortgage originators use rate algorithms take basic application information and present a roster of potential lenders to customers.

• The customer chooses one, or several, of the rate options, and the referring marketplace site receives a fee for the lead; the customer then completes the process with the lender.

• Online mortgage brokers provide a concierge service with advisors guiding customerthrough the home loan selection process.

• HashChing is an online marketplace for customer to access pre-negotiated home loan deals from verified mortgage brokers. Consumers choose a deal, upload required documents and receive a call from the mortgage broker.

7

The Alternative Providers-Nonbanks provide more mortgages than banks in USA

• Alternative lenders are online mortgage originators that are fast becoming a major force in the US mortgage industry

• These next-generation mortgage lenders strip away layers of delays built into the old system by using – automated loan-decision algorithms, – electronic document gathering – secure online communications

“We understand how complex mortgages are, that’s no secret. It is extraordinarily complex. But where we differ is that we think computers are better with complexity. Software eliminates human error and human greed. Plus, the Internet is always open.”

Jason van den Brand, founder and CEO, Lenda 8

3rd Biggest Mortgage Lender in the USA

Rank Mortgage Lender 2015 Vol Share1 Wells Fargo $213bn 13.0%2 Chase $106bn 6.3%3 Quicken Loans $79bn 4.7%4 U.S. Bank $71bn 4.2%5 Bank of America $70bn 4.2%

The Alternative Providers

9

“Push Button, Get Mortgage”

The Alternative Providers

10https://www.youtube.com/watch?v=QlRm6Y5iVfw

“We make mortgages fast, simple, and totally better”

The Portfolio Builders- Mortgages as a means of chasing yield

In the Netherlands, Regiepartijen accounted for c. 25% of mortgages sold i.e. non-bank lending platforms that use brokers and/or websites to sell home loans on behalf of institutional investors.

Better Mortgage is combining data science, machine learning, and user experience (UX) design with the goal of streamlining the mortgage process.

“an 'alternative' fixed income asset management and advisory firm and risk analysis software provider. In addition, we manage our proprietary online mortgage lending platform”.

11

Pepper is a humanoid robot that: • takes its surroundings into

consideration • reacts pro-actively using

proprietary algorithms• synchronises with cloud-based

databases using the Internet to gather information

• detects your emotions and chooses the ideal way to communicate with you

The Alternative Advisors- “Pepper” the Adaptive Humanoid

Jiaojiao

NAO

12

Susceptibility of Computerisation• Insurance Agent 92%• Personal Financial Adviser 58%• Mortgage Advisors ???

For 4m people in England and Wales (8%), English is not their main language• This rises to 22% in London • In total, 726k said they do not speak English well while 38k speak no English

Source: Mail Online 30 January 2013

The Alternative Advisors- Humanoids understand and speak multiple languages

ConductRules

&Obligations

13

“where banks and brokers bid for your loan”

The Customer Enabler

14https://www.youtube.com/watch?v=RpI9TLtW8ek

Could mortgage bidding work in UK?- Already here for cars!

15

The Transformers- Creating a Home Exchange Market

16

“a better home selling and buying experience”

Don’t wait for Digital Innovation!

• The UK is the largest European mortgage market; book & new originations

• This represents a significant opportunity for entrepreneurs looking to build a new business by improving on the market that exists today.

17

The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.

Thank You

18