Innovators dilemma! According to Clayton Christensen’s classic study, large, dominant companies in a market place often fail to spot important new innovations until it is too late. Instead, some upstart company manages to create expertise for itself which the older more established firms cannot match.
Could the housing market see its own innovators dilemma unravel?
According to Intelenet Global Services, the UK mortgage application system remains largely phone and paper-based, the application cycle is slow, patience is tested, business lost.
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Queue digital. The company reckons that traditional players need to digitise the home-buying process, or eventually, won’t be able to compete with non-traditional players disrupting the mortgage market.
So that is non-traditional companies such as fintechs and challenger banks, unencumbered by decades or even centuries of old thinking, eager and ready to grab market share and then jealously guard it.
“Updating underperforming and costly core-banking systems are a strategic priority for traditional mortgage providers,” says the company.
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Banks may not be the only organisations that operate in the housing market and which are in danger of being disrupted.
Attom Data Solutions, for example, has developed an artificial intelligence based system for estimating the value of a property.
AI systems could also be used to customise communication with customers, as well as support marketing, and estate agents target new potential clients.
Returning to the mortgage market, Intelenet Global Services has launched a new lending suite for their banking clients.
The system is AI & Automation based. Banks can apply it to generate mortgage offers in 30 minutes. The Lending Suite is interoperable with banks existing legacy systems which are often inflexible, and Intelenet calculates that it reduces processing time by 40% and costs by 50%.
It says that the solution integrates with existing core systems to deliver speed and accuracy improvements without the need to replace current infrastructure. This is important given that less than 30% of first-generation Core Banking Systems (CBS) replacements succeed, according to McKinsey.
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Nitin Sahni, Director of Corporate Services said: “Consumers are constantly searching for the best deals to enable them to invest in their dream home as quickly as possible. The last thing a customer wants is for this landmark time in their life to be tainted by long waits and arduous processes to get things moving.”
He added: “Revamping the core banking system seems daunting for banks who recognise there is a need to change their system but are deterred from the exorbitant implementation costs. Totally replacing the core business systems which largely underpin all banking operations is not feasible. Firms are looking for solutions to cut costs and processing times which fit alongside these systems.”
Nitin continues: “Speeding up processes will help traditional mortgage providers retain and expand market share while delivering the best possible customer experience.”