Digital banks face a tough challenge selling mortgages

Digital banks face an uphill struggle when it comes to monetising their quickly growing growing audience.

Little more than a quarter (27 per cent) of British adults would consider taking out a mortgage with a digital bank, according to a new poll.

This is the second story AltFi has published in a series of features analysing the results of the AltFi/Streetbees Digital Banking Benchmark 2019, a 4,500-person Europe-wide survey on fintech attitudes among consumers.

Of the 1,000 Brits we asked (530 women, 450 men) about how they feel about fintech challengers to traditional banking we found greater sceptism towards digital mortgages than other financial products.

Of those who said they wouldn’t consider taking out a mortgage from a digital bank, 36 per cent said it’s because they'd prefer to take out a mortgage with an established bank and 11 per cent said they don’t believe digital banks will be around for the lifetime of their mortgage.

Ishaan Malhi, CEO and founder of online mortgage broker, Trussle, says while numbers might appear low it is a positive shift in consumer attitudes that nearly a third of people saying they’d consider taking out a mortgage with a digital bank.

“Had that question been asked a few years ago, the number of people likely would have been none. It’s not hugely surprising that of those who wouldn’t, one of the main reasons cited is that they’d rather stick with a more traditional bank out of fear a digital bank wouldn’t be around for the lifetime of their mortgages,” Malhi said.

“Digital banking is relatively new. And a home is one of the biggest financial and emotional commitments someone will make in their lifetime. It takes time to build trust when it comes to something of such value,” he added.

Malhi says that across the board we’re seeing the continued progression of digital banking, with more people encountering it and trust building in disruptors.

“With a shift in consumer needs, including the number of people with non-linear income streams, digital mortgage brokers and banks will harness technological advances, enabling a more sophisticated approach to mortgages. If challenger banks move into the online mortgage space, we're likely to see technology making the process simpler and more transparent for customers, and in turn, encouraging them to trust in the digital world."

Want to dig into the data? The full AltFi/Streetbees Digital Banking Benchmark 2019 results can be accessed here.

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