On your Atom bank website bio, you say “I’m getting ready to turn the intermediary mortgage market on its head” How are you planning to do this?
We have started - and it’s still early days, we're still very young - but we have started with the customer journey from application to offer. We've made that bit of the journey completely digital. From the moment the intermediary submits the application or a Decision in Principle to our system to the point the customer gets their mortgage offer. We've managed to make that entire process fully digital front end and back. For the customer that journey happens entirely within their app. The customer gets instant updates and transparency on what's happening with their application. They get all of their documents in a digital format, which are saved in their digital vault in the app. So no snail mail for signatures, none of that legacy stuff and they login to our app using their biometrics. Finally, they accept their mortgage offer entirely in app.
We started with that bit of the journey where we could make a difference but what we'd like to work on next is joining up the rest of the chain. From the point that the customer starts either looking for their house or searching for their remortgage, right up to the point of completion. We'd like to try and join all of the bits of the industry together, because at the moment they're quite disparate parts. In a perfect world, I'd like that if the customer goes through their mortgage the first time and then when they're ready to move or remortgage they don't have to go through the entire process again. We want to make it easier the first, second, third, fourth time etc.
I was going to ask you how is the experience of getting an Atom mortgage from the customer point of view, but maybe you've already explained in the previous question. Would you like to add anything else?
From the point that the intermediary gives the advice and submits the application for the customer, the first thing that they do is request a Decision in Principle. We've made that decision fully automated, apart from a very small number of cases which get referred. So the customer knows straight away whether or not they're eligible for one of our mortgages or not. We tried to make that process really simple and straightforward for the intermediary and the customer.
When the customer gets a Decision in Principle accepted they get an instant update from us. We send them an email and a text message to say "Good news, you are eligible for one of our mortgages and your intermediary will take you through the rest of the process. But you can go now and download our app and you can follow the progress of your application there". The customer gets to do that straight away. They get to set up their app, biometric security, call their account whatever they want to call it and personalise that experience. Even down to the colours that are within the app, the naming conventions and all that, the customer gets to make them their own.
The customer follows the journey from Decision in Principle and as soon as we get the full mortgage application, the app updates to tell the customer "Your full application is here". We give them a copy of what we have so they know exactly what goes on file in terms of data that we have for them and what was submitted in the application. We sign post them around "This is what happens next and this is what these things mean". Because a lot of customers still don't really understand some of the terminology and the journey is quite opaque in the traditional sense. We explain to them "We need to instruct the valuation, if we didn't get an automated one. This is what a valuation is, this is why we need it and this is how long it will take". Then when that valuation comes back in, a copy of that goes automatically into the customer's digital vault. They can see exactly what we've got, what the valuer said and how that influences how much they can borrow. We do the same about instructing the conveyancing. We explain what that is, the steps that we go through to underwrite the mortgage and how long those processes take.
So where we get a fully automated application that gets an automated valuation and we can verify the customer's income using a digital check, we can get the customer from application to offer in 14 seconds. Our average time is 12 days, against the industry average of 16 days. Don't get me wrong, that's not the norm yet. We don't do too many applications in 14 seconds. But we regularly do a few a week where we get them out in under 20 seconds. For a customer to have that kind of transparency, reassurance and decision so quickly, with their offer in their app straightaway, it's pretty game-changing. It's a such a nice customer experience. We'll keep working with the technology and the automation to try and make it more of the norm for us.
What were the most difficult lessons you've learnt?
Having no legacy systems made it so much easier and we also started with no customers. A completely blank sheet of paper, which is such an amazing place to start. It's really helpful to be able to think differently and push the boundaries.
But because all the technology is brand new, we're using an app-based journey and sales and origination systems that didn't exist before. We're using open APIs in a way that has not been done in the mortgage industry before, so we had to do things quite slowly. We had to move in a very conservative and kind of slow and steady way to make sure that we didn't try and do too much too quickly and get things as close to right as we could before we went live. These are things we have to launch in stages.
Also, you know, the technology is new and some things didn't work quite the way that we expected. You put systems together and you think they're going to behave in a certain way and they don't.
And as with all good startups, projects overrun, and you spend more money and time on some things than you'd think.
Some parts were really difficult to recruit for. All of our development and middleware is in house but because we're based in the North East of England there's such a shortage in some areas of technology, especially fintech. Sometimes we really struggled to get the people we needed to do certain parts of the journey.
So yeah, it's been very exhilarating but also very frustrating in equal measure. But that's the joy of doing something that is different. Being the first to do this, you get all of the growing pains, but you also get the upside as well. So being the first one, we broke some industry records and we've broken the mould on the journey. We've grown quite slowly compared to how we could have but achieved a lot. The stats that have come out recently from UK Finance shows that we're now the fastest growing lender in the UK. We were in the top 25 in the first year of trading, which is pretty phenomenal for a brand-new bank which started with no customers at all.
From the broker side, how is working with Atom bank different from other lenders?
We started with intermediaries only and at the moment we still are. While we were designing what we wanted this journey to look like, it was the brokers who came to help. We had lots of customer insight, but we also had brokers actually on site who came and did workshops and told us what their frustrations were, what they really wanted from a lender system and how we could make this customer journey better. Which also makes the intermediary journey better, because intermediaries spend a lot of their time chasing things that they shouldn't have to. Or just not knowing where something is in the process because it's not transparent or it's not accessible. So we got a lot of insight from our brokers very early on about what the problems were and what were the things that they really wanted a digital lender to fix.
When we were designing and building the journey, the intermediaries were with us every step of that way. They gave us feedback, insight, they tested our systems for us, told us what worked really well, what didn't add value or they didn't think they needed. Even now that we're 18 months in, we still speak to our intermediaries on a really regular basis. And because we're agile we do sprints every four to six weeks, so they feed into that. Then we let them know that we have made the changes they've requested, because that makes us better. We've done a lot of criteria changes, app upgrades and system changes to make journeys better.
How do you see the future of mortgage lending?
There are so many things that are on the cusp of getting here but aren't quite ready yet. We've got Open Banking, which is still very early days and we're still not quite sure how that's going to pan out yet. Mark Mullen [CEO of Atom bank] chairs the Challenger Bank group for the Open Banking Implementation Entity which is great because then we get to feed into that and understand what's happening and how to shape it. We think that if we can get Open Banking to work the way it should for customers, a whole lot of the existing processes around origination and underwriting won't have to be done anymore. Today we're still very reliant on asking the customer for bank statements or payslips to verify their income or their outgoings, we shouldn't need to do that going forward.
There's also Blockchain technology. As I mentioned earlier, the process for the customer to move home or to remortgage, we can get sales and origination down to 20 seconds. We'll keep working on that until it becomes the norm. But the whole end to end journey can still take anywhere from six weeks to six months, depending on what property you're buying, where and how many people are involved in that chain. I think there's definitely a place in the future where we can use a distributed ledger to make more of that journey digital and enable customers to get to a point where they don't need 14 days to get a mortgage offer. But right now that data is not available in a way that’s accessible or easy to share between platforms to make that happen - time will tell.
We're also working on Machine Learning and AI - things like how we make a decision, how we use credit scores and incomings and outgoings and the customer profile to make that decision. We should be able to use AI to make that so much quicker, more stable and less manual, but also more unique to the customer, because we'll be able to build a much better picture of how that customer's credit works. I think we'll get to a point where we should be able to give a customer an absolute unique product for them, so they can get a mortgage which is completely bespoke to their needs based on the data that we were able to get from them.