Will international revolutions change the Dutch mortgage market? (Gerwin Woelders)

Where the Dutch mortgage market is growing steadily and there are few major shifts, there is plenty of movement in the international market. The return on mortgages is good compared to other forms of lending and banking products. For example, it prompted Bunq to offer Venn Hypotheken. In neighbouring countries, the mortgage market is shifting considerably. New banks are growing rapidly, working completely digitally, and investing heavily in superior customer interaction. Growth figures such as that of the British OakNorth with a consolidated growth rate of 622% since 2015 are his practice. In the Netherlands, driven by investors, we saw a whole new number of new mortgage labels. These often operate under the wings of a service provider or big sister. The Netherlands lacks digital newcomers such as OakNorth. The Dutch mortgage market has all the ingredients to provide and manage fully digital mortgages. What could the Dutch market look like in 2025?

FinTech drives rapid market shifts abroad

Worldwide, we see the number of FinTech solutions growing like mushrooms. The number of investments in such companies is increasing to billions. Banks using FinTech have been showing impressive figures since their early days. Using the core banking platform Mambu, OakNorth was profitable within 6 months, with NPS of an unprecedented 80.5 for Dutch banks. The British ThinkMoney is widely praised for its user-friendliness of the customer environments developed with OutSystems. The British Habito, in 2020 rewarded as the best mortgage lender in Great Britain, assesses mortgage applications directly in its advisor portal. For mortgages this year, the American Finserv, SimpleNexus, Mojo, Qualia and LendingHome have won awards such as FinTech Breakthroughs. What is striking about these solutions is the high degree of user-friendliness, custom advice and they are fully data driven. OakNorth has fully configured its products in Mambu in 5 months, no more code is required. It is also possible to offer multiple products almost immediately. For example, the number of Monzo banking products in the UK has grown from 1 to 14 in 5 years. The flexibility and manageability of these new digital banks has an unprecedented basis. The cost of activating a new customer drops by 90% to €20, at least according to the World Retail Banking Report 2020 of Capgemini and Efma. The management costs and maintainability of the IT landscape also decrease significantly. As a result, mortgage lenders achieve a considerably lower cost/income ratio and can thus increase competition on interest rates.

International FinTech solutions offer the Netherlands potential for better customer service and efficiency

We do not stand still in the Netherlands. HDN recently started offering its standards from an API platform, parties such as Ockto and iWize provide the necessary customer data and parties such as FinData and the Nationale Hypotheekbond provide even more data needed in the mortgage process. Having all the data in order, including the product requirements and risk models, is the basis for adopting FinTech solutions to achieve greater efficiency and compliancy at lightning speed. In the Netherlands, a large majority of mortgages are applied for by an advisor on behalf of a customer. Digital interaction with mortgage advisors is therefore essential for providers. With HDN, the Netherlands already has a digital advantage in this respect.

  1. Mortgage lenders that achieve these five goals can distinguish themselves from and compete against new players and innovations.
  2. Strengthen data management capacity, put your own data in order and of the highest quality, and ensure that the adapter for external data sources is as simple as possible.
  3. Embrace a startup mentality to innovate, make sure your architecture and application platform is so flexible that functionality of FinTech solutions can be directly integrated.
  4. Optimize customer processes, data instead of documents and give customers continuous insight and flexibility in their mortgage process.
  5. Provide a digital and model-based risk management, not only the risk model for the calculation of interest and acceptance but also to comply with regulations such as KYC and AML, banks that do this completely digital, also over older portfolios, yield better returns.
  6. Minimize dependence on legacy systems, ensure a modern core and orchestration in the application landscape. The above-mentioned solutions offer an excellent and trusted basis for this, also next to existing environments.

Mortgage lending is mainly about risk management, also when it comes to digitisation of underlying processes and customer interaction. With the developments taking place worldwide, Dutch mortgages are becoming an even more sought-after and customer-focused sector in which risks in the granting and management phases can be monitored automatically and continuously. Will Dutch mortgage lending look completely different in five years’ time through the use of new technology?