The future of mortgage distribution is about choice, not channels – Spencer

Mortgage advisers continue to play a crucial role in helping customers navigate an increasingly complex market, bringing expertise, reassurance and a human perspective to one of the most significant financial decisions many people will make. 

While questions are often raised about whether a market that remains heavily intermediary-led can continue unchanged, there is little evidence that customers value advice any less today than they did a decade ago. What is changing is how customers expect to interact with lenders and advisers throughout their journey. 

Customer expectations are evolving, technology is developing rapidly and lenders are under increasing pressure to become more efficient while delivering more personalised experiences. Against this backdrop, it is all too easy to focus on whether the future of the mortgage market is direct or intermediated. 

In reality, the focus needs to be on how the industry gives customers greater choice, while ensuring the people, technology and processes behind each journey work together. 

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Tech supporting advice 

The debate around the future of mortgage distribution is arguably too binary: digital versus human, lender versus broker, direct versus intermediated 

In reality, the modern customer journey is unlikely to fit neatly into one channel. 

A customer may conduct research online before speaking with an adviser. They may engage initially with their existing bank or lender through an app. They might complete parts of their journey digitally and then seek human support when faced with a complex decision. Once the mortgage is in place, they may prefer digital self-service for some interactions, while expecting access to advice when circumstances change or it is time to remortgage. 

Technology does not have to diminish the value of advice. Used well, it can enhance it, reducing burden and repetitive processes so advisers can focus on the areas where human expertise adds the most value. 

That could become increasingly important as customer acquisition and retention become more competitive. As technology advances, we need to look at how we make the adviser relationship even more valuable. 

The advantage lies in data 

Underpinning this is data. The mortgage industry has access to huge amounts of information, but simply possessing data does not create a competitive advantage. The real opportunity lies in connecting it, understanding it and, above all, acting on it. 

This has been emphasised by the Financial Conduct Authority (FCA), particularly in relation to customer vulnerability and Consumer Duty. It is not enough to collect customer data. Firms need to demonstrate that they understand what it is telling them and that they are acting upon it.

For lenders, better use of data can support more personalised propositions, improve servicing, identify opportunities to intervene earlier and help firms understand how different customers want to interact with them. It can also help them become more agile, translating changing customer needs into improvements in products and service. 

For advisers, better-connected data and technology can remove friction points from the advice journey. The less time spent searching for information, rekeying data or managing processes that can be automated, the more time advisers have to focus on customer needs and delivering advice. 

The industry’s next competitive advantage will come not from the volume of data firms hold, but from how effectively they use it. 

Organisations that can convert insight into action, whether that is improving customer outcomes, identifying vulnerability earlier, personalising communications or reducing friction in the mortgage journey, will be better-positioned than those that simply collect more information.

Put simply, data only becomes valuable when it drives better decisions and better outcomes. 

The experience doesn’t end at completion 

Much of the conversation around mortgage distribution focuses on acquisition, but customer expectations increasingly extend far beyond the point a mortgage is agreed. 

Borrowers are comparing their mortgage experience not just against other lenders, but against the digital experiences they receive elsewhere in financial services and beyond. They expect greater visibility, easier access to information, more proactive communication and the ability to self-serve when it suits them. 

That creates a significant opportunity for lenders. Those that can combine quality advice and distribution with seamless ongoing servicing will be better placed to strengthen customer relationships, improve retention and identify future borrowing needs earlier. 

Increasingly, the quality of the servicing journey becomes just as important as the quality of the sales journey. The firms that recognise this and invest accordingly will be best placed to build long-term customer value. 

Better together 

This creates an important opportunity to move beyond the idea that lenders and advisers are competing for the same customer relationship. 

Both have an interest in delivering a better customer experience. 

Advisers need to attract and retain customers by demonstrating the value of their expertise. Lenders need to deliver efficient, responsive servicing and develop propositions that meet changing customer needs. 

Technology can support both. 

A more connected mortgage ecosystem can allow lenders to work effectively with their distribution partners while giving advisers the tools and support they need to reduce administration and spend more time with clients. 

That does not mean every customer needs to follow the same journey. The better the underlying infrastructure, the greater the opportunity to support different journeys without unnecessary complexity. 

Emerging technologies, including artificial intelligence (AI), will play an increasingly important role in supporting this shift. The biggest opportunity is not to replace human interactions, but to make them better. 

Used responsibly, AI can help lenders and advisers automate routine tasks, surface insights more quickly and identify customer needs sooner. That allows people to focus on the conversations, judgement and expertise that technology cannot replicate. 

Choice will define the next phase 

Rather than one channel replacing another, the future of mortgage distribution will be about choice. 

The majority of customers will continue to value advice, while others will move between digital and human interactions depending on their circumstances. The strongest propositions will be those that can accommodate those differences without compromising customer outcomes. 

For advisers, that means embracing technology as a way to strengthen relationships rather than seeing it as a threat, while making better use of the data available to understand customers and deliver a more personalised service. 

For lenders, it means investing in data, technology and operating models that allow them to support advisers and serve customers effectively across an increasingly diverse product and distribution landscape 

Ultimately, the next phase of mortgage distribution should not be about deciding which channel wins. It should be about making every channel work better. 

The industry has spent years debating whether the future is direct or intermediated, digital or human. 

The more important question is whether customers can engage in the way that suits them best. 

The firms that succeed will not be those that force customers into a particular channel. They will be those that combine technology, data and human expertise to deliver the right experience at the right time 

Advice will remain central to many mortgage journeys. Technology will continue to evolve. Data will play an ever-greater role in shaping customer experiences and outcomes. 

The organisations that bring all three together most effectively will be best placed to meet changing customer expectations and build stronger, longer-lasting customer relationships. 

In that future, choice becomes the competitive advantage.