Expert survey on the utilisation of personal and property-related data in the context of mortgage financing

The following theses were validated through these interviews:

1. The end-to-end use of data from the "credit initiation" stage adds substantial value for all parties involved - especially for customers.
2. The use of data enables standardised processing with high efficiency and quality gains.
3. The customer experience at banks, comparison platforms, intermediaries or fintechs is sustainably improved.

The goal of the survey was to gain a broad overview of the market, and to get a feel for the current momentum of banks, providers and other financial market participants. At the same time, the aim was to identify critical success factors for implementation and to obtain a rough assessment of an implementation project or a step-by-step implementation.

Highlights:

1. Savings of up to 50% are possible along the financing process.
2. All parties involved benefit from the solution, but especially the customer.
3. Nothing stands in the way of making object and personal data usable. The task now is to do so.
4. Data-driven business models are only at the beginning, the intended implementation project an important step.
5. Such an implementation project is a "real" digital transformation, especially by bringing the public sector and the banks closer together in the interest of the customers.
6. Sustainability, reporting obligations and evaluations are constantly increasing. Data is indispensable for this.

Further insights from the expert interviews:

There is agreement that the utilisation of data as well as the necessary competence - not only in relation to the subject of the study - is a promising field of development for service providers, software and solution providers as well as for banks. The experts interviewed and their companies are currently in different development cycles. Some have been working intensively with data models and their utilisation as part of their business model for years, others are in the process of building up their own competencies. Around half of the experts rely in particular on proven and established data providers and suppliers, as soon as these have a sufficiently strong maturity level and the data quality and up to date to a sufficient extent.

From the customer's point of view, the interest in data in the context of mortgage financing is virtually "zero", but is event-driven (i.e. relevant in the case of a financing or extension/repayment). The majority agrees that the effort for customers is "enormous" and also inhibits the willingness to change. All organisations see the time savings for customers and the organisation in the utilisation of the data, as well as the greatest added value in the increase in efficiency, followed by increases in quality. Experts from the banking industry also see that the time saved can be used to increase (holistic) advice.

The greatest added value along the financing process as well as the efficiency gain are seen in particular in the loan initiation (regardless of whether online or physical) and the credit check, which are maximally favoured by the data.  The end-to-end use of the data brings further efficiency and quality potential for the credit institutions. In addition, further added values have been identified. These include the improved data basis for reporting obligations, support in sustainability reporting (reduction path of CO2 emissions), portfolio analyses and reporting with institutional customers and partners, in the issuance of e.g. bonds or the utilisation of property information for the public sector (e.g. official property valuation).

The greatest risks or reservations for the "fully automated" credit check are currently still considered to be the recency and quality of the data or the still missing information on objects (e.g. building substance, materials, condition of the building). Furthermore, certain personal data is currently not yet available in a structured and uniform way in central databases or data providers (e.g. pension funds, insurance companies). Provided that several data sources fulfil these premises of data topicality and quality, the project is said to have very good chances.

Among the experts interviewed, the data that is already used today - even if not in the customer interface - is particularly valuable. This includes the creditworthiness data of individuals, the property register data, the property valuations and the personal data relating to income and assets. The personal data, which is not yet available as a data source for the credit institutions, is probably the most important source of data from a trustworthy source (e.g. tax office) for one-time and repeated use (assuming the customers' consent).

In this context, the added value for the timeliness of data, credit monitoring and resubmission (in the sense of credit extension) were also mentioned as further advantages of such a solution, whereby the initial financing or replacement of an existing financing has significantly more potential. Sustainability information and data, such as energy efficiency, were also rated as valuable, although these are currently not sufficiently meaningful, but will gain in importance. Among the other data, the transaction history of the property or the existing mortgage financing contracts were also mentioned in isolated cases, which would ideally round off the picture.

The implementation and use of the existing interfaces, which have to be adapted and expanded accordingly, are seen as a particular challenge. The greatest challenge, according to the experts, lies in the consideration of the regulatory and data protection requirements as well as in the declaration of consent or authorisation by the customers to the bank, as well as in the corresponding use, data storage and archiving.

In addition to the legal and compliance requirements of such a solution, the second success factor for implementation for the interviewees is that the project is carried out with the participation and design of all parties. The influence on business models and the competitive situation was assessed differently, from very reserved to "it will come sooner or later anyway". Further use cases were seen by the majority in the further development in the direction of further forms of financing (investment properties, MFH), as the next logical further development step.

Based on the results of the expert interviews and many other discussions with interested parties along the entire value chain of mortgage financing, the OpenBankingProject (OBP.ch) is in the process of launching an implementation project. For questions or further information, please contact daniel.baenziger@bei-sg.ch.