KBC banks on three-hour approvals for mortgages
Dara Deering has big plans for tech but admits trust is still an issue for banks, writes Samantha McCaughren
PRIOR to September, KBC Bank’s app took 26 steps to open an account. A new and improved app launched last month reduced that process down to five steps. Next on the horizon is mortgages which can be approved in three hours.
The prospect of being able through the usually painful mortgage application process in such as short time frame will be available within months. Dara Deering, executive director and head of retail banking at KBC Bank Ireland expects it to be introduced in the first half of 2018.
“What we’re seeing in banking is probably no different to what customers are doing outside banking,” she says.
“What we’re up against from a customer perspective is the experience they are seeing elsewhere. They are not necessarily comparing us to one of their competitors they are actually comparing us to an online site they have been on or an app they booked a taxi with.”
When the Belgian parent group announced its commitment to Ireland back in February, KBC’s strategy was very much digital first. But customers need to be convinced that new tech works.
“We put €5 into new accounts so you can actually go out and pay for a cup of coffee using Apple pay or Android pay so you could actually use the account instantly,” she says.
“You go from a journey that used to be days or weeks down to minutes.”
According to Deering the new technology, which can match up your face via a selfie with the photo on your ID, is actually more secure than traditional banking checks. “Mapping technology is more sophisticated than the human eye.”
Just under 20pc of new accounts opened at KBC have been done via the app in the past few weeks. “That is much stronger than we would have thought even in the early couple of weeks.”
The bank has 250,000 customers in total, across current account customers, deposit customers and mortgage customers. From a market share point of view, in the first half of the year, about 15pc of all new account current openings were KBC accounts.”
“Volumes are up,” she says of activity since the launch. “And inquiries are up.”
At the moment the five steps current accounts are limited to the app but it will transfer to online banking across the board. “We are designing for mobile but then making those processes available though every single channel,” she says.
Next on the horizon is personal loans. “We want customers to be able to get approval in an hour and our objective is to mortgage decisions in three hours.”
She says that while in the past getting a mortgage and moving house was seen as a ‘nightmare’ of a process, technology was making it smoother.
“The reality is that a lot of the data that we as a bank needs exists. It’s not about slimming down a process and taking a couple of steps out, it’s rethinking how mortgages can be brought to the market. We are very far along in personal loans and we’ll do the same with mortgages. Our objective is to do it by the first half of next year.”
Technological advancements are an important selling point for a bank with only 15 branches or hubs, as Deering calls them. But even far more important are interest rates on mortgages.
AIB has sparked a new wave of competition in the mortgage market by slashing its variable rates, with others following. KBC has launched a competitively priced 10-year fixed mortgage rate. “We’ve gone from a situation where about 25pc or 30pc of new mortgages were fixing to a situation in the past six months where it went up to 70pc,” she says. In response to this a longer fixed rate was introduced.
The bank has been criticised by those on the older standard variable rate (SVR) for leaving it unchanged.
However, Deering says that SVR is a legacy product and there are ways for customers on this rate to reduce their interest rates.
“The SVR isn’t a product we offer any more so instead we decided that all our new business pricing is offered to our existing customers. So existing customers on that SVR can get an up-to-date valuation and depending on their loan-to-value ratio can avail of new business pricing.” Since this option was introduced in December, only one in 10 eligible customers have availed of it.
Deering accepts that in spite of marketing and innovation, the banking sector still has some way to go before being embraced by consumers following the banking crash and fallout from the recession. “Trust in banking in Ireland was the lowest in Europe,” she says.
“Customers want to re-engage, whether it’s buying a house to saving for the future, but I wouldn’t say they have forgotten. I would say that trust factor is still a challenge,” says Deering. “The lesson it has taught us is that trust is very hard to build up but it is very easy to lose.”
‘Our customers are comparing us to an app that they booked a taxi with’