The mortgage market continues to attract new players. This constant growth results in a more competitive environment in which companies are continually being challenged to make their offer stand out from the competition. Innovation is becoming an ever more important factor in any company’s success. To innovate is simply to introduce something new for the first time. But innovation is more than just headline rates or new products – it’s about the whole package, including service, staff, branding and marketing. Many financial services companies are innovative simply in their approach or rationale without launching tangible, innovative products.
A company’s success in innovation can depend heavily on its culture and whether or not the business as a whole has ‘bought into’ the concept. For example, one of GE’s core objectives is imagination at work. It encourages non-conventional and imaginative thinking to provide solutions to our customer and broker needs.
Innovative thinking
In addition to a creative culture, it is also important to attract individuals with a track record for innovative thinking and a ‘can do’ attitude. Not all ideas will be workable, but often it is an ‘off-the-wall’ and even ‘bad’ suggestion that sparks a winning idea. The companies who will flourish are those who allow teams the time and space to develop ideas and to fully explore new concepts. This is especially true for those businesses that have the foresight to have a separate function dedicated to innovation and development, which is not constrained by the day-to-day business tasks.
GE invests heavily in multiple ways to enhance the skills and professional development of its colleagues, including, face-to-face training, online learning programs, mentoring programs and working on cross-functional projects. Our commitment to developing leaders, introducing cultural change and spreading key corporate initiatives throughout the company takes place in many forums.
Product innovation is about creating a product that meets the needs of the lender, the customer and brokers. Identifying a need and a gap in the market doesn’t just come from the lender. For example, offset and current account mortgages originated in Australia and were introduced to the UK to meet customer demands. The non-conforming market was established in the United States over 30 years ago, with self-certification mortgages being introduced to the market as a solution to an increasing number of entrepreneurs and self-employed people.
Market research
One of the cornerstones to product development is market research. It plays an integral role in generating new ideas and testing new product concepts. Market research also provides the opportunity for the lender to listen to the needs of its customers and brokers. It enables a lender to develop products which meet their specific needs and expectations. For an intermediary lender, there are three main elements to a market research programme. Firstly, by listening to and involving brokers during the initial stages of product development, the lender can ensure the features it is offering have a value to the potential customer. Secondly, market research needs to involve not just the brokers, but the end customer too. Finally, lenders need to analyse the market and competition. Comparing the products offered with their own portfolio and identifying similarities and differences can help establish strengths and weaknesses in a lenders’ product range. It also identifies where the gaps and trends are in the market.
Successful innovation depends on taking all the elements of a product and identifying how refinements and developments can really make a difference. Although price is one of the most obvious ways of providing an innovative product, it is by no means the only way. Service is another key differentiator behind new products, be it through providing on-site underwriters, enhanced service support or through online tools to facilitate the application and approval process. An innovative take on service could also mean rewarding intermediaries – GE, for instance, has ‘lender of the month’ schemes to reward many of its branded lending packager associates.
Technology
Another key example where innovation has been brought to the marketplace is in the use of technology, which can help make life quicker, easier and much less stressful for everyone. The growing popularity of online systems is making the lives of many intermediaries easier. They can obtain a decision-in-principle (DIP) in record time before submitting the application, which, in turn, removes any elements of doubt. In recent years, we have seen the introduction of the UK’s first ever online decisioning system that provides a decision that is binding. Given the demand from brokers for speedier processes and application processes, more and more lenders will look to technology as a way of bringing a more innovative service offering to the marketplace.
A company’s image and perception can be crucial for its success and an innovative brand and marketing strategy can be instrumental. At GE Money, for instance, we recently rebranded our businesses. A company’s brand is one of the first things a potential customer sees and should encompass and represent that company’s ethos and reputation. An innovative brand can immediately separate a business form the crowd.
It is more important than ever for lenders and intermediaries to focus on innovation in order to grow as businesses and to flourish in an increasingly crowded market. Looking at new ways to manage service, staff, marketing, and product features will be at the core of any successful business’ strategy.
