New 'instant mortgage' product promises home loan approval in 60 minutes

by Mike Wood03 Dec 2021

A major US fintech has launched a new ‘instant mortgage’ product in the APAC region that promises to approval home loans in just 60 minutes.

FICO, a Silicon Valley giant, first launched the product in Singapore during the height of their lockdown and reaped the benefits, with $700m USD ($977m AUD) of new loans originated in just three months.

The product saw FICO’s Origination Manager platform adopted by Singaporean bank OCBC to create an end-to-end product that customers could use to apply for a mortgage and then receive a decision within the hour, with AI, automation and processing all performed online.

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It might best be compared to Australia-based operators such as 86 400 and Athena Home Loans, though the 60 minute claim would place them faster than those three providers.

Aashish Sharma, segment leader for risk lifecycle and decision management, explained that the Singapore market was primed for such a product and embraced it wholeheartedly.

“Earlier, the digital option was happening but it was only for certain segments – particularly the most-savvy on the digital uptake,” he said.

“What we saw immediately was behavioural change, because everyone wanted a bigger house due to work from home. But you couldn’t buy a house, as you couldn’t go out in the lockdown. That’s where OCBC ramped up and offered this instant mortgage.”

“The results speak for themselves, because we did $700m in loans during the period, and 30% of OCBC’s total yearly business through it.”

“The consumer was happy and confident that they were able to initiate from their living rooms and where there was a need, we would do some audio or video sessions. The oral feedback was fantastic.”

Instant mortgages delivered in 60 minutes

Brokers will be able to offer the product to their customers and, if required, walk them through its use, according to Paul Sywny, client partner at FICO.

“I don’t see the mortgage broker channel in Australia declining any time soon,” he said.

“What we’re trying to do is improve the customer’s journey and give a quicker time to yes, and whether that’s via a broker channel or a direct digital channel, we want to increase the speed and remove the friction.”

“Brokers direct their customers towards the instant mortgage or the banks are able to give broker access to the process – or brokers can hold their customer’s hand through the process too.”

Sharma added that, in Singapore, brokers had not been cut out.

“This will be a value chain,” he said. “We are thinking of ecosystems and partnerships, and that’s what we’re seeing in Southeast Asia. Banks are going after multiple agencies, be that broker or retail. That concept of partnership is what is driving digital innovations. We believe that there is a role for everyone to play in delivering value.”

What mortgage brokers need to know about instant home loans

One of the key factors in the adaptation of the Singapore market to the product was that Open Banking is well advanced that, which allowed many data providers to integrate into the system and thus back up applications more quickly.

The tax system, for example, is available as an open API and thus can immediately deliver up to date financial information to lenders and brokers.

“The solution in Singapore, which is relevant for Australia, was that we integrated with open APIs that the Singapore government was offering for income taxes,” said Sharma.

“Once you’re integrating all the open APIs that are available, you see the data running analytics, running decisioning and then finally delivering an answer within 60 minutes.”

“The same thing will be applicable as Australia opens up Open Banking and APIs are exposed. This solution will almost become an orchestration of calling these APIs in one place and delivering a final answer.”

Paul Swyny said that the progress of Open Banking was vital to making products such as FICO’s work.

“We see this application process and platform as part of the digital arena,” he said. “We certainly see a lot of enquiries about Open Banking within the Australian market, and our tech can enable that and does so in other markets.”

“Whether it’s the ability to crunch traditional data, such as applications, or more non-traditional transaction-type data that is provided via bank statement sent via Open Banking, we can take that in and use it within the loan application process or within our analytics to ensure a better result for the consumer.”