Online Mortgage Platform

Online platform to issue housing loans at the lowest rates and without intermediaries providing the most convenient online service

Innovation presentation

Mortgage lending in Russia presents a number of challenges both for customers and banks offering mortgage products. For a customer filing for a mortgage loan is a tiresome, time-, effort- and resources consuming process, at the end of which a customer is offered a high interest rate form a bank. The whole process is not streamlined and badly organized as customer needs to contact a whole range of companies in the process (insurers, appraisers, real estate agents, developers, notaries, etc.) and file different set of documents with each application to each bank. Banks spend a lot of money on marketing to attract a customer who takes a mortgage loan once or twice in their life which translates into a high interest rate for a customer.

Banks, developers and other mortgage market players spend enormous money on advertising, offices and employees. All of them compete for one customer who will finally buy one apartment and take a mortgage loan in one bank. The winner will be also one, but money will be spent by all. Tinkoff Bank operates in the daily banking segment – we know how to acquire customers, and invest a lot in the customer experience. That is why we have taken a function of acquiring customers for mortgage banks.

We have made a uniform mortgage platform linking customers and mortgage banks to streamline the whole mortgage application process, bring it online and make it cheaper and more convenient for the customer. In the process of the platform development we drew inspiration from online marketplaces.

All the customer needs to take advantage of Tinkoff Bank’s mortgage platform is simply contact the bank’s call centre or file an online application. Tinkoff Bank will screen the market based on the customer’s needs and borrowing capacity, select the most suitable product among those offered by partner banks, and negotiate the deal terms. After that, the customer can close the deal with the partner bank. Tinkoff Bank will do all the work with appraisers, insurers, and partner banks without charging the customer any service fee.

All these services are free for the customer which makes our product the only one at the market offering such online streamlined services for free as brokers change a commission from a customer.

This is an ideal synergy and a win-win situation where Tinkoff Bank receives commission fees from partner banks for each deal, partner banks acquire customers and cut down on acquisition costs, and customers obtain loans at lower interest rates and a simple streamlined online customer experience.

Uniqueness of the project

Banks do not offer this service, forcing clients to come to their offices. This means that the search for the best rate entails numerous visits to various banks. The clients who seek several approvals would have to prepare and submit a separate document package for each bank. It doesn’t make sense for the banks to invest in customer service either, as people take a mortgage loan once or twice in a lifetime and is not likely to turn into a recurring customer.

T&C aggregators fail to provide the precise cost of loans, and after selecting a product, clients still have the same arduous process to go through with each bank, since all aggregators do is compare the advertised rates (and then there are hidden fees).

Brokers either charge money for their services or upsell the product to get a fee from the bank. Plus brokers’ fee depends on the transaction volume, so brokers are not interested to provide a lower rate for a customer. We are naturally the only player providing streamlined online service for free to a customer.

The Reason Behind

The project was launched to address challenges that both customers and mortgage bank are facing – these challenges were specified above.

The project is also part of Tinkoff Bank wider strategy of transforming its business to a universal financial marketplace. By launching a non-balance sheet mortgage platform in partnership with other banks we reach out to new customer segment and boost our commission income without taking any additional risks for our business on our balance sheet.

Advantages for a customer:

• Selection of the best offers from large banks based on needs and borrowing capacity

• Lower mortgage interest rates from 10.5% (13.25% on the market average), and special discounts for Tinkoff Bank's customers (from 0.25% to 1.5% off the annual interest rate)

• A fully online process and a Tinkoff Bank personal manager who will guide the customer till the deal closing.

Results

As of today, the amount of the approved mortgage loans signed via Tinkoff Online Mortgage platform amounts to c. RUB 1 bn.

By the year end we plan to reach c. RUB 1.5 bn of loans signed via platform.

This will make us one of the Top 20 mortgage lenders by monthly volumes.

Judging by feedback received from customers via the bank’s call centre and online (dedicated online portal banki.ru – leading Russian website dedicated to financing services with the largest forum), the service if demonstrating a high level of customer satisfaction. Mortgage is traditionally perceived as a ‘heavy’ banking product which requires a lot of paperwork and visits to banks and other companies mentioned above. Hence Tinkoff Bank service which streamlines the complicated process and puts it all online exceeds all the expectations.