Mortgages – Walking with Giants?

Mortgages – Walking with Giants?

With the recent news that Goldman Sachs is likely to back another tech giant in the US – is this the start of something transformational between traditional banks and their big tech partners…

In 2019, Apple launched its app-enabled credit card to market with funding through Goldman Sachs. Now only a few months on, we hear there could be wider talks between this global banking giant and the world’s favourite e-commerce market place – Amazon. 

Rumoured to be providing small business loans via Amazon’s portal, this would be another huge step into the finance sector for this customer giant.

https://www.cnbc.com/2020/02/03/goldman-sachs-close-to-a-deal-with-amazon-to-offer-loans-to-merchants.html

Amazon already provide some small business loans, customer credit and pre-paid credit cards to its members. All through a marketplace designed to link the customer with everything they will ever need. In addition to this, during 2018 Amazon also entered the modular housing arena, investing in California housebuilder – Plant Prefab. 

Couple all this with last year’s launch of Amazon Care, a digital health service for Amazon employees. Although only a pilot, is this the start of a broader proposition and health services, leading to a potential move into insurance sales. All paints a much bigger picture of the tech giant than just Prime and Black Friday deals. 

https://www.constructionmanagermagazine.com/news/amazon-invests-modular-building-firm/

Now then, back to Mortgages – let’s throw a few regulatory changes in to the mix, and by this, I’m referring to the FCA and their focus on price and execution only, along with their push to drive the cheapest products to customers. 

Are we likely to see one of the big tech giants… Amazon, Google, Apple jump on this and enter the mortgage market sooner than we thought? Personally, I wouldn’t be surprised if we hear more and more chatter of expansion for these big tech businesses. All relating to their possible entry into the regulated mortgage world over the coming 3-5 years (5 years isn’t very long – The Mortgage Market Review ‘MMR’ was almost 6 years ago).

https://techcrunch.com/2019/09/24/amazon-care-healthcare-service/

The value of market size, capital and brand all play a part in the above. Especially in the emotional and still rather analogue world of mortgages and house buying. Although, do not underestimate the power of a successful customer marketplace and convenience to the customer. 

Convenience can often trump many things, including rational thought and best practice. 

The industry, tech providers and the regulator – all play a part in championing the best outcome for the customer. Here at Twenty7Tec we see this through technology and advice for the mortgage world. Let us hope that any future giants entering this space, feel the same.

It’s fair to say, mortgages are one of the very last areas of financial services to see any real innovation, and Twenty7Tec are pleased to be leading this change. This still potentially leaves the sector wide open to big ideas, big change and big disruption. Many of us innovate extremely well – but very few do disruption better than the big tech firms. Both exciting and worrying at the same time…

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