How is the open API helping banks and fintechs transform their businesses in Hong Kong?
Hong Kong banking has adopted the new digital transformation of open API practice since the release of Phase I and II in January and October 2019 respectively. Phase I and II covered the scope of services with the "product information" and "customer acquisition" API types in the market.
With the introduction of Acquisition APIs, third party service providers (TSPs) are now able to build their API business cases around their business models and integrate them with internal banking systems. This transformation offers a whole new user experience for retail banking customers. Specifically, mortgage agency gurus have built a new business case around mortgage sales and loan applications using mortgage and loan APIs.
What is the typical mortgage process?
Traditionally, potential mortgage applicants search for the flats they are interested in on the agency's website or mobile app. After the physical visit, they obtain information about the flat (i.e. price) and meet with the potential bank's mortgage specialist to obtain the initial valuation and complete the necessary onboarding process for a mortgage application.
The first part consisted of an online search and liaison, while the second part was completed by a physical visit to the offline branch. This typical process takes at least weeks or months, from flat search to appraisal and until the loan application is completed. For many potential mortgage applicants, this is a nightmare because of the length of the process, the length of the documents and the tons of paperwork.
How can Open API help in this area?
Thanks to the Lending and Mortgage API services, potential mortgage applicants are now able to get their initial property valuation in seconds on property search engines (i.e. the 'Centaline' or 'Midland' mobile apps) and book their mortgage appointment in one trip.
Real estate gurus 'Ricacorp', 'Centaline Property' and 'Midland Property' have teamed up with major retail banks including Bank of China, Hang Seng Bank etc. and start-up 'mReferral' to build their business cases on simplifying the mortgage application process.
How does it work?
The business case is divided into two parts. Firstly, it provides an initial property valuation on the front-end property search engines with an API linked to the bank's internal valuation system which offers the possibility of an instant valuation on the search engines. User consent is required at this stage.
Once the assessment is provided, property seekers can make an appointment with a mortgage specialist for a full consultation or complete the mortgage application directly, which follows the bank's internal business model. The API offers the ability to display the mortgage application form on branch platforms to collect the application data and redirect it to the bank's internal processing systems.
A similar user experience has also been provided by a start-up company "mReferral" which connects with more than 7 banks to offer the online loan recommendation and booking form on their front-end platform.
With this new experience, the customer journey is improved and the typical mortgage application process is shortened through a one-stop shop service from the applicant's perspective. By leveraging the TSP's ability to provide faster solutions and referrals, banks can also improve their sales pipeline and easily reach potential customers.