Startups are rushing to try and digitise the mortgage market - now £1.6 billion UK comparison giant Moneysupermarket is getting in on the action
- Moneysupermarket is launching a new 50-50 joint venture, Podium, that aims to digitise the mortgage application process.
- It comes amid a wave of investment into startups looking to digitise mortgages in Britain.
- Moneysupermarket's MD of Money said: "Why we think we can succeed is we have scale and search traffic."
LONDON - UK financial comparison website Moneysupermarket is launching a new joint venture aimed at digitising the mortgage market, which is still a largely phone and paper-based market in Britain.
Moneysupermarket, which is listed on the London Stock Exchange's FTSE 250 index and has a market cap of £1.6 billion, announced on Thursday that it is setting up a 50-50 joint venture with two entrepreneurs who built key comparison engines for credit cards and loans that are used by Moneysupermarket."The reality is the way that people take out mortgages is still unchanged from the mid-80s," Andy Hancock, MD for money and publishing at Moneysupermarket, told Business Insider. "It's still quite an analogue market. It's probably one of the last areas of the market to be digitised."
Moneysupermarket already attracts 16 million visitors a year to its website for information on mortgages, around 25% of the total UK search traffic on the topic. But the majority of these visitors then turn to mortgage brokers who work over the phone. Customers are also required to provide paper documentation to support their applications.
Podium, as the joint venture will be known, intends to digitise the entire process. If everything goes to plan, customers will be able to not only compare mortgages based on eligibility but also be able to apply for them through Moneysupermarket's website. Moneysupermarket earns a fee for every product sold through its site as long as the customer does not cancel or switch, which the company says aligns its interests with customers.
Hancock would not disclose how much Moneysupermarket is investing in Podium, nor would he disclose a timeline for when we can expect to see the product. He said: "This is obviously longer term, it's a complex process. But the current market is pretty broken and we think we're in a pretty good position to do this."
Moneysupermarket's efforts come amid a wave of investment into startups looking to digitise part or all of the UK mortgage market. Other notable businesses in the space include Habito, Goldman Sachs-backed Trussle, and Dynamo.
"It really is the final area no one has been able to digitise," Hancock said. "This is one of the most complex and one of the most significant financial transactions we make in our lives. A number of fintechs, including obviously ourselves, have identified this as a key opportunity but the reason why we think we can succeed is we have scale and search traffic."He added: "The market is definitely moving this way. And to be honest the fintechs coming into the market are helping us."
Podium will be run by Matt Denman and Mark Hawkins, the other partners in the venture. Denman and Hawkins previously helped to build HD Decisions, a startup that makes financial comparison tools. It was sold to Experian in 2014, but Moneysupermarket still owns a stake.
Hancock said Podium is part of Moneysupermarket's long-term growth plan. He said: "This we see as a key element of growth in the future."
Moneysupermarket announced the venture alongside its first half results on Thursday. Group revenue rose 5% to £173.7 million and post-tax profit rose 5% to £42.5 million.