Daniel Hegarty, Founder and CEO of online mortgage broker Habito, tells us what it takes to be successful in fintech and how he got there.
After I left my role at Wonga as Head of Product in 2013, I knew I wanted to start my own business, I just wasn’t sure of the field yet. I was also in the process of buying a house – which was a headache that turned into a nightmare.
With a house found, an offer accepted, the deposit good to go, and the mortgage application submitted, the worst should have been over. However, my mortgage application was declined due to the broker listing myself once and my partner twice on the application. A week later we went through it again – application submitted, application declined – this time my was name missing but my wife’s name was still listed twice.
Another week went by. Application submitted, application referred! The lender then needed three years of P60s and the seller started to get impatient, threatened to pull out and wanted to see bank statements and credit reports. Our dream home was fading from view while we were buried in paperwork.
In the end, we made it, thanks to some bike couriers and sympathetic ears in the HR departments of old employers. I couldn’t believe this was normal in the 21st century, until I looked at what was going on in the market.
In my research, I found there had been almost no technological development in the industry in over 30 years. People were hand-typing applications still. Once I saw how bad the process was from the inside, I knew technology could make it better.
I realised that millions of people were having the same issues I had and that we had to put up with them because there was no alternative. There was a huge market – worth £1.3tr ready to be disrupted for
the benefit of all homeowners in the UK.
One of our biggest challenges was not with the building of the product (we always knew that was going to be hard) but with gaining consumer trust.
Even on a good day, it’s difficult to navigate the complex array of financial products we all have accumulated over our lifetime. It’s daunting and unnecessarily repetitive, yet we accept the norm and never fight for a better experience.
We felt that an artificially-intelligent financial adviser product, which is not sensitive to advertising and can do the sums on all the incentives to see through to their real value (or lack of) on your mortgage rate, would be an easy-to-sell to consumers.
After all, few consumers relish getting into the weeds with even the most basic financial service, so what consumer would turn away from knowing that their financial life is a solved problem?
But, people can be complicated and there are big trust issues with machines, even now. With the rise of products like Amazon’s Alexa, people are getting more used to the idea, but still one of our challenges is showing that done right, AI, machine learning and algorithms can give consumers the ultimate power of convenience at a fraction of the traditional cost.
Consumers are getting more and more confident in using start-ups for services and there are lots of funding options available, whether from VC or crowd-funding, so it is a great environment for start-ups (excluding any ramifications of Brexit, which is still unknown). My general advice would be, make sure you are solving a real problem. Think deeply about any real consumer pain and you will be in a much better place to build early traction with customers.
I would have started another start-up. I had a number of ideas for different companies before going through my own house-buying nightmare and settling on building a company to fix mortgages. So, I would be spending my time trying to fix something else!
For mortgages long term, the adoption of real-time affordability checks by lenders and brokers will happen with the coming of Open Banking APIs. This technology will likely be used to make individual assessments on a customer’s suitability to products instantaneously by comparing income and historic spending to borrowers with similar profiles.
A great office space is crucial for us. We work long-hours in a variety of creative and customer-facing roles and we need to have a comfortable and calm but visually interesting space to work in. We also want to hire the best people and start-ups are in a war for talent for the best people, so having a good office definitely helps us show visually in interviews that we are a good place to work.
Don’t rush it, factor in some buffer weeks, so you don’t have to compromise on your new office because you’ve run out of time in your current office. Involve other people in the team, but ultimately know that the decision needs to lie with one person – it will never be in the most ideal location for everyone, but it can be good for most.
DeVono helped us greatly with finding and creating our first real office, making it a fantastic place for 40 people to work every day.’ Amazingly, we have already outgrown the space because we are growing so fast! When thinking about our next move, there was no question that we would put our trust in their professional and expert hands once again.
We are growing rapidly, so next is to continue expanding the team and developing our online service so that we can serve our growing number of customers. We are working with several major retail banks and high-street lenders to identify ways to integrate their technology and systems directly in order to be able to facilitate real-time mortgage approvals, as well as applications.
To find out more visit habito.com.
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