Case
Digital transformation of Landshypotek Bank - Senior loans for agricultural and forestry customers
The solution – digitized loan application
We have worked with Landshypotek Bank for many years and, among other things, developed a digitized mortgage application for private individuals – the first fully digital mortgage preparation that transforms the way the bank can work with lending. Thanks to the experience from that project, we were able to get started quickly with this, which has many similarities but also some crucial differences.
The biggest difference is that the target groups in this case can be either private individuals or companies. In some cases both. What determines which loan the bank can offer is the property to be mortgaged.
By using BankID login we immediately have the opportunity to retrieve relevant information about the customer required for a loan application. We perform a lookup against Bolagsverket to see whether the person has one or more companies associated with them, or none at all. In this way we can control which questions must be asked and which we can remove. This is a simple but clear example of how, with the help of technology and integrations, we can simplify a user experience.
Further in the process, questions are asked about budget and finances that are decisive for the ability to approve a loan. Some details the applicant is unlikely to be able to answer off the top of their head without looking them up, and we therefore offer the option to save a started application and continue at a later time.
Expression of interest vs complete application
Greedy but content with little — that's an easy way to summarise the philosophy behind the application process. Applying for a loan is (honestly) both demanding and pretty tedious. The bank needs a lot of information to be able to grant a loan, but at the same time doesn't want to wear the applicant out with questions that make them give up. On the other hand, it's also in the applicant's interest to submit as complete an application as possible in order to get an answer quickly.
Our solution was to enable the applicant to provide complete documentation, but not to force it. If the customer prefers to submit a concise summary and handle the rest with a loan officer by phone, that's fine. The process has few mandatory steps. If someone wants to provide exhaustive information for quick processing that's equally fine. We're all different!
Landshypotek Bank stands out among banks in Sweden by enabling an almost entirely automated process for its customers. A strategy that has proven very successful.
The questions you get depend on how you answer
One challenge in digitizing a loan application process is asking the right questions at the right time. When it comes to loans, the questions are many and sometimes complicated. To be able to apply for this type of loan, you must live on or operate a business on a property classified as an agricultural or forestry property. The applicant can apply for a loan as a private individual or as a company, and in some cases both, which the digital flow needs to accommodate and adapt to dynamically.
The information provided also needs to be verified; either through automatic lookups in available systems, or by uploading documents as attachments to the application.
The questions asked are based on the answers the applicant has given. Our solution adapts depending on whether the applicant applies for a loan as a sole trader or a limited company, whether a co-applicant is a private individual or a company, and whether the loan security will be a property, EU support, or a guarantor.
An important trade-off throughout the project was continually keeping the complexity of the interface at an appropriate level. Simple enough that anyone can manage and complete it, yet comprehensive enough for the bank to take the case further. By asking for a lot, but allowing little, customers are offered flexibility.
Technology
The choice of technology for the application fell on React - a JavaScript framework well suited for API- and data-driven applications. The interface components were developed to be simple and generic so they could be reused across all views. This gave users a consistent interface and reduced development time for the developers. The components in the business layer were modeled after the bank's own data model for a loan application. A Swagger API served as a common description of the data model. This gave us a structured way to manage the application's interface to underlying systems, which was crucial because development of the application and the underlying systems was happening simultaneously.
Although the application was developed in record time, the quality of the code was so high that even the bank's test team, which is usually good at finding tricky bugs, didn't have much to criticize. The minor bugs that did exist were resolved and since the launch in summer 2019 the service has run without errors or interruptions.
If you look at the integrations with external systems in the application, you will find the following, among others:
- Login and signing with BankID
- Retrieve registered companies via the Swedish Companies Registration Office
- Document management for attachments
- Integration with the bank's underlying systems
As always, high security is a requirement that permeates everything that is developed.
Results
Immediately after the launch, and even before broad marketing had begun, the number of loan applications for land and forest increased through the new digital entry point. New customers who had not previously been in contact with Landshypotek Bank also found their way there.
"Our goal with the new digital entry was that both new and existing customers, in a simple and modern way, would apply for loans with us when it suited them. Already during the first half of the year we had reached 1,000 applications, two out of three of which came from completely new customers, which exceeded our expectations. It shows that, with the help of the new digital application in combination with digital marketing, we have succeeded in reaching and resonating with the target group"
says Catharina Åbjörnsson Lindgren, Head of Business Landshypotek Bank.
About Landshypotek Bank
Landshypotek Bank wants to contribute to a richer life throughout the country. Since 1836 they have financed the housing and business activities of farmers and foresters. For a few years now, anyone with a heart for the countryside can also save with Landshypotek Bank. They now also offer mortgages for houses. Landshypotek Bank became a bank in April 2013 and is one of Sweden's ten largest banks. The bank is owned by about 38,000 loan customers in agriculture and forestry, organized as members of Landshypotek Economic Association.
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