With 1.8 million mortgages due for renewal in 2025 and high customer churn rates, leading outsourcer and software provider Target Group has urged lenders to rethink mortgage servicing, reframing it as a strategic asset for customer retention rather than a cost centre.
Speaking at a high-level industry summit, Target challenged lenders to look beyond originations as the end point and consider the wider mortgage journey. The mortgage solutions provider argued that 90% of the customer relationship happens after the deal is done, making customer-centric servicing essential in driving loyalty, retention and long-term profitability.
With customer acquisition costs as much as five-times higher than retention costs, Target believes that even a five per cent increase in client retention can boost by profits by more than 25%. As a result, Target warns that focusing purely on origination, rather than in engaging regularly throughout the customer lifecycle, not only harms retention, but risks leaving millions of pounds on the table.
Melanie Spencer, growth director at Target Group, said: “With lending targets to hit and tough competition, there’s no question that customer acquisition remains absolutely critical. But lenders must also consider what happens when the ink is dry and the keys are handed over. We have to challenge the mindset that the mortgage journey ends at origination. There is massive untapped potential in mortgage servicing to drive customer retention and profitable growth.
“With high mortgage maturity and high churn, it’s a clear wake-up call for the mortgage market. It requires lenders to re-think their post-origination strategies – moving away from just statements and arrears and focusing on building relationships, earning trust and delivering long-term value. Today, smart servicing leverages emerging technologies to transform the experience into something that is proactive, personal and ultimately profitable.
“To keep seeing servicing as a cost centre is a huge mistake and one that if not corrected will leave lenders lagging behind the competition.”
Speaking to lenders, Target said that the reframing of mortgage servicing requires firms to consider the client’s lifetime value, not just the loan value – focusing on the full relationship instead of just the transaction. It believes that firms must shift to a technology-enabled, human-led approach to servicing, leveraging technology to improve efficiency, compliance and customer experience, while still prioritising people as well as processes to make sure every interaction matters and is authentic.
In its own contact centre solution, Target has invested in new technology and resources to ensure servicing is a strategic priority for the firm and the clients it supports. Most recently, Target has implemented new functionality and AI-driven insights into its systems to speed up resolution times, improve service quality and deliver better outcomes for agents, customers and clients. Further innovations will continue to improve the customer experience - particularly for those in vulnerable circumstances, to assist with detection, ongoing monitoring and support.
