Xtreme Lending, or Dude, you can win your Dream Home
How millennials would like to buy houses
Introduction
For most people buying or building a house is the biggest expense they will ever make in their whole life. It also means getting a loan, because it very few can afford to buy for a house in full with a single payment.
The generations of consumer that are now and will be soon thinking of buying a house, genX, millennial and genY[1] are technically savvy, skeptical, have short attention span, poor planning and problem solving skills due to information overload.
They like to feel in control and they hate feeling consumer’s remorse
The leaders in the mortgage and lending market need to reach out to these generations speaking their language and engaging them in the process, because usually they have no patience for the orthodox ways the corporations and financial institutions work.[2]
While for previous generations holding a job for 20, 30 years seems the norm, for the new generations, a 5-year stint in a company is a very long time. It doesn’t imply that they can’t reliably commit to long-term loans, but the loan offers have to adapt to their moving lifestyle and once they sign a mortgage contract, it is important for the loan institution to provide them support on their crucial life decisions to make sure that their commitment is fulfilled.
Technologies available today like social networking, pervasion of smart devices that are most of the time connected to the internet, allied to new research on game theory, neuroscience and marketing makes it affordable for wise companies to create the perfect environment to offer such products.[3]
Gamification
As we can see by the current trends, of reality shows sprawling everywhere, on any imaginable subject, high rate of social networking usage and prevalence of game use in the social and individual setting, “gamification” is ruling the business world. [4]
And there is a reason for that. When we play a simulation game, we have a chance to practice and experiment with a lot of possibilities in s short period of time. Games help us solve complex problems more easily.[5] And playing them in a social network setting allow us to interact and get helpful feedback from our support network., leveraging our social intelligence in the process of trying to “win” the game. [6]
A mortgage company has a lot to gain with the gamification of the loan application process, specially when dealing directly with the consumer.
Learning tool
It is a learning tool for the applicant. It raise awareness of type of commitment that a mortgage is, what are the requirements, what is affordable. It will explain through the rules of the games the complex application process, the different steps and it can reward the player that adhere best to the rules.
Calculator x Simulator
Although several mortgage applications available today offer mortgage calculators, a mortgage simulator implemented in a game setting has a lot more advantages:
duration of Loan
future plans: (marriage, kids, education, traveling, moving, changing jobs, taking sabaticals)
Engaging the applicant
In a game setting we create animations of the simulation, capturing property and applicant’s photos and aging it along the life of the mortgage, on background showing how property/neighborhood is changing during the years, making the analogy more concrete than the simple dryness of a line graph.
This will engage the user and increase his/her commitment with the mortgage process, making it less abstract and more concrete, removing the fear of the unknown and for the long-term commitment. User can simulate several situations and learn how to better plan his/her life around the mortgage and realize how his/her dreams can be fulfilled even when assuming a big commitment like buying a house. The applicant can decide at some point in the game to sell his house and move to a different location and the game would show how this can be accomplished.
The appeal of the big data
The life of the loan can be shown on a chart and as the applicant moves his finger along the chart, an image shows the transformations the applicant’s commitment and passage of time is making on property, the owner and their community.
The applicant takes on an active role in the mortgage process instead of just a passive beggar for money.
The lender becomes a enabler of the applicant’s dreams, highlighting the social role of the interest paid.
The applicant can navigate the loan data in several ways, for example a map view that shows how the neighborhood is changing along the years, a zoom view of the house inside and out, the curb appeal, adding appliances, gardening, planting trees, adding solar panels and analyzing the carbon footprint of the house, the impact on the bills for each remodeling, etc.
The loan game gives the applicant tools to experiment and see which lifestyles changes are needed to afford the house of applicant’s dreams.
Learning with rewards
Good performance in the game can help qualify the future property owner and will help the actual application process to run smoother. It adds a certain degree of transparency to the lender actions and confidence on both sides of the transaction.
The game can continue during the life of the mortgage, with the user feeding back to the game the actual life events and the model being adjusted accordingly. This will provide to the lender better knowledge of the asset that securing the loan. [7]
Why not going social?
References are an important source of leads and revenue for business. If the applicant plays the loan game in a social setting, not only his support network can give him feedback, but he can also promote the brand among his peers.
It is important on this stage to make sure that sensitive private information is not published without the applicant’s consent and that the applicant feels confident that his information is safe in the lender’s cloud.
While the “practice rounds” of the game are important for the applicant’s learning experience, the actual application process needs to happen in a different setting, due to the binding conditions of the process.
Conclusion
Gamification of the loan process can bring several benefits for the lender and the applicants and the lender that makes the earliest offers on this setting will have a powerful advantage over the competition is establishing itself as the choice of the new generations of home buyers.
[1] See description of the generations on this link http://www.socialmarketing.org/newsletter/features/generation1.htm
[2] http://www.businessweek.com/articles/2013-08-14/the-millennials-have-no-patience-for-your-corporate-travel-policies
[3] It’s a complex world out there. http://youtu.be/NO6tdRpSJkU
[4] http://business.time.com/2012/08/28/six-reasons-why-gamification-will-rule-the-business-world/ and
http://clomedia.com/articles/view/five-reasons-you-can-t-ignore-gamification
[5] http://youtu.be/L57Zp2nQwpA
[6] http://en.wikipedia.org/wiki/Social_intelligence
[7] http://en.wikipedia.org/wiki/Mortgage
For most people buying or building a house is the biggest expense they will ever make in their whole life. It also means getting a loan, because it very few can afford to buy for a house in full with a single payment.
The generations of consumer that are now and will be soon thinking of buying a house, genX, millennial and genY[1] are technically savvy, skeptical, have short attention span, poor planning and problem solving skills due to information overload.
They like to feel in control and they hate feeling consumer’s remorse
The leaders in the mortgage and lending market need to reach out to these generations speaking their language and engaging them in the process, because usually they have no patience for the orthodox ways the corporations and financial institutions work.[2]
While for previous generations holding a job for 20, 30 years seems the norm, for the new generations, a 5-year stint in a company is a very long time. It doesn’t imply that they can’t reliably commit to long-term loans, but the loan offers have to adapt to their moving lifestyle and once they sign a mortgage contract, it is important for the loan institution to provide them support on their crucial life decisions to make sure that their commitment is fulfilled.
Technologies available today like social networking, pervasion of smart devices that are most of the time connected to the internet, allied to new research on game theory, neuroscience and marketing makes it affordable for wise companies to create the perfect environment to offer such products.[3]
Gamification
As we can see by the current trends, of reality shows sprawling everywhere, on any imaginable subject, high rate of social networking usage and prevalence of game use in the social and individual setting, “gamification” is ruling the business world. [4]
And there is a reason for that. When we play a simulation game, we have a chance to practice and experiment with a lot of possibilities in s short period of time. Games help us solve complex problems more easily.[5] And playing them in a social network setting allow us to interact and get helpful feedback from our support network., leveraging our social intelligence in the process of trying to “win” the game. [6]
A mortgage company has a lot to gain with the gamification of the loan application process, specially when dealing directly with the consumer.
Learning tool
It is a learning tool for the applicant. It raise awareness of type of commitment that a mortgage is, what are the requirements, what is affordable. It will explain through the rules of the games the complex application process, the different steps and it can reward the player that adhere best to the rules.
Calculator x Simulator
Although several mortgage applications available today offer mortgage calculators, a mortgage simulator implemented in a game setting has a lot more advantages:
- simulates how the life of the consumer will change during the course of the mortgage:
duration of Loan
future plans: (marriage, kids, education, traveling, moving, changing jobs, taking sabaticals)
- factors in possible casualties according to age/lifestyle
- considers how neighborhood is going to change during the years (urban planning models)
- estimates monthly expenses along the years (utilities, education, insurance, maintenance, transportation, health)
- estimates property taxes, real estate market flutuations and insurance along the years
- removes the fear of the “permanent death trap” conveyed by the name of the loan object “mortgage”.
Engaging the applicant
In a game setting we create animations of the simulation, capturing property and applicant’s photos and aging it along the life of the mortgage, on background showing how property/neighborhood is changing during the years, making the analogy more concrete than the simple dryness of a line graph.
This will engage the user and increase his/her commitment with the mortgage process, making it less abstract and more concrete, removing the fear of the unknown and for the long-term commitment. User can simulate several situations and learn how to better plan his/her life around the mortgage and realize how his/her dreams can be fulfilled even when assuming a big commitment like buying a house. The applicant can decide at some point in the game to sell his house and move to a different location and the game would show how this can be accomplished.
The appeal of the big data
The life of the loan can be shown on a chart and as the applicant moves his finger along the chart, an image shows the transformations the applicant’s commitment and passage of time is making on property, the owner and their community.
The applicant takes on an active role in the mortgage process instead of just a passive beggar for money.
The lender becomes a enabler of the applicant’s dreams, highlighting the social role of the interest paid.
The applicant can navigate the loan data in several ways, for example a map view that shows how the neighborhood is changing along the years, a zoom view of the house inside and out, the curb appeal, adding appliances, gardening, planting trees, adding solar panels and analyzing the carbon footprint of the house, the impact on the bills for each remodeling, etc.
The loan game gives the applicant tools to experiment and see which lifestyles changes are needed to afford the house of applicant’s dreams.
Learning with rewards
Good performance in the game can help qualify the future property owner and will help the actual application process to run smoother. It adds a certain degree of transparency to the lender actions and confidence on both sides of the transaction.
The game can continue during the life of the mortgage, with the user feeding back to the game the actual life events and the model being adjusted accordingly. This will provide to the lender better knowledge of the asset that securing the loan. [7]
Why not going social?
References are an important source of leads and revenue for business. If the applicant plays the loan game in a social setting, not only his support network can give him feedback, but he can also promote the brand among his peers.
It is important on this stage to make sure that sensitive private information is not published without the applicant’s consent and that the applicant feels confident that his information is safe in the lender’s cloud.
While the “practice rounds” of the game are important for the applicant’s learning experience, the actual application process needs to happen in a different setting, due to the binding conditions of the process.
Conclusion
Gamification of the loan process can bring several benefits for the lender and the applicants and the lender that makes the earliest offers on this setting will have a powerful advantage over the competition is establishing itself as the choice of the new generations of home buyers.
[1] See description of the generations on this link http://www.socialmarketing.org/newsletter/features/generation1.htm
[2] http://www.businessweek.com/articles/2013-08-14/the-millennials-have-no-patience-for-your-corporate-travel-policies
[3] It’s a complex world out there. http://youtu.be/NO6tdRpSJkU
[4] http://business.time.com/2012/08/28/six-reasons-why-gamification-will-rule-the-business-world/ and
http://clomedia.com/articles/view/five-reasons-you-can-t-ignore-gamification
[5] http://youtu.be/L57Zp2nQwpA
[6] http://en.wikipedia.org/wiki/Social_intelligence
[7] http://en.wikipedia.org/wiki/Mortgage
