Recently, a financial services consulting firm, Carlisle & Gallagher, surveyed a group of U.S. consumers in a consumer mortgage study. The study found that while overall satisfaction with primary banks remained high (81%), various issues and frustrations had the potential to drive consumers to consider alternative mortgage providers.
Most frustrating for consumers were high interest rates, high payments, high taxes and escrow, followed by mortgage processes such as slow execution and communications issues (status tracking and bad advice). When asked, 80% of those surveyed indicated that they would be willing to use a non-bank for their next mortgage, including 33% who said that they would consider a mortgage from Walmart.
If Walmart were to offer mortgages, it would be interesting to see how they would differentiate themselves. If price (costs) are the biggest frustration, it appears that consumers believe that a discount provider like Walmart will be able to provide a mortgage at a discounted level. While that might be true, what impact would that have on that other key frustration – service?
Choosing a mortgage is a little more complex than shopping for shampoo. That’s not to say that Walmart doesn’t understand customer service at all, but I might be concerned with the possible lack of financial experience and quality of advice in choosing an appropriate loan for such an important purchase. Would Walmart employ the kind of qualified mortgage consultants needed to counsel consumers and offer trustworthy advice?
After the debacle of 2008, the level of trust in financial service providers took a nosedive. Either consumers are still so distrustful of banks that they’re willing to consider alternatives, or they’ve forgotten what the “trusted” institutions did and have no problem considering a less-experienced player as long as they are cheaper. Would you consider Walmart for your mortgage?