The Potential Transformation of the Home Moving Process

It’s been an interesting couple of months in the financial services world. Neil Woodford’s fall from grace and the fallout experienced by all those around him has been a salutary reminder that it is vital to properly understand the value and potential of transformative businesses.

For those that may have missed it, Neil Woodford was forced to suspend his Equity Income fund in early June after investors withdrew so much cash that it became impossible for him to continue the fund and pay them out. This is virtually unheard of.

Several issues were identified but perhaps the most impactful was the decision to invest large swathes of the fund into unlisted ‘growth’ opportunity companies. Hargreaves Lansdown, the investment platform giant, also felt the wrath of investors as they failed to remove Woodford Equity Income from its preferred funds list until after it was suspended.

You might wonder why I’m mentioning something which, on the surface, has little to do with mortgage brokers and home moving. I do so for two reasons: to demonstrate why companies experience tremendous growth, and also to demonstrate the role that software platforms, specifically, play in delivering said growth.

Aside from providing a sobering reminder that believing the hype around a person or company can end in tears, the whole episode has shone a spotlight on unlisted companies, particularly those purporting to offer investors massive growth potential.

It’s timely. Research for the Government’s digital economy council published in early June revealed that over the past two decades, UK-based entrepreneurs have built 72 companies now valued at more than $1 billion. That includes 13 companies reaching this valuation in the last year, alone.

These firms – commonly referred to as unicorns – include companies such as BGL Group (which owns Compare the Market), digital challenger bank Oaknorth, FNZ (a company that provides financial firms with digital user experience and portfolio management services through to back-office trade execution and administration), challenger financial services providers Revolut, money exchange firm TransferWise, the increasingly recognisable coral bank card app-only bank Monzo, and restaurant food delivery firm Deliveroo.

When listed out like this, it’s easy to understand the appeal of investing in unlisted companies in pursuit of growth – particularly when so many FTSE listed companies have struggled to perform in recent months.

Woodford’s wish to back firms that are genuinely embracing the future is understandable. Whether these firms’ billion dollar valuations will stand isn’t so much my concern; but the model they largely subscribe to, is.

BGL, Monzo, Deliveroo – these firms are all marketplaces. They may have a central product on which to build consumer trust but ultimately, they act as gateways to the services provided by others. This cuts overheads, compliance and product costs and delivers real value through consumer trust.

Take Monzo. It provides users with a current account – loss making – but offers terrifically easy access to competitive savings deals from Investec and fellow unicorn Oaknorth, taking a cut somewhere along the way. It has also branched out beyond FS, allowing users to switch energy providers through their banking app after tie-ups with OVO Energy and Octopus Energy. More of these partnerships are on the way, according to the bank’s Chief Exec.

In this example, Monzo is the platform, users trust the established brand and can be confident that they have done due diligence on its partners such that they are able to transact easily and securely. As a business, it makes money by delivering quality services for users; precisely what Hargreaves Lansdown’s customers trusted their platform to do too.

Firms like Compare the Market, MoneySuperMarket – even our own DigitalMove platform – seek to do the same. It is about product and service provision but it is equally about how those platforms or marketplaces can deliver added value over and above the core proposition. In effect, it moves the proposition on very quickly from being about product provision to an improved customer experience, consistent online security and due diligence that ensures a consistent standard across all services accessed.

We’re at a pivotal point in how consumers access financial services – as these examples show. The mortgage market and home buying process is not so far down the line in adopting these new models, yet. We must learn the lessons from recent events: trust, security and due diligence are paramount to building the trust that consumers demand.

We have a chance to get this right and transform the home moving process for everyone. Let’s take that chance and not let it pass us by.