A FinTech matching mortgage lenders with borrowers online and bank competition, diversification and automation opportunities

68 Pages Posted: 9 Aug 2019 Last revised: 24 Feb 2021

See all articles by Christoph Basten

Christoph Basten

University of Zurich; Swiss Finance Institute; CESifo (Center for Economic Studies and Ifo Institute)

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: August 9, 2019

Abstract

How do banks offer mortgages through on online platform to areas without their branch presence? Unique data on responses from different banks to applicant households yield three salient findings: First, banks offer 4% more often and 6 basis points cheaper credit when markets have high versus low concentration, implying more profitable future business. Second, they offer 2% more often and 2 bps cheaper credit when unemployment or house price growth in the applicant’s state are one standard deviation less correlated with those at home, improving portfolio diversification. Third, these offers are increasingly automated, using available hard information more efficiently.

Keywords: Mortgage Lending, Spatial Competition, Credit Risk, Automation, FinTech, Online Pricing, Bartik instrument, Pandemic

JEL Classification: G2, L1, R3

Suggested Citation

Basten, Christoph and Ongena, Steven R. G., A FinTech matching mortgage lenders with borrowers online and bank competition, diversification and automation opportunities (August 9, 2019). Swiss Finance Institute Research Paper No. 19-39, Available at SSRN: https://ssrn.com/abstract=3434966 or http://dx.doi.org/10.2139/ssrn.3434966

Christoph Basten (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Swiss Finance Institute

c/o University of Geneva
40 Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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