Financial Institutions as Partners for Life-Altering Events Like Buying a Home

Life is full of significant milestones that often occur just once or twice in a lifetime. These milestones—while life-changing—are also highly complex to manage from both an administrative and financial perspective.
The challenge stems from their unfamiliarity, as most people only experience them a handful of times. As a result, the process is new, and there’s much to learn and explore.

Events such as the birth of a child, a wedding, the death of a parent, or buying a home are prime examples. Despite their importance, it’s surprising how little comprehensive guidanceexists to help people navigate these pivotal life events. Professionals like wedding planners, notaries, accountants, and real estate agents can assist, but their services are often expensive and rarely cover the entire process. Additionally, finding the right expert adds another layer of complexity.

Financial institutions, which already act as long-term trusted partners, are well-positioned to help customers through these milestones—especially those with significant financial implications. Moreover, with their ability to scale services through automation, banks can offer guidance at a reduced cost compared to traditional professionals.

Let’s take buying a house as an example. This major life event typically involves two parties—the buyer and the seller—who, in many cases, are both navigating this process for the first time. While professionals like notaries, real estate agents, and property platforms can assist, their advice often comes at a high cost and with potential conflicts of interest.

What’s more, the home-buying process is rarely outlined in a clear, step-by-step manner with timelines and guidance on which other parties should be involved. Without comprehensive guidance, small mistakes can lead to significant financial consequences.

A seller’s journey involves numerous tasks, such as:

• Collecting certifications (e.g. soil quality, electricity certification, energy performance, mortgage status)

• Researching and determining an appropriate asking price

• Marketing the property to potential buyers

• Formalizing bids with disclaimers and conditions precedent

• Managing the sale compromise and deed

• Closing out any outstanding mortgages

• Adjusting insurance policies

• Organizing the move and updating addresses

• …​

Each of these steps can feel overwhelming, and errors in any of them can lead to costly delays or complications.

From a buyer’s perspective, the journey includes:

• Determining budget and financial capacity

• Searching for suitable properties

• Inspecting homes and estimating repair/renovation costs (potentially involving experts)

• Securing a mortgage and comparing different loan terms (e.g. duration, fixed vs. variable interest rate, with/without insurance)

• Placing a bid with necessary conditions, e.g. bid is canceled if the buyer cannot secure a mortgage, if certifications are not delivered, or if certain repairs are not completed by the seller

• Completing the compromise and deed processes

• Organizing renovations, if applicable

• Arranging the move and address changes

• …​

Given that both parties often face this level of complexity for the first time, misunderstandings and mistakes are common. Many agreed-upon bids therefore never result in a sale, leading to frustration and wasted resources.

Trust is paramount in any high-value transaction. However, in real estate, trust is often built reactively through legal stipulations and contracts. This approach is less effective when both parties are inexperienced and unfamiliar with one another.

Financial institutions have an opportunity to facilitate trust between buyers and sellers. Here are several ways banks can add value:

• Knowledge and Education: By providing clear, easy-to-follow checklists and standard templates for sale conditions, banks can help ensure that both buyers and sellers complete all the necessary steps. An interactive tool that walks users through the home-buying or selling process, allowing them to track tasks and access templates (such as bid forms), would greatly reduce the margin for error.

• Proactive Trust Generation: Rather than relying solely on legal safeguards, financial institutions could offer certifications to vouch for a buyer’s solvency, liquidity and trustworthiness. Tools such as Capilever’s CPRA (Counterparty Risk Assessment) or Immotheker/Finotheker’s "Certificate of Purchase Security" ("Attest Koopzekerheid") provide assurances to the seller that the buyer is financially secure, making the transaction smoother and more trustworthy.

• Financial Planning: AI-powered financial planning tools can help clients visualize the impact of major life milestones. Dynamic questionnaires, chatbots, and intuitive simulators can assist customers in defining their purchase and repayment capacity (cfr. Capilever’s FINE tool).

• Financial Product Comparators: Choosing the right loan remains a manual and unclear process. By offering intuitive comparators for different loan products (with various conditions) and showing repayment forecasts (for different assumption on interest rate and inflation evolution), banks can help customers make more informed choices (cfr. Capilever’s CompaRate tool). Banks can also promote sustainable homeownership by offering green mortgages, incentivizing energy-efficient home purchases aligned with ESG goals.

• Enhanced Digitalization: While many banks offer generic mortgage simulations online, there’s room for improvement. Personalized mortgage offers, fully digital mortgage origination, and online tools for servicing mortgages (such as early repayment, term adjustments or new drawings on existing mortage) would greatly enhance the customer experience and improve efficiency.

The purchase of a home is a momentous occasion. It’s not just financially significant; it also marks a critical juncture in a customer’s relationship with their financial institution. The advice and support provided by a bank during this time create a strong foundation for long-term trust and loyalty. Banks that help customers successfully navigate these life-altering moments not only ensure customer satisfaction but also generate powerful word-of-mouth recommendations.