With interest rates falling, the profitability of real estate lending is increasingly low for banking groups. But the acceleration of digitalization linked to the health crisis is opening up new opportunities for the major networks, which are attempting to converge real estate and banking activities.
Real estate and banking: a fast-developing search for convergence
Until now, the convergence between banking and real estate has been confined essentially to offering mortgages and assisting customers with their loan applications. Mortgages, while no longer very profitable for banks, still represent a loss-leader that helps build consumer loyalty.
Currently, two banking groups are looking for more powerful synergies. Groupe BPCE, for example, is leveraging its expertise with various real estate players among regional banks. It is also developing a dematerialized mortgage offer.
The Crédit Agricole Group has an entire division dedicated to real estate, including rental management and property development. In addition, the Regional Banks manage Square Habitat, a nationwide network of real estate brokers.
Digitalization at the heart of convergence strategies between banking and real estate
Since the onset of the health crisis, customer behavior has changed, making digitalization a priority for banks. Yet it is this digitalization, in both the banking and real estate sectors, that is capable of creating powerful synergies between these two business areas.
Several banks, such as Boursorama, Arkéa and Caisse d'Epargne, now offer a dematerialized mortgage application procedure, giving customers complete autonomy.
The customer experience is also enriched, as customers can carry out online simulations and manage their own accounts and subscriptions. All this is made possible by the startups' many innovations, which include dematerialized insurance policies and notarized deeds, virtual visits to market real estate programs, and property selections associated with mortgages.
Today's challenge is to enable customers to navigate rapidly, in the same universe, between the banking sector (to estimate their borrowing capacity or apply for a loan, for example) and the real estate sector (property selection, virtual visits, etc.).
Retail banks therefore have every interest in quickly seizing the opportunities offered by the new field of real estate banking.