Target Group has called on mortgage lenders to rethink their approach to servicing, arguing that it should be treated as a key driver of customer retention rather than a cost centre.

Speaking at an industry summit, the outsourcer and software provider said the sector is at risk of “leaving millions of pounds on the table” by failing to engage with customers once a loan has completed.

With 1.8 million mortgages due to mature this year, Target warned that high levels of churn threaten long-term profitability. The company said 90% of the customer relationship takes place after origination, making the post-completion phase critical for loyalty and retention.

Melanie Spencer, growth director at Target Group, said: “With lending targets to hit and tough competition, there’s no question that customer acquisition remains absolutely critical. But lenders must also consider what happens when the ink is dry and the keys are handed over.

“We have to challenge the mindset that the mortgage journey ends at origination. There is massive untapped potential in mortgage servicing to drive customer retention and profitable growth.”

NEW CUSTOMER ACQUISITION

Target pointed to research showing that acquiring new customers can cost up to five times more than retaining existing ones, and that even a 5% uplift in retention could increase profits by more than 25%.

Spencer described the current climate of high mortgage maturity and customer churn as “a clear wake-up call for the mortgage market”, urging lenders to adopt post-origination strategies that focus on building relationships and delivering long-term value.

The firm said modern servicing should move beyond basic statements and arrears management, harnessing emerging technology to make customer interactions proactive and personalised. It added that lenders must recognise the lifetime value of a client, not just the value of an individual loan.

Target has invested in its own contact centre solution, adding AI-driven insights and new functionality to reduce resolution times and improve outcomes for customers, particularly those in vulnerable circumstances. The company said this approach combined technology with human support to ensure interactions remained authentic as well as efficient.

Spencer added: “To keep seeing servicing as a cost centre is a huge mistake and one that if not corrected will leave lenders lagging behind the competition.”