BigTech versus Swiss banks in mortgage lending services

Digitalisation enables new players to enter the finance industry, ranging from smaller FinTechs to multinational non-financial technology giants, also known as BigTech, such as Google, Amazon, Facebook, Apple or Microsoft. The technological sophistication of such digitally-adept titans allows them to serve clients with better pricing. Building on established research about the impact of BigTech’s market entry on Switzerland’s incumbents’ business models, this paper investigates the competitive weight of interest rates when these two players compete over mortgage origination. Furthermore, a self-administrated online experiment consisting of four groups in a between-subject design collected 139 valid answers and analyzed the relevance of positive and negative publicity about BigTech for the consumers’ choice of type of mortgage provider. While Chi-Square tests reveal that Switzerland’s mortgage demanders show a significant preference for incumbent banks under no-stimulus conditions, they show that information reporting positively about tech giants is marginally significant for the customer’s purchase intention in favour of BigTech. Moreover, the results outline that negative information has no significant impact on the consumers’ decision to borrow money from BigTech. Considering the distribution of information prior to the product choice, gender bias is discussed, as a subsequent data analysis reports a significant relationship between gender and type of mortgage provider chosen, with predominantly male respondents selecting BigTech. Following a scenario where BigTech enters Switzerland’s mortgage market as direct competitors to present marketers, this study reports the potential customer churn to incumbent banks and provides BigTech insights about potential marketing efforts.