The turnaround of Habito’s business is well underway, with growth on the cards in the coming months, its chief executive Ying Tan has said.
Speaking to Mortgage Solutions, Tan (pictured), said: “Habito is a fantastic brand, the technology is market-leading, and the people are phenomenal, but if I can be candid, what we lacked was basic business commercial acumen, where we were spending too much money on things that arguably we shouldn’t have spent on.
“I think sometimes there is a pressure for growth, fintech businesses were in the position where they raised a lot of money, and they were chasing the top line. There’s nothing wrong with that, but when that funding dries up and your burn rate is so high… what happens after that?”
He noted that the burn rate, so how much money Habito was losing each month, was £1m in 2022.
Tan joined the firm in June last year, taking a major stake in the business, and he is currently the largest shareholder in the business.
He joined the firm with Penny Desborough, formerly of Dynamo but now vice president of customer, compliance and culture at Habito. They then went on to replace five senior C-suite executives, move out of their expensive premises in London to a WeWork and renegotiated commercial contracts that “saved millions of pounds”.
He said that the failed merger with L&C, along with Liz Truss’ mini Budget, put the business in a “very precarious position” in early 2023, but Tan said it was still a “great business”.
Tan said that the website gets around 50,000 website visitors per month without additional marketing and 3,000 organic leads every month, which are “full fact-find leads”.
He added that Habito’s advisers were some of the most “productive in the country”, with every adviser advising on 45 mortgages every month. This compares to 15 cases that Tan saw at previous businesses.
“It was clear to see that Habito was a great business, but maybe some of its execution wasn’t as good as it could have been, and that’s what I just gave it.
“We’re here to democratise homeownership, to make it jargon-free and much quicker and technology drives a lot of that. I think most of us agree that’s where we need to go.”
However, he said that many fintech broker businesses in the 2010s, like Habito and Trussle, “didn’t quite hit the point”.
“I think a lot of people lost faith in fintechs within our space as everyone’s talking about ‘disrupting’ [the mortgage space], but you can’t make it profitable. One of my proud moments in the last year has definitely been the fact that we’ve proven that not only are firms like Habito needed, but it can be a profitable sustainable business model executed in the right way.”
Habito is looking to grow Plus service
Tan said that there was “no intention to change” its fee-free offering at present, but it was looking at boosting its Habito Plus service, with around a quarter of cases coming through this avenue at present.
This is where the firm handles all the buying administration such as the property survey, legal work and mortgage. Fees start from £2,000.
Earlier this year, Habito launched a specialist team, with Lizzie Markham, Teddy Cenaj and Jamie Gardner, who previously worked at Habito.
“That’s going really well. Their business volumes are already up there with the other advisers,” he added.
Tan said the firm was “very excited” for its in-house protection team, which it launched earlier this week.
He said not only would it increase revenue per case, but it was “right for the customer”.
“If you sell them a mortgage, you need to ensure that they’re properly protected and understand the risk. That’s something that we needed to address in house, rather than relying on a third party,” Tan added.
Habito was ‘tarnished’ by robo-advice
Tan said that he thinks that Habito was “tarnished a little bit” by the “robo-advice” label, and while it was a digital broker, there was still a strong adviser/people presence.
“We are real human beings. We’re the only digital mortgage broker in the UK, to my understanding, because we don’t speak to anyone face to face or on the phone. The whole journey is done online.
“That is something that we’re really proud of doing, and the technology we introduce is not robo-advice. The technology that we’re trying to build is to make us humans stronger and faster. It’s making us more efficient, and that’s why we can do four times more applications than a traditional broker, because of some of the processes and systems we have in place,” he explained.
Tan said that Habito was “here to challenge the norm” and wanted to ensure that there is less duplication.
He noted that the pandemic helped accelerate technology adoption, but also improved confidence in technology.
“People want to transact in their own time and at their own convenience. They don’t want an hour-long conversation. They won’t want to do some of the form in the morning, some of the form on the train, and some of the form when they’re watching Netflix in the evening.
“There’s confidence in that process now, and the fact that they’re speaking to a real human being who’s qualified and not a bot also helps, but our guys can focus on that advice and not worry about filling in forms, duplication and repetition, and that gives them the productive edge [over] others,” Tan said.
Habito’s focus is pivoting to growth
Tan said that the first six months at Habito were about cost and cost rationalisation. However, the focus is now pivoting to growth.
“We have definitely had a focus on growth and headcount because you can only squeeze your costs so far. If you want to start getting more profitability, you’ve got to go to top line and that’s the stage we’re at now,” he explained.
Tan said that the firm had been hiring engineers, business writers and support staff, with headcount growing by a third in the last 12 months.
“We’re absolutely committed to growing the business, but at the right rate. It’s not about bums on seats, it’s more about being productive, efficient and smart with what we’re doing, and I believe we can write significantly more business with a lot less overheads because of our productivity and technology that we have,” he added.
He said that Habito was looking to “grow all areas of the business”, but he saw the protection team “growing quite quickly” due to the lead flow in the next six months.
Tan said that there were “no immediate plans” to fundraise, but that in 2025, that could be on the cards.
“We could look to fundraise too, but to use that cash not to help with our runway, but to actually grow the business and build out areas of opportunity for us, so, I think there’s a strong possibility that could happen in 2025,” he noted.
He also added that it was “not on the immediate agenda” to accept merger offers, noting that it was “too early”, but when it came to fundraising, it may look for strategic partners to join the table.
When asked what he would want people to know about Habito, Tan said: “We’re disrupting from within now, rather than externally. I think from what I hear from people is that they’re very supportive of us.
“I think we are just like any other mortgage broker, yes we’re digital, but we want to work within the industry, and I’m passionate about ultimately getting the right customer outcomes, which is no different to any other broker, so we’re completely aligned on that.”
Anna is currently the deputy editor for Mortgage Solutions and editor for Specialist Lending Solutions. She has worked as a journalist since 2019, having secured her Gold Standard NCTJ diploma from News Associates in a fast-track six-month course.
She started her career as a report at specialist publication The Insurance Insider covering a wide range of areas before joining Mortgage Solutions and Specialist Lending Solutions in 2021.
In her role, she helps put together and structure the news agenda for the day and writes up press releases, reports, interviews, analyses and exclusives across both titles. She also commissions blogs for Specialist Lending Solutions and hosts online masterclasses and in-person events across the business.
She has been shortlisted for three journalism awards, which include BIBA Journalist and Media Awards Scoop of Year Award in 2020, Headline Money Mortgage Journalist of the Year Award (B2B) in 2022 and 2023.
Prior to being a journalist, Anna worked in ecommerce across Snow + Rock, Cycle Surgery and Runners Need websites, and before that worked at specialist financial PR firm Rostrum.
In her spare time, Anna enjoys reading, seeing live music, and cooking for friends and family. When she gets a chance, she also enjoys hiking, skiing and indoor rock climbing.
