LOAN INTRODUCER
SECOND CHARGE
The need for speed in the mortgage market Matt Meecham chief digital officer, Evolution Money
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ust like Tom Cruise in Top Gun, we all find we have the need for speed from time to time – not least when we’re trying to complete a mortgage application. The first- and second-charge mortgage markets have made some great advances over the last decade in their move to digitalisation, but now is the time to step it up a gear. Technology firm Yapily recently crowned the UK the best European adopter of open banking – beating Germany and Sweden to the top spot for the second year running. There are now six million active users of open banking in the UK, with such payments growing 500 per cent yearon-year, according to the latest statistics from the Open Banking Implementation Entity (OBIE). Evidently, the country as a whole and the industries within it are doing well in the fintech process – so why is the mortgage market still lagging? There is no escaping the fact that some firms face significant barriers to implementing change, and the bigger the firm, the bigger those challenges often are. For some of the largest lenders, significant cost, time, and resources are needed to implement any digital move, in part due to legacy system issues. In a fast-paced mortgage market – especially one coming out of Covid and, in some instances, struggling with staff shortages – making the time for such upgrades has not always taken priority. Another big factor is a lack of incentive or urgency. In any other consumer-driven industry, when faced with slow service, clients would simply
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MORTGAGE INTRODUCER AUGUST 2022
look elsewhere. A time-consuming, non-digitalised approach from a current account provider, for example, would result in the user switching providers. The mortgage market is unique in that it is not like other financial sectors. The transaction – for mainstream clients, at least – is, for the most part, rate-driven. Lenders offering a competitive rate thus know they will win business, regardless of the service they offer. This can be frustrating for borrowers and advisers. The tide is turning, however, as we are seeing an influx of new lenders and advisers to the market who are technology-led. This increased competition should help drive change. A wider cultural shift will also help prioritise fintech for those providers that haven’t already done so. More than 70 UK companies and organisations, including Evolution, are currently trialling a four-day working week. Some 3,300 workers, based throughout the UK and representing more than thirty sectors, are receiving 100 per cent of their pay for 80 per cent of the usual working time, in exchange for a commitment to maintain at least 100 per cent productivity. We have joined this move because we believe that, if the mortgage industry is to continue to attract the best new recruits, we need to compete with firms and sectors that embrace flexible ways of working. A four-day working week, however, is currently unachievable for many other mortgage firms without further slowing down borrowers’ applications. Thankfully, we are not among those firms. The recent spate of short-notice product withdrawals in the mortgage market highlighted some of the inefficiencies in the current market, with brokers working out of hours and wasting time on hold, chasing the progress of their cases.
Our ability to embrace a true digital journey, however, means that a lot of the time-consuming manual tasks in the mortgage application process can be eliminated though digitalisation – freeing up underwriters and advisers to focus on more complex cases, and thus reducing our costs. As more lenders in both the firstand second-charge markets follow our lead and start to implement new technologies – the benefits of open banking and a more automated way of working are becoming clearer – we will increasingly see those that are not adapting get left behind. Open banking will play an increasing role in helping those clients that require more than a tick-box approach. The cost-of-living crisis and the increasing complexity of some borrowers’ financial makeup is requiring more in-depth insights into their finances. By accessing a borrower’s bank accounts and up-to-date financial information, we can more accurately assess what products are available to them and gain a deeper understanding of their finances, which leads to a better-informed lending decision. The pace of advancement is perhaps somewhat quicker in the specialist and second-charge markets, with lenders like us using open banking, apps, and digital ID verification to speed up and streamline the customer process. This is having a significant impact on funding timelines and can provide a competitive edge for those borrowers who may need funds quickly. A small cluster of firms cannot drive change alone, however, and a broader approach is needed from all within the mortgage market to deliver real advancement. The mortgage industry is very close to a largely digitalised process – but for this to happen, lenders and advisers need to make it a priority. M I www.mortgageintroducer.com
