Mortgage Technology – May 2022

Champion of the Mortgage Professional

MORTGAGE TECHNOLOGY www.mortgageintroducer.com

May 2022

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Silver Linings Legal & General’s Jodie White on how COVID jump-started overdue technology adoption in the mortgage space

EDITORIAL

COMMENT

Managing Editor Paul Lucas paul.lucas@keymedia.com Deputy News Editor Jake Carter jake.carter@keymedia.com News Editor Richard Torne richard.torne@keymedia.com Content Editor Kel Pero Commercial Director Matt Bond matt.bond@keymedia.com Advertising Sales Executive Jordan Ashford jordan.ashford@keymedia.com Campaign Manager Amie Suttie amie.suttie@keymedia.com Production Editor Felix Blakeston Production Coordinator Loiza Razon Head of Marketing Robyn Ashman robyn.ashman@keymedia.com CEDAC Media Ltd Signature Tower 42, 25 Old Broad Street, London EC2N 1HN Information carried in Mortgage Introducer is checked for accuracy but the views or opinions do not necessarily represent those of CEDAC Media Ltd.

Contents

Tech as the silver lining

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ometimes the headlines write themselves: “The biggest disruptor in 35 years.”

Those were the words of David Smith, strategic relationships director for 360DotNet, speaking at this month’s tech roundtable in association with Legal & General Mortgage Club. He was, of course, referring to the COVID-19 pandemic – but while disruption may have been the focus of his comment, it could just as easily have been “opportunity.”

The mortgage industry – to outsiders at least – has rarely been seen as forward-thinking or innovative. Odd, when so much of our industry revolves around data and algorithms.

But as any tech specialist will tell you, there is a difference between the frontend and the backend of any tech-based offering – and what goes on behind the scenes with lenders intricately analysing applications to produce an offer with a manageable level of risk for the borrower is all well and good, but it’s what customers actually see and understand that they care about the most.

They care about convenience – such as being able to tour properties virtually from the comfort of their own homes. They care about communication – being able to reach out on their terms, at the touch of a button, rather than rigidly within nine-to-five working hours, when they’re probably occupied. They care about transparency – staying connected throughout the mortgage journey and feeling confident in the service you’re providing.

While upping your tech game might seem like a pain for your business, in the long term, it will pay off. COVID may have been a cloud hanging over businesses and all of us individually, but the transition to tech it has prompted is its silver lining.

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www.mortgageintroducer.com

MAY 2022

4 Reviews 10 Cover: Jodie White Jodie White, head of product and transformation at Legal & General, spoke to Mortgage Introducer this month to discuss the impact of technology on the mortgage industry – and particularly on a customer’s early online search for a home 13 Roundtable: All change The pandemic is “the biggest disruptor” the mortgage market has seen 19 Feature: Mortgage journey How can mortgage lenders improve their digital offerings?

22 Interviews

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REVIEW

EQUITY RELEASE

Technology: an ally in equity release Alice Watson Head of marketing, insurance Canada Life UK

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he equity release market has evolved significantly in recent years. Not only has the range of product options and features grown exponentially, but technology is supporting advisers in finding flexible solutions for their clients with ease. It is this growing choice and competition in the market, as well as customers seeking additional income in retirement, that has led to record growth in the equity release market,

with activity up 24 per cent year-onyear.1 When I first joined the industry over 10 years ago, the adviser journey was painful and the way in which they generated KFIs and submitted business was complicated. Not all lenders had an online presence or quote portals, meaning it was time-consuming for advisers to deal with multiple lenders.

However, leap forward a decade and providers are now embracing technology and advisers are seeing the benefits of this.

SUPPORTING ADVISERS THROUGH INNOVATION

With so many products with similar features available to choose from, we,

as an industry, must help advisers find the right solutions for their customers quickly and easily. This is where technology has a crucial role to play.

Technology is not only allowing advisers to accelerate their business over the long term, but the time-saving element technology provides is also enabling advisers to focus on what really matters - giving quality advice to customers.

With the help of digital tools, advisers have been able to help equity release customers find the right solutions for their needs and process their cases efficiently.

Adviser portals are going a long way in making the lives of advisers simpler, giving advisers more control over how they can support their clients, and giving them the time to focus on relationships with their clients. At Canada Life, we’re passionate about supporting our advisers, which is why we recently launched our new Home Finance Adviser Portal. With nearly all (96 per cent) of respondent advisers saying the portal allows them to manage and oversee cases easily, we see numerous possibilities for the role of technology in providing them with a hassle-free user experience.2 As cost of living pressures start to take hold, we are seeing greater demand from customers wanting to be able to plan for the future, and for some people this means turning toward property wealth. Thanks to technology, advisers can now more easily review their clients’ options as the world around them evolves, and make changes at the touch of a button.

WHAT NEXT?

The right technology can help solidify decision-making in the equity release process

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Ultimately, it is our responsibility as an industry to support customers and advisers through good and bad periods, so that they can adapt as their needs evolve over time. Technology will be vital in this, providing advisers with tools at their fingertips that will allow them to bend with the storm.

Technology has already dramatically transformed the equity release industry, and I personally look forward to seeing what else is to come in providing advisers and their customers with even greater choice and flexibility. www.mortgageintroducer.com

REVIEW

REMORTGAGING

Second charge market vigorous, complex Charles Neal Jannels McDowell managing director director, – specialist One Mortgage mortgages, System HTB (OMS)

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1 2022 saw a spotlight on the remortgage sector as a large number of fixed rate residential and buyto-let deals matured over this period, with many more to come over the course of the year. This followed a period in which we experienced an unprecedented volume of purchase business – largely driven by the stamp duty holiday – that saw homeowners and landlords lock into longer-term deals to take advantage of some recordlow mortgage rates. A smart move, especially in view of the recent trio of Bank of England base rate rises – but this has also led to some challenges from a refinancing perspective.

LOOKING AT HOME DIFFERENTLY

With remote work still prevalent and space coming at a premium across the UK, many new homeowners are having to look to alternative sources to generate funds to improve or upgrade their properties – it’s either that or face considerable early repayment charges and having to move onto a higher mortgage rate, a combination that severely dents the attraction of a remortgage.

This is where we are seeing the second charge market really come into its own. A growing number of advisers are appreciating its suitability for a range of borrowers, where circumstances dictate.

This was evident in the latest figures from Evolution Money’s quarterly data tracker, which outlined that the proportion of second charge lending issued to prime borrowers had increased quarterly to 27 per cent in www.mortgageintroducer.com

the three months to February. This represents a four per cent rise from the 23 per cent share of the market that this category of borrower held between September and November last year.

Prime borrowers were suggested to account for 37 per cent of the value of second charge lending over the period, up from a third. Borrowers using second charge mortgages to consolidate debt made up the remaining share of lending activity.

As prime borrowers are able to use second charge mortgages for wider purposes than debt consolidation, this factor suggests that they are willing to use these loans in more imaginative

“From an operational standpoint, efficiency and simplicity are welcome components within any multifaceted specialist lending marketplace.... [but] it’s vital that we not ignore the importance of the human touch in these individual markets to ensure that products such as second charge loans are widely available” ways. According to the tracker, 57 per cent of prime borrowers used second charges for debt consolidation, up from 55 per cent, while 24 per cent used it for home improvement and some consolidation, up from 23 per cent.

Some 15 per cent used second charge solely for home improvement, a dip in the previous quarter’s 18 per cent. Borrowers were also using second charge loans to pay for vehicles and to fund existing business ventures.

When evaluating activity across

the sector from a wider business perspective, figures from the Finance and Leasing Association (FLA) outlined that second charge mortgage new business volumes grew by 59 per cent in February, representing a total value of £119m in new business in the month, with 2,660 new agreements made, the highest volume in two years.

The association also reported that it had seen £1.192bn in new business in the 12 months between February 2021 and February 2022. This constitutes 27,624 new second charge agreements over the course of the year. Between MAY 2022 and February 2022, second charge lending raked in £309m through 6,950 agreements, representing 60 per cent higher earnings and 50 per cent more agreements made than in the same period last year.

REAL POTENTIAL

This data represents some highly positive figures and demonstrates both the diversity of the uses of second charge loans and the positive journey seen by lenders, distributors, and advisers over the past few years.

And this is now a sector which – whilst still arguably not receiving the business volumes or attention from the intermediary market that it should – is really making its mark within the wider mortgage industry. It has also progressed greatly from a tech standpoint, and this continues to be evident in ongoing conversations we are having with a raft of second charge specialists and lenders with a second charge arm.

From an operational standpoint, efficiency and simplicity are welcome components within any multifaceted specialist lending marketplace.

However, alongside successful tech integrations, it’s vital that we not ignore the importance of the human touch in these individual markets to ensure that products such as second charge loans are widely available, fully understood, and easily accessible for intermediaries and an array of borrowers.

And this is a balance that we, as an industry, must strive to maintain to ensure that this forward momentum continues.

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REVIEW

BUY TO LET

Landlord portfolios need right data, tech Mark Blackwell COO, CoreLogic

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ritain’s cost of living crisis continues to dominate headlines, with very real financial consequences for individuals already struggling with higher bills for energy, travel, food, clothes – you name it.

UK consumer price inflation reached a thirty-year high of seven per cent in March, with economists staunchly expecting it to surge over the eight per cent mark in the autumn.

For investors, protecting against the ravages of inflation is just as relevant as it is for consumers, and it seems landlords are acting already.

Figures from Hamptons show buyto-let investors purchased 13.9 per cent of homes sold across Great Britain in Q1 2022, the highest proportion recorded in the first three months of any year since 2016, when landlords rushed to beat the introduction of the three per cent stamp duty surcharge on second homes.

The North East saw the biggest year-on-year increase in buy-to-let purchases as investors sought higheryielding properties, buying up 28 per cent of homes sold in the region, more than twice the share bought by firsttime buyers.

A record 73 per cent of Londonbased landlords bought buy-to-lets outside the capital in 2022, up from just 24 per cent a decade ago, while the average cost of a new let across the UK rose to £1,115 pcm last month, up 9.1 per cent from its 2021 low of £1,022 pcm in March last year.

The hunt for yield is almost certainly driving this behaviour – the FTSE 100 has delivered an average yield of

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just 3.46 per cent this year to 12 April.

With inflation far higher than that, real returns are not only wiped out, they’re negative.

Buy-to-let yields by contrast look far healthier. Landlords can expect an average gross yield of nine per cent in the North East, 7.2 per cent in the East Midlands, 7.9 per cent in Wales and 7.6 per cent in the North West, according to data from the Land Registry crunched by Hamptons.

It’s perhaps no surprise, then, that Hamptons’ analysis indicates that investors are increasingly looking to the highest-yielding areas of the country as a way to maximise their returns and hedge against inflation. So far this year 71 per cent of investors bought in the 50 per cent highest-yielding areas of the country, up from 57 per cent of investors a decade ago. It’s also one of the reasons why nearly threequarters (73 per cent) of London-based landlords bought their buy-to-lets outside the capital this year, where yields tend to be higher, up from less than a quarter (24 per cent) a decade ago.

THE CURRENT LANDSCAPE

The private rented sector has had it rather tough over the past five or six years, with a raft of tax reliefs withdrawn and higher entry costs imposed under fiscal rules. The supply of rental property has fallen back consequently, so the recent rise in activity suggests the asset class may be about to have a bit of a renaissance. It isn’t just the yields that are attracting investors, either; having gone through the past few years of constant tax changes and various other regulatory burdens, landlords can now plan financially far more predictably and balance risk more transparently.

The general profile of private landlords in the UK has also shifted as a result of these reforms, discouraging

small-time landlords with just one or two buy-to-lets from the market.

Portfolio landlords are increasingly the norm, with much larger holdings across multiple locations. The type of property attracting new investment is also leaning toward multi-units and HMOs, where typical yields are much higher and risk of voids lower.

Market analysis from Octane Capital suggests that the current market value of HMOs currently sits above wider market values – by up to a third on average, they claim – demonstrating just how much higher yields available to more experienced or ambitious landlords can be in some corners of the market.

In the North East, the specialist lender claims HMO market values are as much as 109 per cent higher than wider market properties, with London (72 per cent), the West Midlands (55 per cent), and Scotland (41 per cent) also seeing some of the largest HMO price premiums. Even in the East Midlands, where this premium is at its lowest, HMO properties still come in two per cent above the value of wider market properties in the region.

Today’s buy-to-let market is a different sort of animal from the market that grew up over the 1990s and 2000s.

There are fewer landlords, and those remaining or entering the market now tend to build larger portfolios and make the management of those their trade.

Using a single or couple of buy-to-lets as an alternative to pension savings and income has become less financially tenable.

This presents challenges for both lenders and brokers, particularly in light of the Prudential Regulatory Authority’s SS13/16 portfolio landlord underwriting standards. Risk must be understood across a portfolio, necessitating the provision of an awful lot of data in a consistent format.

Brokers know only too well the impact that administration has on time taken to submit each case. The opportunity cost implication is significant.

Lenders are also expected to have a far more detailed and comprehensive understanding of their exposure across not just one landlord’s portfolio, but their entire book. www.mortgageintroducer.com

REVIEW

DIGITAL ECOSYSTEMS

Lenders must think – and invest Charles Steve Carruthers McDowell Head of business managing director – specialist mortgages, development, HTB Iress

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he slew of good news regarding many mutuals’ results in 2021 means these lenders are in a good place.

Balance sheets are in good repair and investment in the future is now a very real possibility – and for many this could not have come too soon, as the possibility of technological investment is in reality a necessity.

Of course, investing in the future means understanding what that future holds for you as a lender. While the lending landscape is changing, so are the technologies that underpin it. The exponential growth of data and the opportunities it affords are fundamentally transforming the way industries and individual businesses are operating. Financial Services is a hugely data-intensive sector, which means there are countless opportunities to process, analyse, and leverage data in useful ways. As ever, with great choice comes great responsibility to get it right. The market for big data technology in finance offers inordinate potential and is one of the

most promising. The evolving digital ecosystem means it is important to understand not only what pieces of interoperable systems fit where but also what strategic opportunity and threat they present in due course. By that I simply mean that lenders must understand where they are gaining from a process and where they are (for the sake of distribution efficiency, for example) giving up ground. My point is that progress must fit the vision – technology is an enabler, not a vision in itself. To that end, it is important to define what it is that everyone requires to deliver a connected ecosystem that allows for the effortless access and use of data, is robust, and delivers better customer and broker experience.

Why is that so important? Well, to borrow a nifty aphorism attributed to Mark Twain, markets rarely repeat themselves, but they do rhyme. An example of the need for agility in markets is one we are living through.

Credit cycles are a reality of our times, and being able to react quickly to changes is important. Developing a roadmap that offers interoperability is key because no solution is lifelong and so agnostic technologies that work well together – whether in the areas of fraud, risk intelligence, or customer analytics – must evolve.

Equally, our use of data and our

The right technology connects people – and that’s a vital key to today’s market

www.mortgageintroducer.com

priorities in business about how we employ it, what we need to know from it, and what sources of data we use also evolve. As an example, the current macroeconomic environment will surely mean we are slowly moving through the current credit cycle, and while reports are benign at the moment, the record spend on credit cards reported by the Bank of England for February points to a rise in arrears in due course. The focus for lenders will looking carefully and responding to the kind of business they do want.

New entrants will also want to be part of this digital ecosystem to cherry-pick business. All will need to consider their positions, and their ability to respond quickly will be determined in part by their technology.

Right now, our changing economy will ask some intensely challenging questions of lenders and their underwriters. What does a potential downturn mean to the kind of business an organisation wants to write? We know in times of high inflation other asset groups become less attractive and bricks and mortar grow in appeal. Withdrawing to think about it is not an option in a world where slow operational execution can be the difference between winning in a market and just being an also-ran.

Also withdrawing to reflect is of little practical import if others are arriving in the market to eat your lunch.

Speed of response in these turbulent times is becoming ever more important.

That response has to be speedy and robust and agile enough to take advantage of the many varying data and technology solutions available to lenders. Without a doubt, what was possibly more straightforward before the pandemic has become much more complex. The right partners are essential in these times of multiple options that bring with them the promise of great rewards but also the risk of making bad choices. At Iress, we are making it our mission to provide the guidance and advice as well as the practical delivery of technology to help our lender clients successfully navigate these difficult waters. We lead with solutions that meet the requirements of lending in a new age.

MAY 2022

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FEATURE

TARGET GROUP

How to lead the technology wave Stephen Sandiford Mortgage Hub product owner, Target Group

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ustomers expect more. They want things to be easy.

Straightforward. End to end.

They want to choose how, when, and where they interact with business and service providers, and on what device.

Organisations want satisfied customers. They want to exceed expectations; it’s how they build loyalty. They also want reduced operating costs and increased revenues.

To achieve this, they need agile and flexible systems that evolve with changing customer behaviours.

DIGITALISATION TO THE RESCUE

Lenders need to rethink existing processes from the ground up. It’s no good to digitise an existing process (or part of a process) if the process isn’t centred around the customer experience.

And let’s face it – many processes have been built on and adjusted over time to meet internal processes, not customer expectations.

That’s why it’s no longer enough for a customer to request a change by emailing or phoning customer service.

They must have the autonomy to manage the change themselves via a customer portal, should they choose to.

Digitisation of services has accelerated massively as a result of the pandemic.

The success of Amazon, Zoom, and Ocado highlights the step-change in consumer behaviours. Customers expect access to an interconnected network of platforms and true digitalisation of products and services.

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“Lenders need to rethink existing processes from the ground up. It’s no good to digitise an existing process ... if the process isn’t centred around the customer experience. And let’s face it – many processes have been built on and adjusted over time to meet internal processes, not customer expectations. That’s why it’s no longer enough for a customer to request a change by emailing or phoning customer service” Customer demand for self-service will both improve their experience and reduce the cost to serve.

The change momentum had started before the pandemic, with the use of financial apps and mobile banking services increasing by 72 per cent in 2020, and 80 per cent of consumers saying they preferred to bank digitally.

Gartner predicts that in 2022 85 per cent of customer service interactions will start with self-service; 88 per cent of customers worldwide expect companies to have a self-service portal. Businesses must adapt or be left behind.

CUSTOMER EXPERIENCE, REDEFINED

Customers should be at the centre of this model, in control of their data and able to make near-instantaneous and informed decisions on a wholeof-market range of choices. They must have access to the information

they need when they need it, on the platform of their choice.

Emerging technology like artificial intelligence, machine learning, robotic process automation and data insights are vital enablers.

Cloud technology provides resilience, scalability, capacity, efficiency, and security.

These technologies allow lenders to better understand customer behaviour to inform future NPD and service enhancement.

DISRUPTING THE STATUS QUO

Before the pandemic, driving a twohour round trip for a one-hour meeting was considered normal.

The ubiquity of virtual meeting platforms made us realise there is a better way! The old system was ripe for digitalisation. The same is true for the mortgage process.

The mortgage industry hadn’t changed significantly for decades – until now.

Target’s award-winning Mortgage Hub is an excellent example of digitalisation imagined, researched, designed, and built from the ground up. It’s predicated on CX and a live ecosystem using best-in-class thirdparty solutions and APIs. Mortgage Hub is the first digital-bydesign white-label mortgage platform in the UK. It transforms the user experience from analogue to digital, removing excessive bureaucracy, minimising points of failure, and expediting the whole process.

It’s powered by open banking technology, and it’s customer-centric for lenders, brokers, and homebuyers.

Critically, it’s transparent and fast – enabling a highly accurate DiP in under 20 seconds.

Book a demo today to find out how Mortgage Hub can revolutionise your customer experience. https://www.targetmortgagehub.co.uk/ request-a-demo/

Stephen is an experienced Residential and BTL mortgages professional, and leads Target’s development of Mortgage Hub www.mortgageintroducer.com

SAY GOODBYE to the old mortgage process SAY HELLO to the future of mortgage lending

Great things don’t come from comfort zones - Stacy Tuschl The mortgage application process hasn’t changed much over time. Yes, it’s had a few tweaks along the way, but it’s never had a complete overhaul. Until now.

Mortgage Hub, a brand new creation from Target, is a ground-breaking digital platform that you, your intermediaries and your customers will love. Unlike anything before, it represents the dawn of a new era.

Whether you’re an established lender or a new challenger, Mortgage Hub

will reduce your operating costs, remove inefficiencies, and help increase the amount of business your organisation writes.

Crucially, it’ll give brokers and customers an experience they’ll enjoy. Something to keep them coming back for more.

And we all know the importance of securing customer loyalty.

To understand why Mortgage Hub is genuinely unique and discover the many ways it will benefit your business, book a demo at:

www.TargetMortgageHub.co.uk

SPOTLIGHT

DIGITAL TOOLS

DIGITAL TOOLS THE KEY TO A FRICTIONLESS MORTGAGE JOURNEY

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t’s no secret that the COVID pandemic had a transformative effect on the use of digital tools in the mortgage industry. Lockdown forced brokers and financial advisers to conduct business virtually, mostly via Teams or Zoom, yet the sector did not suffer as a result. On the contrary, both customers and brokers experienced a qualitative jump in tech sophistication, as fintech companies fast-tracked developments that would have taken years to roll out in normal circumstances.

By leveraging technology, mortgage advisers not only save precious time, but they can also capture more consumers and help homebuyers to make more informed decisions during their early online searches, L&G’s research has shown.

How did the COVID pandemic fast-track tech and the use of digital tools in the homebuying process?

Well, I think the whole industry had no other option but to accelerate the digital journey. We spoke to both brokers and lenders who were given a bit of a sharp shock at the beginning of the pandemic. They had to use things like Teams and Zoom which they had never used before, and I suppose it put digital tools and transformation in general on people’s roadmap. It was inevitable that it would come, but it just accelerated that journey and probably brought the importance of it right to the forefront. I think lenders were just as confused in some respects as the brokers at that point, but everybody’s kind of muddled through and some really good tech has come out of COVID that will stay for quite a long time and just continue to be adopted.

For the L&G report, you carried out some immersive, in-depth sessions aimed at gaining a better understanding of the pain points of the mortgage application process. What did that involve?

We’re obviously focusing on the frictionless mortgage journey. From a B2B perspective, it might be very different from a B2C perspective, so it was about getting

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to both of those and actually going to the consumer and saying, “How did you find the journey?” and we’ve done quite a bit of research in terms of the emotional journey that a buyer goes through. They have seen the perfect dream property, but then the reality dawns on whether they can afford it and they have to decide what their next steps are.

You might get a decision in principle [DiP], but then everything falls off the radar in terms of communication.

That, again, is a different sort of emotional journey and that’s what we really wanted to explore with the consumer research.

L&G focused mostly on seeing how first-time buyers fared. We are now in a market where we have higher rates, soaring inflation, and sky-high property prices.

With all these factors conspiring against first-time homebuyers, do you identify them as a particularly vulnerable group?

They’ve definitely got challenges. I think the deposit amount has always been something that’s talked about, and with the Help-to-Buy scheme ending soon, that’s going to create some problems for first-time buyers, but also [create] all sorts of opportunities for different schemes to emerge – and possibly create more choice because I think there’s lots of potential barriers in getting first-time buyers on the housing ladder. But we’ve also got to be careful that we don’t go back to the 100 per cent mortgages and people in negative equity, because we don’t want any more mortgage prisoners. So there’s a little bit of a balance as to what schemes are going to be useful in the future as well.

Are buyers who use brokers better informed than those who don’t?

The value of advice is so important, in my opinion, and the reason is because you don’t know what you don’t know until you don’t know it. And the idea of going to your high street bank is probably the comfort of familiarity, but is that the right thing to do? They → www.mortgageintroducer.com

SPOTLIGHT

WHAT IS THE STRAP PLEASE Jodie White

Jodie White, head of product and transformation at Legal & General, spoke to Mortgage Introducer this month to discuss the impact of technology on the mortgage industry – and particularly on a customer’s early online search for a home

www.mortgageintroducer.com

MAY 2021 MORTGAGE TECHNOLOGY

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SPOTLIGHT

DIGITAL TOOLS may be the right person to bank with, but are they the right person to make a financial commitment to?

As a customer you have different needs for different products, so I think brokers just take a more holistic view of your circumstances and what your future plans are. So personally, I think you are better informed using a broker. They keep customers up to date and keep them in touch with rate rises. I think that’s the value of a broker.

“Customers need clarification ... and that’s why a broker is still really useful and still definitely needed” How useful are these digital tools in providing accurate information about a homebuyer’s habits?

They’re definitely accurate. What the research did highlight to me was that although customers were doing their own research, which is brilliant, there’s an interest there – they’re obviously looking for information.

Transparency of information is something that I’ve personally taken out of that report as a key need by customers – what are we showing them, and what are brokers showing those customers who are looking for information? What are their websites like? Are they up to date? Could you give customers a good idea of how much they could borrow so they don’t have to go on a comparison website?

Because from the research, that’s what they’re looking for. They’re looking for a little bit of reassurance, and as a broker, if they did more work on their website, that’s something they could really help them with. That’s kind of what we took out: they’re okay to do research up to a point, but then they need clarification as to what option they could take. And that’s why a broker is still really useful and still definitely needed.

How can brokers leverage tech to attract more consumers early on in a homebuyer’s search for a property?

The website is a shop window for a broker. So if they are looking into your shop, what is your shop telling them that you do? Some people may think that you’re giving them too many answers and you might scare them away, but it might give them that decision to then say I can borrow what I want. I’ve seen that house on Rightmove and now I want to move forward and speak to someone about it.

Giving people the right information is the right thing to do, but also just making sure that you’re using the right tools for that customer. You could adopt lots of tech, but if it doesn’t fit into your business and if you don’t follow through on those leads, then there’s no use having it.

“Once we start integrating technology, that’s when the real benefit is going to come, and that’s when the customer is going to be able to get on a smooth, seamless journey to the end”

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The report said that it takes consumers around three weeks to do the research using brokers’ comparison and financial advice sites. Is it a question now of streamlining the process further?

Yes, I think there’s definitely work to do. Technology is still a little bit disparate and the links between the technology could be better – the industry kind of elongated the process, in some respects. But I think once we start integrating technology, that’s when the real benefit is going to come and that’s when the customer is going to be able to get on a smooth, seamless journey to the end. But these things take time.

Is it also a question of standardizing tech in the industry?

Yes, I think so. These stories of ID being asked for six or seven times throughout the homebuying journey aren’t brilliant from a customer’s perspective. If you had some standardisation throughout the industry, it would make it so much easier, and I think people recognise that that’s a current problem.

Are brokers sufficiently tech-savvy?

I think the brokers that we speak to are definitely willing and open to onboarding technology into their businesses. But I understand the challenge is deciding what to onboard, because these things are not always free. As a broker running your own business, it’s important to step back and see where you want to concentrate your efforts. Ask yourself if it’s completing your journey quicker, bringing new leads into your website and making that as efficient as possible. It’s important to consider what works for them.

Nine out of 10 buyers were satisfied using digital tools in the mortgage application process, but what can brokers do to encourage the remaining clients to rely on tech?

Make customers aware of it. We do have some people who don’t want to use tools; they want to use face-toface journeys, and that’s still a valid route to take. For some people it’s a massive financial decision, probably the biggest that they’ll ever make in their lives. People buy from people and that absolutely is still a valid journey. You need to trust in the expertise of a mortgage broker, but you also need to be able to upload your information at 11 o’clock on a Sunday night when your kids have gone to bed because that’s just what you need, and people’s time is really precious now. So I think a hybrid of both is really where the industry is sitting. Technology is not there to replace people, it should be used to complement and make the journey as straightforward and seamless as possible – for lenders, brokers, and customers alike. www.mortgageintroducer.com

ROUND TABLE

TECHNOLOGY

ALL CHANGE The pandemic is “the biggest disruptor” the mortgage market has seen

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here has arguably been no bigger disruptor to the mortgage market in decades than the COVID-19 pandemic. But along with the cloud that was the pandemic, there came something of a silver lining, as it opened the doors to the increased use of technology within the sector.

Technology often bridged the gaps among individuals working on a mortgage application and enabled everyone involved with the lending process to stay connected. Customers were kept satisfied by virtual viewings, and, similarly, technology allowed valuations, which screeched to a halt at the height of the pandemic, to be conducted virtually. All of this kept the housing market moving.

But where does technology go from here? The impact of the pandemic and the next steps for technology in the mortgage market were top of mind for a recent technology panel led by Mortgage Introducer in association with Legal & General Mortgage Club.

IMPACT OF COVID Looking at how big an impact the COVID-19 pandemic has had on the mortgage tech landscape, Matthew Darlington, business development manager at Finova, explained that it was massive for the market.

“The pandemic was of course an unprecented event that no business could have prepared for,” he said.

“However it was clear from very early on that many firms did not have the infrastructure for any remote working.“ Darlington noted his surprise at the number of people using Excel spreadsheets and paper files who had to pivot quickly.

“It really, really shocked me,” he said. “But I understand it – traditionally it has been a very face-to-face market.”

Darlington went on to say that this was a widespread issue across the market, with small and large brokerages struggling with their lack of technological infrastructure.

To combat this, Darlington said, many businesses created tech alliances to assist each other in providing solutions for their customers.

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“The broker market has traditionally been face-toface and prior to the pandemic some brokers would even book home appointments to conduct fact finds,” he added.

Stephen Sandiford, mortgage hub product owner at Target Group, concurred with Darlington that many businesses were drastically underprepared for the complications caused by the pandemic.

“Lenders in particular have struggled, but I think it applies to a lot of broker firms, too,” Sandiford said.

“The savvier lenders are starting to realise that ... their customers, whether they be brokers or the end borrower, want and demand to work in a different way,” he explained. “We are going to see the pace change on that quite a lot over the coming years.”

He believes that technology is all about what it does for customers and finding the way that they want to interact in the new world.

“The impact of COVID-19 on the tech landscape in mortgages was huge. Incredibly disruptive for the sector and probably the biggest disruption I have seen in 35 years here,” said David Smith, strategic relationships director for 360DotNet. “What it highlighted was how firms at any point of the advice process, whether sourcing, distribution adviser, lender, surveyor, conveyancer – they all relied on three simple ways to communicate: email, face-toface, and telephone. And they got disrupted hugely through COVID,” he said.

Smith went on to say that when dealing with the fact that people could not meet face-to-face due to restrictions, everyone became scared to use email due to fraud and the lack of security in place.

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“We speak to a lot of lenders, and they have had a lot of similar challenges to everyone else – they are under-resourced, and they do not know where to put their focus” JODIE WHITE their staff to suddenly start working from home, which meant there were many delays while this process was being figured out,” he said.

Smith added that even now, two years since the start of the pandemic, people are still struggling to adapt to the technology that is now in place.

“You get technology teams in businesses that say ‘Yes, you can use Zoom,’ or ‘You cannot use Zoom,’ or ‘Yes, you can use Teams,’ ‘No you cannot use Teams’,” he said.

Smith mentioned that it had become very confusing for those simply trying to continue their usual dayto-day tasks.

Jodie White, head of products and transformation at Legal & General Mortgage Club, agreed with all the points made and added that she believed people just got into the mindset of working in businesses rather than on businesses.

“So they were looking at the short-term – How do I do this? How do I do X, Y & Z? – rather than thinking, ‘Right, what do I need to do to make my business better?’ And so I think that was one thing everybody learned to change,” White said.

“We speak to a lot of lenders, and they have had a lot of similar challenges to everyone else – they are under-resourced, and they do not know where to put their focus because there is that much technology on offer,” she added.

White went on to say they should question which horse they should back and how successful and useful it is likely to be.

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She noted that consumer behaviours have changed, and went on to outline that that affects both lenders and brokers because people generally just want to go online now rather than having face-to-face or telephone conversations.

TECH AND HYBRID WORKING Looking at whether the rise of technology alongside hybrid working is overall a positive or negative for the mortgage industry, Smith believes it has been a huge positive.

“I’ve got three children who do not want to speak to another human for anything, not even going to the dentist,” he said.

“If they could do that online, then they would go to the dentist online – so I think this shift in the way of working is a huge positive for the younger generations, who were already used to mainly doing things this way.”

He went on to say that the balance is shifting between those customers who want the face-to-face human interaction and those who just want to click a button.

“The rise of technology and hybrid working is allowing people to progress with their mortgage application without going to see a mortgage broker, without having to go into a bank branch to confirm identity, or proof of earnings, and all that kind of stuff,” Smith added.

Smith believes that the progression toward hybrid working is a very positive step for the industry, and one that allows both the consumer and members of staff more freedom.

Darlington said that he believes that the pandemic has taught us all many lessons across life and business.

But in terms of remote working, the pandemic has really emphasised the importance of technology for business continuity.

“Our roadmap has always included digital tools that allow brokers to remove manual processes and increase efficiencies. The past two years have definitely affirmed our key initiaives and we will continue to work with brokers to help them drive their businesses,” he added.

Sandiford too believes that the change has been very

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TECHNOLOGY positive for the market, but he noted that he thinks it will bring about both winners and losers.

He believes it is important for brokers to cast their nets widely in order to attract as much business as possible, and said this also applies to employers who are looking for good employees.

By offering different approaches to working, whether that be remote working, travelling into the office, or a hybrid, by giving employees these options, Sandiford believes businesses will be able to attract more and better potential staff.

“I believe customers will lead lenders and brokers with their changing behaviours and how they want to complete a mortgage application,” he said.

White went on to say that many people are no longer restricted to certain areas for their property purchases, as they are not required to commute into city centres every day, which she believes is a positive.

“For brokers and customers, the time-saving and transparency of information with technology – that is all brilliant, more upfront,” she added.

However, looking to the negatives, White said that driving people online makes it harder to maintain business as an intermediary.

“As an intermediary, what are you doing to stop those customers from going on to a direct-to-consumer website? So, what does your shop window look like?” she questioned. “You need to have something in place.”

Increased use of technology The increased use of technology does bring with it some issues for the mortgage market, such as threats of fraud and cyberattack.

White believes that these can be addressed by businesses keeping themselves informed and up to date on the subjects.

“You just need to know the basics,” she said. “So there are things like the UK National Cyber Crime Centre – they have got some good top tips and guides for small business owners, which look at things like backing up and protecting your customers’ data and avoiding phishing attacks.

“It also gives you resources and videos and even some

certification if you want to go that far for your business, but mainly it gives you all the latest updates on certain fraud schemes that are going around, and it lets you know what they are.”

White went on to say that there are a lot of webinars that lenders are holding and that other technology providers are hosting about fraud and awareness.

“Just attend them and ensure that your staff are doing exactly the same thing so they can spot these issues as well, because this is your first line of defence,” she said.

“On April 20, the Highways Agency came out with an amendment to the Highway Code to allow autonomous driving on the motorway below 37mph,” said Smith, picking up the conversation from White. “The stat I read was that it would reduce accidents from human error by 88 per cent. That is a great example of how you can reduce risk by using technology – so it’s not all about added risk.

“This can also be applied to the mortgage world,

“I think it is quite shocking that something like this had to happen for people to realise the importance of technology” MATTHEW DARLINGTON

in the form of ID fraud, payslip fraud, and money laundering fraud. There are so many services out there now that will give you security around digital certification, ID, income expenditure, etc. We need to be proactive like the Highways Agency.”

Smith added that brokers and lenders should not be sending customers spreadsheets asking them to fill them in, or emails asking for a photograph of their passport, utility bill, or council tax bill. He said that →

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TECHNOLOGY these services can be offered through technological processes, which are also safer.

“Fraudsters are very quick to identify gaps, but there is no doubt that the tools you can use now allow lenders, brokers and consumers to protect themselves from fraud,” said Sandiford.

Sandiford went on to explain that Target Group seeks to identify whether the information it is being told is correct, and then to act on it.

Darlington said that one thing that Finova has started doing is making sure that its customers understand completely the ins and outs of the products they are choosing.

“So, when we are selling a new product, we make sure that the customer has got the right information, and they are aware of the ‘do’ and ‘do nots’,” he added.

Looking to some of the advice he has shared with consumers, Darlington explained that Finova encourages clients not to send sensitive information via email and to ensure that they are using the company’s software, not a third-party site.

Darlington added that mistakes regarding cyberattacks and fraud are easy to make, and, as a result, Finova regularly trains and teaches its staff members to be able to identify online threats correctly.

“What the ‘do’ and ‘do nots’ are making sure of is that our customers have done their own due diligence and are making sure that everybody is aware of what is going on, so everyone remains as safe as possible,” he said.

DIGITAL PLATFORMS There are numerous digital platforms available within the mortgage space, and Sandiford believes that a good-quality CRM is essential.

However, he noted that because there is such a high number of quality digital platforms available on the market, it is more about how brokers will use the technology when they are selecting the right platform for them.

He went on to say that he would also class lenders in

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“The savvier lenders are starting to realise ...that their customers, whether they be brokers or the end borrower, want and demand to work in a different way” STEPHEN SANDIFORD this bracket.

“I am not sure that people really know what they are doing with CRMs and what they are for. I think they are very often seen just as a database, a list of names, but the key is to use those in a way that really adds some value to the customer,” he said.

Sandiford explained that he believes this has to start with the customer – and added that it is relatable to everyday life in the way that some people are able to keep a good database of all their contacts on their phone or emails, whereas others struggle to maintain this information.

When assessing which technology is best, “It depends on whether you are asking the question around lead generation or whether it is around reaching a customer as part of the advice process,” Smith said.

He explained that if it is about reaching the customer as part of the advice process, then he would recommend using a secure messaging platform.

“I would not specifically advocate for WhatsApp, but a WhatsApp for Business or something similar along that line that offers a secure channel and that gives the customer notifications [is important],” he said.

This is to ensure there is a known audit trail and ease of use on a mobile device because Smith said this is how customers want to use digital platforms.

Then, for engagement, Smith pointed to Facebook and TikTok, which are already used by customers and would provide easy access to a known brand.

“If mortgage brokers could somehow engage in

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TECHNOLOGY workplace communication technology, I think that would be a brilliant place to invest some time and effort in for lead generation,” Smith said.

He believes this would be beneficial because brokers would always know their customers were going to be engaged and they could target a specific demographic, whether that be law enforcement or teachers.

“The CRM is the best place to start for a broker,” said White in assessing the importance of digital platforms.

“The reason for this is because that is where you house all your information and then what you bolt on and what you utilise within that CRM system is very much within that business’s remit.”

“Customer retention solutions are amazing. If you are keeping your customers up to date they will not go anywhere else – you should help them find that information and really keep them abreast of what is happening over the course of their journey,” White added.

White explained that all these tools are often good for business, but each business must adopt the right ones in order for a company to operate to its fullest.

“The messaging side of things is so important, there are so many new tools being developed out there that are offering great onboarding tools, such as the best way to get a client or a new customer into the CRM system, or getting a customer as a retention back into the CRM system as a new lead,” Darlington said.

He went on to express his surprise at how many brokers and firms do not have a website or any kind of social media presence.

“It is staggering just how little they have. It may just be a simple website with their name on it and a contact form, but so many do not even have anything,” Darlington said.

He believes that simply giving brokers and firms snazzy tools to aid their digital progression is not enough; they need to have solid ground upon which to build.

“They need to have that basic platform of a good website, even if there is just basic messaging on the website and a social media presence. Then you can

start looking at some of these tools with portals and messaging onboarding tools,” Darlington added.

Tech: threat or complement?

White explained that the mortgage process in general is still confusing for consumers – in part, she believes, because it is an emotional journey with ups and downs.

She said a broker can bring clearer transparency and visibility to that process through technology.

In addition, White explained that consumers like to conduct research when making their decisions, but that this can be misleading in terms of presenting the best option. She believes that the support of a broker is thus best in terms of assisting the consumer in making the right decisions at the right times.

“A mortgage broker and I were looking at global trends in the last five years and the phrase ‘find a mortgage broker near me’ has increased by 3,500

“Firms ... all relied on three simple ways to communicate: email, face-to-face, and telephone. And they got disrupted hugely through COVID” DAVID SMITH per cent,” she said, emphasising the importance of a digital presence.

White said it goes back to how you keep in touch with those customers who do not know how to go out and source information on their own. She went on to suggest having a mailshot or some similar form of communication is a possible solution.

“Customers should be kept informed and made to feel comfortable that they have got someone to go and speak to; however, there definitely are threats out there [in → the sense that] if you are driving people

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TECHNOLOGY online to find information, then they may go away from you as a mortgage broker as well,” she added.

Darlington said that he was in total agreement with White regarding tech being a complement; in his opinion, the threats lie in other firms not adapting technology like their rivals or competitors.

“If there are two brokers in a street and one of them has a fantastic client journey with a snazzy portal and they can make it easy for the customer, and another down the street is relying on old-fashioned methods, it is a no-brainer who is going to get the business again and again,” he added.

“Brokers might be left behind if they don’t adopt technology, because word-of-mouth is huge, and people respond to positive experiences,” he said.

“If people don’t like a broker’s method for retention, then it is going to become very hard for them to continue to operate and attract more business.”

Sandiford reiterated that with the increased use of technology, he believes there will be winners and losers.

“What borrowers will do is they’ll come to the brokers for their expertise, for their professional guidance and their advice; and so I would say that, actually, the technology does not just complement what mortgage brokers do; it can enhance it.

“That’s why we want to automate and use open banking and electronic IDs, so that it’s easier for brokers to do what they do best, which is imparting their professional knowledge and expertise to their borrowers.”

Sandiford believes that people still need an emotional connection, and he said you can never get that through a tech-only journey.

“We crave it, and with something as important as buying a home – which is likely, for the majority of people, to be their biggest asset and also the largest amount of money they will borrow – there is a disconnected feeling in doing it entirely online and it brings in more doubt about whether this is the right thing to do,” he added.

He went on to say that while human interaction is important, it can simply be a 10-minute phone call – it does not need to be a full four-hour mortgage application.

“The threat for firms is maintaining the correct balance,” he said. “We have seen over the last couple of years that the trailblazers only offering online advice have hit problems and have had to have cash injections in order to continue operating.

“That is not to say that their model is wrong. It’s probably just missing a couple of elements. And they were the first, so they’ll learn from the mistakes of the past.”

STANDOUT TECHNOLOGY Focusing on the leading forms of technology that will have the biggest long-term impact on the mortgage space, Sandiford explained that he believes the online

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automation of processes stands out.

He went on to say that technology that can reduce decision times to a fraction of what they used to be and can give brokers and customers an accurate decision in principle in a time is what will truly benefit the process.

There are also some massive benefits for lenders – and alongside those are a kind of a subset of processes, such as APIs, checking IDs, and open banking, he believes. Sandiford said this is where the future lies in terms of technological processes, and what will benefit everyone the most.

He added that improving technology should never be adopted for its own sake, but purely for the benefit of the end customer, the broker, and the lender.

Smith brought a different perspective to the table.

“Lenders’ systems are archaic and do not move quickly, and you’ve got young, fledgling disruptors who are agile coming on board and saying, ‘You know what? We can do all this’,” said Smith.

“Great stuff, but it fails as soon as you start getting into the Santanders and the Nationwides – it falls down because their APIs are not as nimble. So I think the answer will not necessarily be APIs, but I think it might be robotic process automation.”

He added that you can bring in robotics to shift information from A to B that would normally have been processed by humans. He emphasised, however, that this is still proving to be a struggle because the technology is relatively new and lenders’ systems are outdated.

Darlington added that the processes right now could be sped up.

Looking to what he views as standout technology, he outlined that a platform for post-sale, which is designed to increase the rapport between broker and client, would be very beneficial.

This is because over the span of a fixed term, customers often see many changes in terms of job, health, or salary, and therefore having a platform through which to liaison with a broker ensures they are always on the best deal.

“This then gives them the best opportunity to crosssell, which may not have been apparent at the start,” Darlington added.

Meanwhile, White said that, so far, she had not seen a standout technological process. “However, there are platforms that are coming in that are really exciting.

These platforms sort of give a wrap-around right from estate agents to completion using blockchain,” she added.

She thinks the home buying process is far from being solidified technologically, although she outlined that it is going the way that it needs to.

“We have not yet hit the big standout technology, but I think it will come in the next 18 months,” she concluded. www.mortgageintroducer.com

INTERVIEW

MORTGAGE JOURNEY

How can mortgage lenders improve their digital offerings?

Digital services taking over the market

by Jake Carter

robust electronic verification in place, mortgage providers can carry out better KYC checks and due diligence processes,” Young added.

While the deal itself remains the most important result for borrowers, Young believes that the access to information and rates, the ability to renew painlessly, and a swift, smooth overall process is becoming much more important to people who are facing severe pressures from a spiralling cost-of-living crisis.

“B

anking is arguably the financial services sector that is leading the way when it comes to digital interaction with customers,” according to Jerry Young (pictured), chief executive of ieDigital.

Young explained that a number of digitalonly banks are making serious inroads against the traditional high-street names.

“This has been bolstered by a wave of US-based entrants that are further chipping away at the traditional banks’ customer base, including JP Morgan Chase’s and Goldman Sachs’ Marcus-branded digital savings accounts,” he added.

According to Cornerstone Advisors’ 2022 What’s Going on in Banking study, to date, three-quarters of banks and credit unions have launched a digital transformation initiative.

Another 15 per cent plan to develop a digital transformation strategy this year.

“However, in an age of digital advancement in the overall financial services sector, mortgage lenders are trailing far behind when it comes to customer service levels,” Young said.

WHAT’S GOING WRONG FOR MORTGAGE LENDERS? When liaising with customers nearing the end of their fixed-term deals, Young explained that many lenders use antiquated systems and onerous, time-consuming procedures.

Such systems typically involve teams of customer service representatives speaking to the customers themselves on the telephone, or in person, for anything up to a couple of hours. The lender will then usually put together various options and scenarios.

There will then often be a secondary call – again, up to a couple of hours long – to go through outlay from the provider.

Young believes mortgage providers need www.mortgageintroducer.com

Jerry Young

to up their digital game, especially when the economy is facing a crisis when it comes to the rising cost-of-living.

“Fluctuating interest rates, inflation, utility bills are rising quicker than many people have ever seen in their lifetimes, fuel prices and food prices [are] creeping up – many people are facing serious pressure just to make ends meet,” Young said.

Against such a bleak backdrop, people are much more likely to shop around when their fixed-term mortgage comes to an end.

Young believes that if providers can offer their customers strong, interactive digital capability, it will be much easier for customers to research and re-apply for further fixed deals, fully online.

WHAT IS THE SOLUTION? Digital platforms offer providers the ability to interact quickly and efficiently with customers.

“Such functionality will encourage customers to remain with the same provider, one that they trust and already know,” Young said.

He went on to say that this will, in turn, prevent lenders from having to pay expensive commission to source brand-new customers to replace the ones who have left.

ADDITIONAL BENEFITS “Going digital is not just about having customer-friendly technology. It is about embracing better security practices. With

WHERE CAN LENDERS START? Young explained that legacy systems can remain the bugbear of many a business trying to figure out how to kick-start digital transformation.

“To overcome these complex and entrenched systems, and improve the experience for customers, lenders should look at modernising and updating their systems,” Young said.

He added that decoupling the frontend from the backend system can help drive change. It is also beneficial to have a modular and flexible digital experience platform that empowers the business to introduce new functionality.

“Being able to start a journey on a mobile device is now expected, and having instant support and guidance through a chatbot or direct contact with an agent is the new norm,” he added.

Young said the benefits include increasing customer engagement and experience, providing next-generation features such as biometric authentication and live chat, and helping customers to self-serve.

Looking ahead, Young believes the mortgage sector is already taking a long, hard look at how it is offering products to its customers. While the rates and the products themselves remain the most important factor, providers are increasingly understanding that customers are demanding much higher standards digitally.

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INTERVIEW

LOANS

Tech can rid market of “easy excuse” of relying on relationships Transparency, certainty, and access are much needed

by Jake Carter

A

s the property finance market grows and becomes more complex, sophisticated technology is required to provide much-needed transparency, certainty, and access, according to Miranda Khadr (pictured), founder and CEO of Pitch 4 Finance.

In the year since its launch in April 2021, the digital funding marketplace has grown to encompass 200-plus lenders, 1,000 registered brokers, and 2,000 direct customers. By the end of the year, the business aims to grow its lender base to 400.

Khadr, with her own history as a broker in the market, told Mortgage Introducer that this success reflects the growing need for certainty, choice, and transparency in the mortgage market.

Pitch 4 Finance allows brokers and direct customers to source the right mortgage for their needs through a two-tier system, which analyses the offerings of those lenders on its books, while also conducting additional wholeof-market research in order to benchmark those results.

Khadr said the service aims to provide 20 to 30 solutions in the first instance – factoring in the best deals, not just the lowest prices – and giving brokers and borrowers a starting point from which to proceed with their research.

“We’re trying to get deals placed quickly, while also getting the best deals for the customer,” she added. “It’s proving really effective for complex deals. We’re seeing a lot of business loans and business finance, commercial mortgages, portfolios, development finance.”

This, Khadr said, proves that a digital, automated approach can be tailored to work for those complex parts of the market that previously would have relied only on a human, relationship-based approach.

While there is always room for those

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relationships, this arguably risks missing deals “You’ve got to bring science and research to that do not fit within a broker’s existing cadre what we do,” Khadr said. “It’s an easy excuse of lenders. to rely on just ‘relationships.’ I don’t see that “My aim with brokers and with the direct one is there to take over from the other, but borrowers is to provide certainty about getting it’s got to be hand in hand. the best deal, rather than just thinking you’ve “You can have a great relationship, but why found the best deal,” said Khadr. shouldn’t it be transparent and automated?

“It’s also about access – there may be a That doesn’t mean losing the human element, new lender that’s just launched and doesn’t but what it does mean is your research is have the business development capabilities proven, presentable, and professional.” or money for marketing yet, and therefore She added: “You want it to be easy, save as people are oblivious.” much time as possible, and create the best This not only opens up options for brokers, client outcome. That can’t be left to guesswork including those who might be newer or the never-ending proclamation of to the market or looking to build ‘I’ve got great relationships.’ It’s up their business, but also simply not good enough, and customers should levels the playing field for lenders in what is an expect more.” increasingly lucrative This is particularly true in a growing, and competitive space. increasingly complex This, in theory, m a r ke t t h a t i s leaves a lender’s overcrowded with success up to whether lenders and products. it has the product and Having a relationship proposition to succeed, with a select few providers is no longer rather than its legacy Miranda Khadr enough for a broker to be relationships and historical market standing. successful.

“Our research also helps give an idea This also plays into the key topic of of areas to develop for lenders,” Khadr added. diversity and inclusion within the property “You’ve got an overarching snapshot of what finance market. Relying purely on historical cases are where.” relationships tends to support the status The challenge, however, is in keeping quo, which in this market is not a particularly on top of the development and evolution diverse one. of technology and data analysis in order to By opening up the market and allowing for continue to provide a value-added service. transparent, research-based solutions, Pitch To this end, Pitch 4 Finance is looking to 4 Finance is also paving the way for brokers further its ability to track product changes to enter the scene who do not necessarily fit quickly and be “on the front foot” as much the existing mould. This can only be a good thing for the market, and for the customers as possible.

Progress can be particularly difficult in a it serves, Khadr said.

It also allows borrowers to gain clarity on market that has traditionally shied away from digitalisation, only begrudgingly adopting the advice they are being offered, she added, newer processes during the pandemic out creating greater checks and balances and of necessity, in many cases. demystifying the market. www.mortgageintroducer.com

INTERVIEW

AFFORDABILITY PLATFORM

Brokers demand lenders adopt new approach Report shows 76% of originators believe it is “more important than ever”

by Richard Torne

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rokers are calling on lenders to take a more affordabilitydriven approach to product development, according to a new report by financial services firm Mortgage Broker Tools (MBT).

The 35-page survey by the London-based company polled more than 400 brokers who said there was “a clear demand for lenders to make greater use of available affordability data in their product development.”

In the report’s preamble, the chairman of the Association of Mortgage Intermediaries, Andrew Montlake, highlighted current economic concerns related to energy price rises and spiralling inflation, which had forced lenders to hike interest rates “on a regular basis.”

Consequently, having access to accurate affordability data was more important than ever, according to 76 per cent of brokers.

Part of the information brokers and lenders can leverage to assess affordability relates to the types of jobs lenders consider ‘stable.’

Regarding self-employed people, that could be the number of years the borrower has been trading, while working overtime, specifically during the COVID pandemic, would not be considered part of a person’s future, stable income.

But while mortgage affordability platforms could save time and money for both lenders and brokers, research found that originators were not confident that all lenders would go in this direction.

Only 19 per cent of brokers said they thought that all lenders would take a more affordability-driven approach to product development, while 28 per cent said that only the smarter lenders would go down this route.

The remaining brokers said they would like to see this happen, but did not have confidence that it would.

MBT’s CEO, Tanya Toumadj (pictured), told www.mortgageintroducer.com

Tanya Toumadj

Mortgage Introducer that the vast majority of brokers now understood the benefit of leveraging affordability platforms.

She said, “The reason 70 per cent of brokers use affordability platforms for so many cases is because there’s a clear benefit, as it saves, on average, 47 minutes per case and helps place the case.”

The changing economic environment, due to soaring inflation and rising energy prices, has stretched affordability and made many lenders change their rules.

“Because of the pandemic, you saw a lot of changes around criteria and affordability, with lenders retracting from the market. And now they’re all kind of slowly expanding back in. So it’s complex because the economic environment changes … but also lenders are changing their affordability calculations. And all of this is done behind the scenes, so the broker isn’t always aware of it,” she said.

The majority of brokers (86 per cent) also said that mortgage affordability had become more complex, prompting Toumadj to point out that finding the lowest rate was not necessarily the biggest priority.

“Historically, brokers usually just researched

on price and chose the cheapest rate, but because of the economic environment, the increasing complexity of affordability is becoming a larger part of the broker decision, and therefore lenders want products that meet the broker’s client needs; they need to consider affordability more and more, and that’s what we’re trying to get at across the ecosystem.”

Despite brokers’ doubts about lenders’ attitudes to affordability, Tumadj rejected suggestions that lenders had become complacent due to the high demand for homes in recent years.

She said, “I think there wasn’t data available. I totally understand you can’t build products without basing them on data because you’ve got a responsibility to make sure you’re lending in amounts that are safe for the customer.

“I think now is kind of the dawn of a new era, where if lenders aren’t thinking about affordability, they’re really missing a trick, because now’s the time when it all starts to become available.”

To make the point, she noted that some lenders had been launching affordabilitybased products over the past few months.

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FEATURE

360 DOTNET

eIDV and AML improve the customer journey Ozgur Unlu CEO, 360 Dotnet

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survey undertaken by 360 Dotnet revealed over 60 per cent of mortgage and protection advisers wanted electronic identity verification (eIDV) and anti-money laundering (AML) checks in their system to help simplify their customer journey. It is not astonishing to know that advisers want to enhance their onboarding process and increase security and trust within their businesses.

It is an onerous and time-consuming task for advisers to ensure they have all the correct documentation to advance an application. The impact of COVID has only made this even more challenging by fuelling digitalisation in the financial services sector and prompting firms to improve engagement with customers. We live in a world where clients prefer their mortgage, protection, or GI application to be handled online rather than through a visit to the high street.

Consequently there is an urgency for advisers to make the onboarding process effortless and quick, and to ensure that clients know they can trust their advisers. This requires them to improve their services and be able to validate a customer’s ID instantaneously. Advisers can do this by selecting software that has eIDV and AML integrated into the chosen system.

Speed, accuracy, and efficiency must be improved when onboarding and authorising a customer, as fraud has increased significantly. While online transactions grew by 65 per cent between 2019 and 2021, according to the RiskOps platform Feedzai, online fraud attack rates alarmingly grew by 233 per cent during the same period.

Fraud and error in public spending are estimated to cost the taxpayer over £51bn every year, which will have risen during the time of COVID. Advisers using a system that has eIDV and AML integrated means they can record and electronically identify clients. A person can be verified on the other side of the screen with checks to guarantee only legitimate customers are onboarded.

Advisers can send their customers a

Security and compliance don’t have to be time-consuming

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MORTGAGE TECHNOLOGY

MAY 2022

unique link over messaging, enabling them to verify themselves by taking a photo, or uploading a picture of their passport or driving licence. Advisers can check addresses, investigate PEPs, and sanction hits and identify whether they are on the electoral register. eIDV and AML stop financial crime and increase security and trust whilst reducing delays by speeding up client onboarding.

Having eIDV and AML unlocks a secure digital world, protecting user privacy and control over personal data.

It enhances customer experiences and boosts productivity, as 25 per cent of all financial applications are abandoned due to difficulties in the registration process, according to McKinsey and Company. This worry can be lifted with eIDV streamlining the authentication process. As most transactions are carried out online, selecting a system with eIDV and AML is vital; the fee is trivial compared to the risks associated with fraud and noncompliance issues. Businesses in the financial services industry will attract more customers with eIDV and AML, those who do not have it could lose customers.

More businesses are looking for solutions with eIDV so they can give their customers a secure and quicker way to identify themselves. As the world becomes more digitised, new rules and stringent controls will come into play to fight fraud, leading to an increased need for technology.

David Smith, Strategic Relationships Director at 360 Dotnet: “Client onboarding is a crucial step for everyone in the advice process – customers, and advisers alike. You only get one chance at that first impression, and today’s customers expect efficiencies, ease of use, and speed.

Advisers also need to be vigilant: the FCA has a strong focus on identity, and mistakes can be costly. At 360 Dotnet we are focused on that first step, making the right first impression, and setting up the advice process to be efficient right from the off. eIDV and AML are just one aspect of how we are powering better customer outcomes through our innovative fintech solutions.” www.mortgageintroducer.com

www.360dotnet.co.uk | 0116 2408621 | enquiries@ 360lifecycle.co.uk

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