The data road map for success

The year 2020 was a record one in the property market, in terms of prices, demand and broker market share. But alongside these positives there were also increased turnaround times and lower conversion rates, as well as a much-increased volume of ‘more information’ requests.

Realising that much of the data it already collects could help tackle these pain points, NextGen.Net set out to offer a unique benchmarking service that allows lenders and aggregators to see where they sit in the wider industry.

For instance, lenders can use its Industry Benchmarking Reports to track how their time to approval compares to what the rest of the market is offering, as well as their volumes, percentage of more-information requests, and conversion rates.

The service also allows lenders to do a deeper dive into the profiles of those volumes: at how they compare across the market when it comes to self-employed borrowers, refinances, different LVR bands, construction loans, and so on.

Using these comparisons, lenders can begin to have conversations about what they need to do to improve or maintain their results, says NextGen.Net chief customer officer Tony Carn.

“2020 has been a record year of volumes, and the broker market in particular stepped to the forefront,” Carn says.

“But with that increased volume has come increased pressure and strain, and what a lot of lenders discover is they don’t actually have the scalability that they would like.

“It’s important that they’re getting the best efficiencies in obtaining those turn-around times and keeping the customer off-market and achieving the right conver-sion rates as well. So, using the data to identify problems and reducing the friction in the process through an action plan is absolutely critical for everyone involved.”

How is the data being used?

Beyond helping lenders understand where they sit in the market, the benchmarking service helps them identify the pain points in their processes. Carn says one of the most prevalent examples of that is not getting the identification of applicants right: this is driving a lot of more-information requests and in turn impacting turnaround times.

Knowing where there is friction in the process, lenders can then begin to take the steps to improve it. Carn says there have already been great results from lenders who are using the data in this way, particularly with those who do a ‘deep dive’.

Aggregators are also using the data to see which brokers are getting the best turn-around times and the lowest number of more-information requests, as well as the trends related to declaring living expenses.

“It’s about looking at that and saying, well, as a broker, what are the things that are in my control? Where am I getting my more-information requests? Why am I getting reworks? What are my times to approval? How do they compare to the market?” Carn says.

“We’ve seen brokers’ market share continue to rise, and it’s because of the valuable role they continue to play. The factors that contribute to things such as time to yes and more-information requests are, however, largely driven by lender processes and lender policy; and even pricing, for example, influences those.

“That’s where the value is for a broker to hand-hold people through that minefield and ask, how do I secure your approval? How do I do it in a timely and efficient way, etc.? It’s always about how do I continue improving that.”

What has the feedback been like?

The value of NextGen.Net’s benchmarking service has been commended by lenders and broker groups who have used it, and Carn says the data has found its way into board-rooms worldwide.

He says for NextGen.Net the accuracy of the data is really important: no assumptions are made; it is made up of replicated produc-tion indicators and is as close to real time as possible. Occasionally, users will come to NextGen.Net and ask about dissecting the data even further, and that is something the group is continually working on.

“A recent example has been lenders asking us if we can start benchmarking debt-to-income ratios, which is obviously very topical, so we’ve been able to deliver on that,” he says.

“Also, we’re looking at how we benchmark volume and per cent flow for first home buyers by state and different categories and how can we provide it in real time.

“We are proud to say that at the end of 2020 we provided these benchmark reports to the first broker group where they can slice and dice the data themselves in real time. That means on a daily basis broker groups and lenders can assess what’s happening at the frontline. The data is powerful, and the insights they provide are of massive value.”

How will this continue to evolve?

As users come forward and ask questions about what more they can do with the data, the service is “always evolving”, Carn says. In fact, NextGen.Net has a number of new types of report in the pipeline. But he says where it can evolve the best is when users can go beyond the analysis and start to break it down into practice.

“The key thing is looking at the headline data insights, analysing them, and then actu-ally having an action plan to say, OK, what are we going to do? What opportunity are we going to tackle first? Are we going to imple-ment this and within what time frame?

“As I said, we’re seeing great results across the market where people are taking that approach as early adopters.”

Carn encourages lenders, aggregators and brokers alike to take the time to embrace and understand the numbers. He says a lot of people have different priorities, but when you consider the money spent on loan processing, understanding the numbers like this should be a top priority.

In 2020, there were around 1.4 million mortgage applications lodged, and Carn says these would have cost around $3bn to $5bn just to process. He believes this makes it critical that lenders are achieving good turnaround times, keeping their customers off the market, and getting the right conversion rates.

“When you bring back those numbers, the billions of dollars that we collectively spend on processing, there should be no other priority than to start at the top, understand the data, go into the detail, and have that action plan for capitalising on the opportuni-ties out of it,” Carn says.

For NextGen.Net as well, the data is incredibly useful. The group identifies the pain points in the processes and innovates to offer lenders tools to help overcome them. Being able to digitally verify identification documents was a key example last year.

“We are problem-solvers, and we utilise our data insights to feed directly into our innovation road map. Our mantra is contin-uous innovation, and our aim is to reduce the friction in the loan process and make it easier for all parties,” Carn says, pointing out that open banking will also assist with that.

“Open banking is all about accurate real-time consumer data that can be lever-aged to improve experiences, and I think that’s where we’re going to continue to see a lot of new tools come into the ecosystem that we’re fortunate enough to assist the industry with.”