CEO on the next transformations set to impact the mortgage space
It’s an oft-repeated truth that the COVID-19 pandemic supercharged the importance of technology in the mortgage industry and market – and with a wave of mortgage renewals approaching in the next two years, having systems that are as streamlined and efficient as possible will be more crucial than ever for agents and brokers.
That’s according to Geoff Willis (pictured), president and chief executive officer at Newton Connectivity Systems, who told Canadian Mortgage Professional that tech advancements were set to play an enormous role in making sure the mortgage industry is ready for the flurry of business that awaits between now and 2026.
The mortgage veteran said embracing tech solutions and optimizing processes should be top of mind for brokers as they gear up for the renewal and refinance surge that’s on the way.
“We know that almost 75% of all mortgages are [going] to come up for renewal in the next two years. We’ve never seen that volume of people needing some version of unbiased mortgage advice ever,” he said. “So if you’re going to have any chance of managing the potential volume opportunity, you’re going to have to refine all your processes. And you can’t do that without embracing change in technology.
“So what satisfied your ability to do your business five or 10 years ago is just not going to make it in the current day. You’re going to have to refine your processes and technology can help you do that.”
Speed of process, quick turnaround times to remain paramount
With mortgage shoppers increasingly seeking as painless and smooth an application process as possible, expectations for the mortgage broker community are set to continue growing – for instance, getting documents for a client rather than asking the applicant to send them over.
The demand for quick turnaround times and a rapid ‘yes’ or ‘no’ answer, according to Willis, will also mean the need to submit an entire package upfront so lenders can make a firm and binding approval as swiftly as possible with a single look at the file, rather than through a piecemeal process.
Equitable Bank CEO Andrew Moor shares insights on mortgage renewals amid rising rates. Despite concerns raised by regulators, Moor notes that 90% of their mortgage holders have successfully adjusted to higher payments since rate hikes began. https://t.co/5rP5nJMKDb
— Canadian Mortgage Professional Magazine (@CMPmagazine) June 3, 2024
“There’s a huge volume of customers that are going to have need for some mortgage advice in the next couple of years,” Willis advised. “So get ready and make sure that your processes are as fine-tuned as they can be.”
Artificial intelligence and how it could impact the mortgage process
Across the mortgage industry as elsewhere, the rise of artificial intelligence (AI) has been a hot topic in recent times, with much debate centred around how it’s likely to transform the application and lending process.
Willis said document reading and processing were already becoming a large part of what major tech is investing in south of the border, with that trend also set to land sooner than later in Canada: AI automatically lifting key elements off the page and using it for income and identity verification.
“It used to be that we would have to confirm somebody’s downpayment and we would have to get a copy of their 90-day bank payment history just to show money in, money out of their accounts to show the accumulation of that downpayment,” he said. “That used to be maybe nine pages. But since COVID, and us all living in a cashless society, that can be 50 or 60 pages.
“And you’re now asking your mortgage underwriter to take out all of those $2 Tim Hortons debits and $7.50 for their online Amazon Prime video rental – there’s a lot of work that goes into now trying to ascertain truly what somebody’s financial circumstance is based on that many more records and that many more transactions that we do seamlessly through electronic banking.”
Regulatory changes coming into play later in 2024
Also on the way in the immediate future are further regulatory changes, with mortgage professionals to be subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act as of October 11 this year.
That will oblige administrators, brokers, and lenders to implement a compliance program, report all transactions, keep records, enforce Know Your Client (KYC) guidelines, and apply ministerial directives – with potential financial penalties in the cards for those who fail to comply.
“Knowing who you’re dealing with and being able to prove it to a regulator is going to become a part of a broker’s life in a way that’s going to be different than what it’s been,” Willis said. “Understand that it’s going to be important for all of us to raise the bar in what we’re asking of our customers to know about them.
“A lot of people will read [the regulations] at first blush and say, ‘Oh, I’ll be fine just by pulling a credit bureau, scanning a government ID.’ That actually isn’t the case – there’s more to it.
“And there’s more to hitting sanctioned lists and verifying somebody’s identity using biometrics and things like that, that are going to be more prevalent in people’s lives.”
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