It’s difficult to understate the emphasis and value that sourcing systems place on the accuracy of their data. Irrespective of the myriad developments and enhancements that have entered our sector of the market, the success of systems is based fundamentally on brokers’ confidence in the data.
Over the past two years our user base has grown to the extent that 70 per cent of brokers now choose Trigold software and we are under no illusion that a significant reason for this is confidence in the high quality of our mortgage information. Securing this level of confidence is not a simple task, especially given the explosion of growth in new product providers, the multitude of product variations and the resource required to physically get the products on the system and checked. You can see from the chart opposite the issue facing us.
Our 24,000 users search, sort, filter and re-sort sourcing results from 50,000 products. To keep this in order requires a massive resource commitment with a team of database analysts. These analysts work continually with lenders to ensure they receive complete information on products and underwriting criteria on a timely basis and are able to present the information clearly and accurately.
Transposition of the product details and the lender’s underwriting criteria on to a sourcing system’s database is a complex and involved process. It is important to acknowledge the tremendous improvement in the relationship between lenders and sourcing systems over the past 12 months. Sourcing systems and lenders certainly have a shared goal to ensure that product details are accurate. As a result, both sides work very closely to achieve our common goal to understand not just the superficial data but also the details that sit behind it. The role of the sourcing system should be to work with lenders to provide brokers with the most accurate possible information upon which they can base the advice they give to their customers.
The more accurate the data, the better the advice. This was the key rationale behind our Enhanced Non-Conforming (ENC) module which allows brokers to source non-conforming mortgages down to the individual element of adversity. In the past, non-conforming sourcing was performed at a high level, which did not provide the brokers with the level of accuracy required to advise their customers correctly. By providing specific algorithms, ENC lenders ensure that the sourcing system has the highest level of accuracy. There seems little need to force lenders to supply calculation algorithms when so many are doing so proactively to ensure their products are delivered accurately to the market.
One other major sign of the co-operation between lender and sourcing system to deliver the highest quality data to the adviser is lenders verifying sourcing system information. Lenders have been very enthusiastic about reviewing the data the sourcing systems have and then verifying that the information is correct. A lot of focus has been on the lenders verifying the KFI information, but it is very important to recognize that the product underwriting information is also verified. The FSA does not give a lot of credit if your KFI is correct but you advised the customer incorrectly based on incorrect product underwriting criteria.
Online – on demand
The natural progression from accurate sourcing is the intelligent subsequent use of this data. Electronically submitting applications has grown both in popularity and convenience to the extent that it is fast becoming the ‘norm’ rather than the ‘exception’. The obvious benefit of online applications is one of simple practicality. As a part of a normal sales process, an adviser will capture a significant amount of information about their client upon which to base their sourcing and product recommendation. The re-use of this information within the next stage of the process, pre-populating AIP and full mortgage applications saves both the adviser and their client time and effort.
Additionally, as this application step is now built into the advisers’ point of sales process, they can offer an added value service to clients by sending applications immediately. This means there is a tangible benefit for the client by knowing that progress is being made. With the development of instant or semi-instant AIPs and DIPs from the desktop, a client can actually leave an advisers’ office with an offer in their hand. Furthermore, the electronic applications provide a significant benefit for the lender in terms of providing a better, faster service to the adviser while reducing the cost of the lender processing the case.
Co-operative and competition
For some time now there have been two very distinct electronic trading ‘camps’. This has also undergone something of a transformation over recent times with these barriers being broken down as a new spirit of co-operation develops in the market. Over the past year Trigold has been delighted to welcome a raft of new lenders onto our Electronic Trading Centre [ETC]. These lenders have acknowledged our 70 per cent market share and made an economic decision to use Trigold as a ‘jumping off’ point for brokers to access their products and services.
Additionally, lenders themselves have worked hard to differentiate themselves by bringing their individual intermediary propositions to the market. Lenders have realised that having spent millions of pounds developing and refining their websites, their online branding and application propositions, that it is crucial to let advisers access these in their preferred manner and not dictate a distribution method. By working with transaction platforms, these lenders have managed to bring their individual proposition right to the broker’s desktop, effectively opening up access to their website from the advisers’ chosen point of sale tool.
A trading platform should be exactly that, a way and means for business to be conducted should the adviser so choose. It has been suggested by some trading platforms that they are in some way a rival to a lenders’ own website. We take an opposite view and believe that the exact opposite is the case and it is the job of the trading platform to promote the lenders’ website. It is the job of the trading platform to bring the lender’s proposition onto the desktop and promote the lender’s preferred means of interacting with their customers not water down their proposition into a lowest common denominator.
Added value
The motivation for most improvements to the process and positioning of online applications is stimulated by a desire to deliver value to the adviser and support their way of doing business. The application decision is moving more towards the desktop and lenders have adapted accordingly to remove traditional barriers. Lenders are working with system providers to streamline all aspects of the application process.
Another significant development has been in the introduction of new generation application forms with intelligent question formats that adapt to the profile of the client showing only relevant questions. This removes a huge amount of wasted time chasing details if a crucial section is missed. Trading platforms like ETC are utilising this technology and moving away from ‘proprietary’ architecture to more industry standardised ones such as the Focus platform. Firms like Focus Business Solutions deliver a robust solution that creates industry standards.
A second development is the creation of open trading platforms. The idea is that brokers have the right to choose which sourcing system they use independent of which trading platform they use. There is no logical reason why the broker should be forced to choose their trading platform just because they desire a particular sourcing system. Both major transaction systems in the market have announced stand-alone systems. This is a positive development in the market and will ensure there is competition to win the adviser’s mortgage transaction business. In addition, by having an open trading platform that can be accessed by all brokers, this will bring greater competition for the lenders allowing the lender to select whichever trading platform provides the best service, with the full knowledge that the lender can reach all brokers in the market.
I look back at the list of developments from sourcing system providers over recent years as a remarkable achievement. The host of new products and services have removed the mystic of many processes and brought control and power within the brokers realm, directly onto their desktop PCs, and more importantly within the sales processes. Expect even bigger and better things in 2006.
Bill Safran is CEO of Trigold
