This is the only survey that analyzes how lenders and intermediaries use Internet
technology to speed the lending process for consumers, and it will also be the first
to compare UK wholesale lending best practices with wholesale mortgage lending in the
United States. When completed in September, the study will offer invaluable aid to
lenders as they begin adapting their Web sites to the new regulatory environment in
2004. This is when mortgage advice at the point of sale becomes regulated by the FSA
(Financial Services Authority) and lenders will be required to take responsibility for
the disclosure and accuracy of information provided to clients, whether those clients
come through the intermediary channel or direct-to-consumer.
The study was mailed this week to more than a dozen wholesale mortgage lenders that
serve over one-half of UK mortgage borrowers. These lenders include High Street
banks, building societies and sub-prime lenders such as Halifax, Abbey National,
Alliance & Leicester and GMAC-RFC. Over the next two months, TowerGroup and Frank Eve
Consulting will also be interviewing these lenders and logging on to their Web sites
to evaluate the actual processes that intermediaries complete.
"Technology has long been critical to the mortgage industry's ability to drive loan
volume up and costs down," said Craig Focardi, TowerGroup senior analyst for mortgage
lending. "As lending becomes more competitive in both the consumer-direct and
wholesale channels, technology is creating a straight-through processing (STP)
environment that will provide better service to consumers and reduce lender processing
costs." TowerGroup is excited to partner with Frank Eve Consulting Ltd. to deliver a
study with broad value for lenders, consumers, intermediaries and financial services
software firms."
"Given the success of the inaugural 2002 study and technology advances in the past
year, the expanded 2003 study will help lenders benchmark their progress from a
technology and competitive perspective," said Frank Eve, Frank Eve Consulting Limited
managing director. "According to the 2002 benchmarking study, some lenders were
receiving up to 80% of their intermediary mortgage lending volume through their
intermediary Web sites. With mortgage intermediaries and consumers demanding faster
loan processing from lenders, this study will help lenders plan and prioritize IT
spending and measure return on investment (ROI) as they consider how to best upgrade
their systems in the light of regulatory changes."
The survey is divided into four core sections:
" Registration, Security and Web Site Design - includes ease of use balanced
against security control of confidential consumer information, and systems
integration;
" Content and Core Functionality - includes loan product selection and quick
quotes, online loan application form, instant agreement in principal (AIP), and case
tracking;
" Intermediary Sales and Technology Strategy - includes integration with
mortgage trading platforms, credit providers and wholesale account managers. Also
includes metrics of users, transactions, AIPs and case tracking inquiries; and
" Best Practices Comparison of UK and US Wholesale Mortgage Web Sites - includes
comparisons of leading features, functions and content in the UK and US.
The final metrics section will aggregate survey results for all wholesale lenders by
function to facilitate "peer group" comparisons. Given the size and diversity of
lenders participating, TowerGroup and Frank Eve Consulting believe the results of the
survey will accurately reflect the diversity of the current UK online mortgage
intermediary lending market.
The 2003 Benchmark Study will be expanded to include links to mortgage trading
systems, a participant roundtable presentation, and information on wholesale mortgage
sites in the US. "We are excited to deliver a comparative analysis of international
best practices to the mortgage lending industry," said Ole Skjodstrup, TowerGroup
managing director, Europe. "This subject matter is in line with the type of research
and advisory projects that TowerGroup delivers for global banks, insurance companies
and securities firms across the areas of technology strategy, business process
redesign, operational risk assessment and vendor selection."
