Integration, between lenders, packagers and brokers systems, is happening. It’s been talked about for far too long and so it’s extremely welcome that finally we are seeing real progress.
Integration is happening on a number of fronts. Firstly, there is increasing evidence that some packagers are seizing the initiative and doing it for themselves. None of us in the industry need reminding that success comes from an effective distribution strategy and providing brokers with a fast and efficient service.
In the past month, two packagers have sold stakes in their businesses to, among other things, boost their technological capabilities – and in particular to integrate their systems with lenders.
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GE Money Home Lending has bought a minority stake in Solent Mortgage Services and no doubt some of the finance will be used to further its already cutting edge internet-based technology.
And, former HBOS Deputy Chairman and entrepreneur Sir Peter Burt, has invested in Enterprise Group, buying a 30% shareholding for £8.5 million. The move was made by Promethean Investments, a private equity firm, of which Burt is Chairman. Michael Clapper, Enterprise’s Chief Executive, stated after the deal that the cash would largely be used to develop technology and in particular the new version of its IT platform Edge 2, which is due to launch at the end of the month.
Solent and Enterprise are but two of the packagers pioneering the technological advancements and both wish to work closely with lenders but also have control of processes. Undoubtedly, we are going to see a small number of packagers move away from the rest of the pack and those businesses which are not developing their own systems in order to eventually achieve integration may struggle to be viable in the medium to long term.
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In recent months, there has been a lot of talk about same day offers. These are now being achieved with ease by a number of lenders, provided the case is relevant. But, nothing stands still and at Platform, we want to launch instant offers by the end of the year.
It will not be good enough to see these transactions as being rarities. Brokers will, in more and more cases, want to provide clients with an immediate offer and lenders must gear themselves up for this.
In the next few weeks we will be integrating our online systems – using XML technology with a few select packager partners. This is an important step for Platform, as we spent a lot of time and effort to ensure our online tools were ‘best of breed’ and now we are able to give our packager partners direct access to these through their own systems.
2007 is set to be an important year for Origo, the e-commerce standards body in the financial services sector. It has already delivered XML standards for pre-offer KFIs and is working on application in principle standards. The advantages have been mooted for some time – namely reducing re-keying, lower administration costs and improved audit trails.
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The implementation of Unipass, the standardised means of user identification which is the so-called passport on the web, into the mortgage industry seems to be gathering momentum. Brokers find it frustrating to have a myriad of user IDs, and we know that security implications have stopped Unipass getting the go-ahead with many lenders. However, we know the technology works since it is already being widely used within the life industry and so the challenge for Origo and lenders is to find a workable solution to remove this unnecessary hassle for intermediaries.
A further topic under discussion is affordability calculators and whether there could be a standard around this provided through Origo. The problem here is that lenders use different models. But, it is all positive that lenders are talking far more about various in ways in which we can have better integration – and indeed that so much work has been going on.
Lenders that are not in tune with the way the market is moving in terms of integration are going to be left behind. You do not have to be first – in fact there are advantages in acting swiftly once a few pioneers have launched. This means you can obtain feedback on what works and deal with your intermediaries’ wish-lists. But, doing nothing could be disastrous as there will be no hiding places.
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