Paul Hunt believes the growing trend of placing business online offers a multitude of benefits to both the intermediary and their client
Placing mortgage business online offers clear advantages and this is a trend that is rapidly gathering momentum. Brokers have largely overcome any misgivings and are increasingly moving away from paper-based transactions.
Recent figures from the Mortgage Intermediary Census commissioned by the Association of Mortgage Intermediaries (AMI) showed the growth in online submission of mortgage applications with 62 per cent of brokers stating they processed more than half of their business online and this is increasing all the time.
It is an overused cliché but this increase in online business is a win-win situation for both lenders and intermediaries. And of course customers benefit too from a quicker service and are likely to lose patience with firms that are not handling business electronically.
It is estimated that a paper-based standard loan takes around 48 hours to process and a non-conforming case can take considerably longer. An online decision can take less than a minute and an increasing amount of non-conforming business, specifically in lighter adverse cases, can now be completed within minutes as well.
Comfort of certainty
While online systems can be rigid in that brokers need to submit full answers, they also mean certainty since forms cannot be sent unless they are correctly completed which again reduces time.
In addition the increasing amount of data available from credit reference agencies has also meant that lenders are much better placed to make decisions without the need for traditional paper references that often slow up the process.
Not least, beyond improved speed and accuracy through the removal of double-keying, cost remains a core driver. No one needs reminding that the market has slowed in terms of new business and as a result there is a lot of margin compression going on as more and more lenders compete for less and less business. Therefore, they are all trying to reduce origination costs.
But, should lenders make online applications compulsory?
This remains a controversial area. Certainly in the non-conforming sector there may well be cases where telephone contact is essential and freezing out brokers by insisting on internet-only submission is not an option. However, particularly in the more straightforward cases, there are already clear advantages in increasing the amount of online business that is currently being transacted.
Key to successful take-up is the creation of technology that brokers feel comfortable using. We learned this when we launched clickdecision in July as subsequent feedback from intermediaries told us that the system’s simplicity was one of the main factors in its repeated use. Lenders without online decision technology are already losing out and very soon it may be impossible to operate in the intermediary sector without such a facility.
An online future?
So what does the future hold and what developments can brokers expect to see in the coming months from lenders? Those who have online decision systems will look to expand to a fully online application facility and so offer pre-sale KFIs, decisions and applications all fully-integrated with one another – allowing the transfer of data between all three facilities.
Also, lenders will look to further reduce the need for extra documentation once the application is submitted and so developments around electronic ID verification can be expected.
Lenders operating in the specialist sector no longer just look at products to enable them to differentiate themselves from competitors, and so further developments to all the currently available online systems can be expected; although what some of these may be can only be guessed at.
As mentioned earlier, you can also expect to see many lenders launching online decision facilities although it will be interesting to see which offer basic decision-in-principle systems and which offer full ‘binding’ decisions. The feedback we have received from intermediaries is that a ‘binding’ decision is very import-ant when considering which service to use.
As you can see, online facilities from lenders will undoubtedly be enhanced and new services will be launched offering intermediaries a wonderful array of options to enhance their ability to provide an invaluable service to the British public.
Paul Hunt is head of marketing at Platform
