The process of the mortgage approval can often be tedious, with demands for approvals of individuals often requiring confirmation and ending up in delays to the mortgage being approved and loan being made.
However one recent development could mean a step forward for the approval process, with RBS Intermediary Partners announcing that it is to begin accepting internet bank statements as proof of applicants’ income. The decision will affect the four intermediary brands of RBS – First Active, RBS, NatWest and ‘The One Account’.
So is this the latest step forward for technology in the mortgage industry, and what does it mean for the future of how files are transmitted and security measures?
A significant milestone?
Although this is apparently not the first instance of internet-originating documents being used for approvals within, as other lenders have used similar set ups to get approvals, this undoubtedly creates a milestone for the way technology is used in the mortgage industry.
The announcement came from Chris Pearson, director of intermediary mortgages at Royal Bank of Scotland, who said: “We recognise that an increasing number of customers are making the choice to do their day-to-day banking online and therefore don’t necessarily receive paper bank statements anymore. Being able to accept internet bank statements will certainly contribute to speeding up the application to offer process and will also make life easier for brokers and their clients.”
There are several questions to be asked about this decision by RBS Intermediary Partners. Naturally you can see the benefits, with ease of access to internet bank statements and the sheer number of people who choose to receive such details online, but could this lead to a problem with fraudulent applications as software packages become more sophisticated?
Fraud concerns
A broker who has spoken on the problems surrounding fraud within the mortgage industry is Jonathan Barnett, director at All Mortgage Matters, who claimed in May that fraudulent activity, such as manufacturing pay slips, was occurring in the industry, and that suspicious applications were being made.
Commenting on the announcement by RBS Intermediary Partners, Barnett said: “The problem is that any document coming in via the internet can be easily reproduced, and often they don’t feature the client’s address details.
“These days a lot of clients will only use internet banks, so the banks themselves need to produce hard copies of statements to show details of the client. Otherwise there is no proof of residency.
“At the end of the day, internet bank statements are no less safe than pay slips and P60s. As brokers we don’t know if they are original or copies, and the best solution is to write to the bank and ask for a reference, or for there to be direct communication between the lender and the applicant.”
Scepticism
From the perspective of other lenders, the announcement was met with some scepticism. Phil Rickards, head of sales at BM Solutions, was generally unimpressed by the decision, claiming: “We’ve accepted internet bank statements in support of a borrower’s application since September 2001, so it’s interesting that RBS Intermediary Partners considers this move to be worthy of such an announcement six years on. Ironically, in internet years, it is 24 years off the pace. Brokers who expect five star service expect lenders to stay up-to-date with their client.”
BM’s claim that it was ahead of the game and was accepting internet bank statements six years ago is perhaps surprising to some, as the concept of internet banking was fairly new at that stage. However it has become less rare to bank online, and the lender’s decision to accept statements at such an early stage is admirable.
The way forward?
Is an additional lender added to the roster of those accepting online statements a good thing for the industry? The general assumption seems to be that having more than one choice is a positive, so having more than one lender accept internet bank statements is generally positive for those applicants who are left with no option but to offer this as a form of identification or proof of earnings.
So is this the way forward for lenders? Should they be prepared to accept new technology when it arrives, or sit back and wait for the demand from customers? No doubt it is a hard decision to make, but if technology continues to move in such a direction, then lenders must sit up and take notice.
Whether there’s a need for other lenders to follow suit is dependant on their own decisions and policy, but it’s good to see such a modern means spark debate.
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