Bill Gates, the person who has had arguably the greatest influence in shaping the way online business works today, once said: ‘Our success has really been based on partnerships from the very beginning.’ When it comes to mapping out a future for web-based mortgage business, this should have resonance for lenders, brokers and packagers alike.
While there’s no doubt that lenders’ ability to conduct business online has revolutionised the industry, the next stage in its evolution is likely to depend heavily on co-operation between stakeholders.
Over the last five years, mortgage customers have become more sophisticated in their demands, and clearly it’s no longer enough to simply offer them an online application form and downloadable brochures. The provision of a seamless, ‘door-to-door’ service covering all aspects of the mortgage application process will be vital to success in securing business, and this will only be achieved if business partners work together.
Increasing connectivity
The first step towards this goal is to increase connectivity across the industry. Lenders and brokers have been moving towards ‘straight through processing’ for a number of years, and a considerable amount of resource has been devoted to removing the need to re-key online application information. The desire to have ‘joined up’ processes has spread to a wider circle of interested parties – credit bureaux, valuers and solicitors have all expressed a willingness to get involved.
Lenders and brokers
When it comes to broked mortgage business, the primary relationship is between lender and intermediary. Significant technological developments have come about thanks to feedback from advisers and the enlightened lenders who took their comments seriously. Real-time case-tracking, online offers and ‘smart’ application forms can all trace their origins back to user requests, and there are further developments appearing which are a direct response to feedback. Online confirmation of customer identity and automated valuation models are all becoming more widely available. Lenders who rely on web-based business are using these developments to speed up their processing to provide point-of-sale offers. This will be followed by point-of-sale completions.
Getting accurate, timely data from valuers and credit bureaux is vital to the mortgage application process, and firms providing these services appear to be aware of the need to raise their online game.
The quality of detail now provided by credit bureaux has enabled lenders to check their applicants’ credit history without going back to them, which reduces the length of the application form and, ultimately, the amount of time it takes to process. Likewise, automated valuations allow lenders to make speedier decisions without compromising their criteria.
Solicitors
Traditionally, lenders and solicitors have worked closely together to handle the legal aspects of applying for a mortgage. While this may have been heavily paper-based in the past, there are moves towards developing an electronic presence for this part of the process.
The Land Registry itself has set in motion an e-conveyancing project, which it will introduce over the next few years. Its aim is to ‘deliver a world-class conveyancing service’ where:
- the worry and risk of the conveyancing process are significantly reduced;
- authorised parties involved in a conveyancing transaction can exchange information quickly, securely and reliably with each other and Land Registry;
- registration will be confirmed immediately on completion;
- up-to-date and accurate information is available on the progress of all linked conveyancing transactions; and
- funds can be transferred immediately, securely and reliably.
Common standards
Origo was launched by 16 life assurance companies in June 1989 to facilitate the development of electronic trading between principals and agents for life, pensions and collective investment business. Since then, and with the increasingly rapid development of new technologies to support financial service business online, it has broadened its remit. It now aims to bring together representatives from throughout the financial services sector to agree a uniform strategy for electronic commerce in the industry.
It is currently consulting widely throughout the industry to develop common standards for conducting mortgage business online. This will involve getting the commitment of all those involved in product development, advising on and processing online mortgages to use a single set of standards, allowing each part of the process to link smoothly with the next. Origo has inspired lively debate on what common standards should be, and the outcome is anticipated.
Sourcing systems
Research carried out among brokers regularly shows they rely heavily on sourcing systems to get accurate rate and product information. Given the sheer volume of products and deals available today – more than 60,000 according to recent estimates – managing the systems and ensuring they are able to keep up with industry demands is a complex and resource-hungry job that is unlikely to get any easier. Because of this, companies have recognised the importance of working closely with lenders on one side of the equation and brokers on the other.
Understandably, advisers will only place their trust in systems which offer entirely reliable and up-to-date information, and in turn, sourcing systems need to be able to rely on the details they receive from lenders. Anything other than 100 per cent accuracy will damage the credibility of all concerned – and customers will end up at best dissatisfied and at worst misled as a result. Advances in technology can only help to improve the quality of data available, and many lenders are moving towards providing verification of sourcing system information. In the future, it’s likely that sourcing systems will work hard to keep apace with and support product and market innovations. They may well have to adapt the way they work to accommodate lenders’ moves towards affordability-based lending rather than straightforward income multiples, for example. Of course, the ideal is that sourcing systems will be able to link direct to lenders’ systems, guaranteeing the accuracy of their output. This will move the industry one step closer to ‘straight through processing’.
Hardware
While it’s entirely appropriate to focus on developing programmes and systems to support market needs, those involved in taking technology forward should not overlook the importance of having the correct ‘tools of the trade’. Currently, most brokers use laptops – it gives them mobility and flexibility, allowing them to effectively ‘take the office with them’ when they meet their customers. Those who are office-bound rely on PCs, but there’s no doubt that this limits the service they can offer – their customers have no choice but to physically go to them for advice.
Fortunately, the latest technology is readily available and relatively cost-effective to buy, and canny brokers have taken advantage of this and the benefits it can bring to their business. However, lenders and providers should bear in mind that brokers’ and customers’ preferences change in line with technological developments. For example, PDAs are becoming increasingly popular because of their portability and ability to access wireless internet connections, which means web developers would be wise to make sure their sites are accessible through them. It’s essential to keep up with hardware developments if product providers are to continue to give brokers the kind of information they need, in the format they want to use.
Bringing it all together
Today’s mortgage market is one of the most dynamic and competitive in the UK, and this is largely due to its willingness to adapt to and use technology for sales, marketing and processing. To make sure it continues to innovate, expand and accommodate customer needs, the industry needs to work as one on delivering first-class online services. So far the signs are good that there is, at the very least, a strong desire to see this through. Thanks to co-operation at all stages, the client should be able to experience a seamless, accurate and speedy service, taking them from sourcing a deal to the offer stages with minimum effort and maximum efficiency.
