A generation of Top Gun fans will have the phrase the ‘need for speed’ firmly etched into their memories. This fascination with speed has leapt from the silver screen to form a cornerstone of our daily life. Nevermore so has it been easier to see examples of the desire for speed within our on-demand world.
This craving for speed is also ingrained in our business psyche and it’s hard to find any developments that are not specifically designed to add an element of speed to our lives and certainly our mortgage processing. However, this is not necessarily a bad thing and most businesses now thrive on models that harness the power of technology to deliver competitive advantage or customer satisfaction. The nine-to-five of yesteryear has been firmly put to bed and clients no longer desire out of hours service, they demand it. The consequence is that technology is being lent upon to deliver time savings – is time really money after all?
IFor technology’s sake
It’s worth mentioning that I don’t consider all technological advances as progress. I’ve never been a fan of technology for technology’s sake and so applications need to do a genuine job. An interesting misuse of technology I recently witnessed was of a protracted and almost entirely unnecessary exchange of e-mails and text messages to make simple dinner plans; a feat that actually required a simple call. That’s where the skill comes in developing the right systems but also the application; hopefully a perfect balance between man and machine. This is perhaps a grandiose introduction about mortgage sourcing but the reality is not a million miles away.
Speeding the process
The introduction of technology into the mortgage market has enabled speed to be added to even the most mundane process. The primitive process of a monthly product booklet followed by a weekly instalment was transformed into a daily faxed piece of paper and finally into the development of an electronic sourcing solution. This has made a massive difference to the working lives of advisers and their clients.
The comparison tool for tens of thousands of different mortgages across hundreds of lenders is now barely recognisable from past reference tools. Even mortgages once thought too complex for sourcing systems, such as non-conforming, can now be sourced and compared relatively easily, giving the adviser an instant, accurate source of vital information at any time.
Recognising the need to continually move forward, we are working closely with all of our lender, packager, network and broker customers to make advances that are immediately beneficial to the efficiency of everyday working practices of brokers. The good news for advisers is that many of these advances deliver massive time savings. The modern sourcing system will now populate customer data onto the lender’s application form thereby removing re-keying and multiple applications. This development can have a significant effect on an advisers’ business and profitability.
Fundamentally, it’s about finding a quicker and easier way to perform a task. An adviser who has already entered all of their client’s details into the factfind of the sourcing system can search and find the mortgage deal, transfer this data directly into the lender’s system and get real-time decisions without the need to re-type any customer information again. The ability to enter the client’s details only once decreases the amount of time needed to spend performing administrative tasks with each client, meaning advisers can see more clients in a day. If developments in sourcing systems allow the adviser to even reduce the time with each client by just a third, advisers could potentially see a third more clients every day, increasing their income dramatically.
Significant advances
It is not only the sourcing systems that have become technically advanced. The whole of the market can lay claim to some significant enhancements. The advances and strides taken forward have benefited brokers, packagers and consumers alike. It’s also true that technology has provided the adviser with access to new areas of business and has opened up doors to other sectors of the market in which to expand and increase their offerings and therefore opening up other income streams.
A considerable number of brokers and packagers are already taking advantage of the introduction of automated valuation models (AVMs) and instant offer mortgages. AVMs are viewed as being time and cost-effective for all involved and can enhance the service brokers can offer their clients. Not only are these the same tools used by a vast array of lenders but they provide a firm foundation upon which to base the
advice process.
Technology also creates more opportunities for brokers to generate business, by opening access to ancillary products that can be slotted into the mortgage process rather than sitting outside and being viewed as an after-thought or poor cousin. Products that I would put into this category include conveyancing and a variety of mortgage-related insurances. Technology has given these sectors something of a shot in the arm by simply bringing them into the mainstream process.
The industry will continue to thrive if brokers keep pace with technological developments. They should be used to attract more clients and expand their business. Lenders and intermediaries who do not keep up will struggle to attract business and may be in danger of potentially losing their share of the market to other more technology savvy competitors.
Technological developments have enabled brokers to also look to markets which may have previously been ignored, such as the non-conforming sector. Our own Enhanced Non-Conforming (ENC) sourcing systems module allows brokers to source non-conforming mortgages down to the individual element of adversity. In the past, non-conforming sourcing was performed at a high level, which did not provide brokers with the level of accuracy required to advise their customers correctly. By providing specific algorithms, ENC lenders ensure that the sourcing system has the highest level of accuracy. It’s interesting that specialist lenders have been a real driving force behind this development and have pushed to have their calculation algorithms incorporated into the system so that brokers can source these products with a heightened level of accuracy.
Setting pulses racing
Technology also looks set to speed the pulses, if not the process, in areas which may previously been viewed as niche ones. The commercial lending, bridging and secured lending arenas, will all benefit if technology can remove barriers to entry and some of the mystic of
the products.
The secured loans market is a particularly interesting one. There has been an explosion of interest in secured loans from intermediaries and also lenders with the market undergoing a massive transformation over the past few years. Once viewed with some contempt by intermediaries within the mortgage industry, more and more are now realising the benefits of having a secured loans proposition as part of their business model. However, previously a sector with little attention or interest to the mainstream mortgage broker, an increase in consumer debt and borrowing, coupled with a rise in diversity and availability of products, has led to a reassessment of the merits of the market and a growth in interest in secured loans.
There is a growing awareness that secured loans offer a desirable and viable alternative to other forms of borrowing such as remortgaging or further advances. Secured loans particularly appeal to borrowers keen to avoid early redemption charges and other fees as a result of remortgaging, or those who would lose the benefit of favourable fixed or discounted rates. With more than half of all current mortgages now on such terms, this represents a sizeable market. Speed is such a crucial element in the provision of secured loans that technology will really need to raise its game to match the ‘need for speed’ this sector demands.
Compliance support is also an important consideration for the secured loan market, and one where technology can pay an active role. Although secured loans themselves are not regulated by the Financial Services Authority (FSA), there is an argument that the FSA’s ‘Treating Customers Fairly’ principle, does apply to them. There is debate, for example, that if a customer needed to raise £10,000 and had a £100,000 prime mortgage but had a number of CCJs since he took that mortgage, then there is a question whether it would be ‘Treating Customers Fairly’ if the broker recommended remortgaging the full amount onto a non-conforming deal.
What is important is that mortgage intermediaries are given the proper tools and this is where another opportunity lies for sourcing systems. The need for speed means different things to different people but for us it’s about making tasks quicker and easier.
