Some mortgage brokers recall vividly how, during the 1990s, they used to compare the best deals on offer via a hard copy of Moneyfacts – which typically became out of date as soon as it was published.
In those days it might have seemed cutting-edge but times have changed and any intermediaries who proved allergic to technology have probably either found alternative employment or retired.
Metro Bank head of mortgage distribution Charles Morley says: “The changes in technology in the intermediary space during the past five to 10 years have been quite significant. Technology has become the backbone of the market and is absolutely critical to all lender and intermediary delivery. Intermediaries use it for tracking cases and there is very little they can’t do online.”
Even though the introduction of the Mortgage Market Review in April 2014 may have created a slight increase in manual processes by insisting on income verification in all areas, it also instigated a wave of systems upgrades and launches. For example, in January 2014 Metro Bank was still entirely paper-based but by April that year it had become a fully online lender.
So Mortgage Strategy decided to take a look at the technology currently on offer for brokers and what the future may bring.
Mortgage intermediaries use customer relationship management systems to assist with their client fact-finds and ensure they are done in a consistent and regulated way. Bigger brokers often have proprietary software to cater for their exact business needs, while smaller ones tend to use off-the-shelf packages offered by the likes of Mortgage Brain, Iress (Trigold), IntelliFlo and MortgageKeeper, which is a product of the eKeeper Group. These can be integrated with product sourcing systems, even if offered by different providers.
The sourcing systems market itself is heavily dominated by Mortgage Brain and Trigold but, again, larger brokers often have their own systems. L&C Mortgages uses Mortgage Brain for key facts illustrations but has mainly compiled its own product data. Meanwhile, John Charcol uses Mortgage Brain for some sourcing but issues its own weekly product guide to its consultants – who then use the Moneyfacts online comparison service as a back-up.
Trigold has the advantage of also offering a protection sourcing system. But Mortgage Brain enables brokers to make applications via the Mortgage Trading Exchange, only keying in information once rather than having to rekey via separate lender platforms.
The Mortgage Trading Exchange, which accounts for around a quarter of all industry-wide mortgage applications, offers access to the majority of lenders of all sizes – with the notable exception of Santander – and can be used by any size of broker free of charge. It can collect the data needed, send it to a lender and issue an accept, decline or refer notice within less than a minute.
Mortgage Brain also offers a mobile app to help consumers find a broker. This locates the 10 nearest brokers who use Mortgage Brain software and has been used more than a million times by consumers since being launched two-and-a-half years ago.
Trigold does not offer such an app nor yet provide an equivalent service to the Mortgage Trading Exchange, although it reports that it “is looking to integrate the end-to-end sales process for intermediaries”. Also, unlike Mortgage Brain, it does not yet provide an online sourcing system but is in the process of developing one.
However, when simply comparing the sourcing capabilities of Trigold and Mortgage Brain, there seems little between them.
Highclere Financial Services partner Alan Lakey says: “I’ve thought of switching from Trigold to Mortgage Brain but I know others who have actually done so or switched the other way and there is no consensus as to which is better. I couldn’t be without Trigold, which is valuable in saving time, but I would like it to be better and to go into more detail.”
Intermediaries who are not fully satisfied with either major provider now have a further option, called Mortgage Source, launched in September 2014 by Twenty7Tec Group. Its key differentiators are that it is purely online, provides real-time updates and uses a lot more lenders’ criteria to deliver more accurate sourcing recommendations.
The software can source by postcode and by lenders’ own definition of new-build. It also provides comparisons of remortgages versus secured loans and has a detailed adverse credit rejection system. For example, it can provide far more information about county court judgments and how a lender would view these.
The Twenty7Tec Group system is already being used by around 1,600 advisers, including those from Mortgage Advice Bureau and networks Homeloan Partnership and Personal Touch Financial Services. It aims to be the number one sourcing player in terms of market share by 2017.
Although Twenty7Tec Group does not provide CRM systems, it integrates very closely with them and is in the process of creating a web-based common application submission platform – which will provide an alternative to the Mortgage Trading Exchange.
Twenty7Tec Group managing director James Tucker says: “The aim is to increase market share and differentiate ourselves on the accuracy of our sourcing system and on our ability to integrate with CRM systems. We believe we are already ahead of the other two sourcing suppliers in terms of functionality.”
Mortgage Advice Bureau head of lending Brian Murphy says: “The early experience with Twenty7Tec is very positive. Around 20 of our advisers have already switched from Trigold as part of a phased process and are giving us very good feedback. They like the accuracy and immediacy of the new system.
“We felt that the Trigold platform hadn’t really progressed in the way that other technology has. It wasn’t real-time live and wasn’t specific enough to the needs of individual customers. There have been cases in the past of products that have been withdrawn from the market still appearing on the system, and cases of new products and prices that have changed not appearing.”
Mortgage intermediaries are also well served by hi-tech protection comparison systems offered by the likes of Direct Life & Pension Services (LifeQuote), Iress (The Exchange), iPipeline (Solution Builder) and eKeeper Group (AssuranceKeeper).
The LifeQuote system, for example, provides illustrations to compare different life, income protection and critical illness product options on one screen. As an added dimension, intermediaries can input client details about medical history and occupation and find out whether a risk would be treated as standard or non-standard. Although LifeQuote does not underwrite for either standard or non-standard risks, applications can then be made via Direct Life & Pension Services.
LifeQuote is available to 4,000 mortgage brokers, either via networks or directly, and is particularly strong for multi-benefit comparisons, for which it has seen a huge increase in usage over the past two years.
Protection technology is about to take a further leap forwards with the imminent launch of UnderwriteMe, which can provide genuine quotes for non-standard risks – as opposed to the approximations provided by LifeQuote and others. Additionally, because its systems are linked to those of insurers, intermediaries do not have to complete any provider application forms.
UnderwriteMe head of sales and marketing Phil Jeynes says: “We deal with whatever non-standard risks insurers are willing to take real time. Some insurers may grant standard terms but others may say they want further information and spell this out, so the customer and adviser are in an informed position as to what is happening next. If someone has a family history of cancer and some insurers do not want further information, the case could literally be on risk within five minutes of the quote request.
“Not only should UnderwriteMe appeal to most mortgage brokers selling protection, it should encourage any brokers not currently selling protection to do so as it gives them a one-stop-shop approach. The feedback we have from many mortgage brokers is that they don’t do protection because they regard it as too unwieldy.”
But UnderwriteMe, which is free for intermediaries, will never realise its potential until it is able to offer a whole-of-market quotation system and, although it hopes to have all insurers on board by 2016, it still has a long way to go in this respect. It can currently quote for only four insurers – Canada Life, Exeter Friendly, Royal London and Scottish Friendly – and three others are due to come on board in September: Old Mutual Wealth (formerly Skandia UK), Partnership and another whose identity has yet to be revealed.
On the other hand, CIExpert, the CI comparison service launched by Highclere Financial Services’ Lakey in 2012, is well on its way to being whole-of-market. It represents all CI providers apart from Vitality, which is keen to join and could be on board within the next year. Mortgage users include members of networks such as First Complete, Mortgage Next, Protection Network, Stonebridge, Tenet and The Right Mortgage.
Intermediaries enter client details and the type of CI cover required into CIExpert and it shows all companies in the market in decreasing order of merit – based on a wide range of criteria. The system, which can also make comparisons between current and old plans, saves brokers a lot of time by using a sophisticated hi-tech database, provides an independent verifiable source of information and, most importantly, provides the ability to upsell by moving away from simply premium comparisons to overall quality comparisons.
A likely future time-saving development will be the ability to combine protection technology with mortgage technology. Indeed, Iress already has a system in the pipeline.
Iress principal mortgage consultant Henry Woodcock says: “I think we will see mortgage and protection sales coming more and more together. We intend to launch a system this year that combines mortgage and protection facilities for both the point-of-sale stage and the product comparison stage. This will mean intermediaries will have to key in data only once.”
UnderwriteMe’s Jeynes also does not rule out adapting his proposition for another market. He says: “It’s not impossible it could become available in conjunction with mortgage search software so that intermediaries have to input only one set of information.”
Other developments are likely in the area of enabling consumers to have remote face-to-face conversations with intermediaries via hand-held devices. There has already been investment from lenders in formats that appear to be heading in this direction.
For example, a year ago Nationwide started to roll out Nationwide Now, which is effectively an upmarket digital version of Skype. It enables consumers to go into a branch and have a conversation via computer with a mortgage consultant based at a regional head office. Logically, the next stage would be to make such a service available via a smartphone.
Nationwide managing director of group intermediary sales Ian Andrew says: “Nationwide Now is proving very popular. Customers seem to like the security of face-to-face conversations when it comes to mortgages and these visual systems have the additional advantage of recording the conversation from a risk and compliance point of view.
“There’s a generation coming where the assumption is that consumers will be more comfortable using smartphones and tablets, and Nationwide thinks there will be a migration away from customers coming into branches. But although lenders are investing in relevant technology, there is no real sign of intermediaries doing so yet. They should possibly be thinking of following suit.”
But even if brokers are lagging in the technological revolution, they are not slow to point out to lenders what could be done better in this area. The Iress Intermediary Mortgage Survey 2015 found that, while most lenders are deemed to perform well on the basics of online payment, quotations and applications, they fall short of expectations in other areas.
At the top of the intermediary wishlist is the ability to scan and attach application proof documents. Ninety per cent of brokers rank this as their most important requirement but only 43 per cent of lenders currently offer it, according to Iress.
Aldermore Bank managing director of mortgages and commercial lending Charles Haresnape says: “Most lenders require additional information and it’s much easier if the broker can scan the documents so they are sent online. The more we can use scan-and-upload facilities, the more we can reduce the chances of error. Using faxes involves more risk of error as they may not arrive or could be filed in the wrong place.”
According to the Iress survey, the most important requirement in the eyes of intermediaries (53.3 per cent) is the ability to have an online single-status view of all cases, but only 52 per cent of lenders offer it. A daily email digest of case studies and information requests is the top priority for 34.2 per cent of brokers but is provided by only 10 per cent of lenders. Meanwhile, the ability to process online post-contract variations is ranked most important by 32.5 per cent of intermediaries but provided by only 35 per cent of lenders.
Nevertheless, on a positive note, lenders seem aware that the job is only half-done and that further technological progress is needed.
Santander for Intermediaries managing director Brad Fordham says: “Mortgage offers can still take over two weeks but they took two weeks 20 years ago. As an industry, we should be looking at ways to improve offer times to meet customer expectations. We also need to look at the legal process and the time it takes to complete the necessary documents to make the customer journey smoother.”
He adds: “Since the MMR ‘Know Your Customer’ requirements for all applications, we require evidence of income. Often this is still a paper document and is sent by the post or fax, so it would be valuable to find a way of getting the necessary documents from customers to lenders more quickly and efficiently.”
London & Country associate director of communications David Hollingworth suggests that, in pursuit of this Holy Grail of obtaining speedier evidence of income, it may eventually become possible for lenders to hook into the new digital tax accounts announced in this year’s Budget. It is intended that 55 million people will have access to these by 2019/20.
HM Revenue & Customs, on the other hand, begs to differ. An HMRC spokesperson says: “All taxpayer information we hold remains legally protected. No third-party access would ever be allowed to any taxpayer’s digital account without their authorisation… so there is no question of any financial organisations being allowed access to taxpayer information.”
Nevertheless, such a statement does not seem to exclude the possibility of creating a system based on customer authorisation. Potentially, customers could give lenders explicit consent to access their digital accounts in order to reduce the time of the mortgage application process.
The pace of technological change is often rapid, meaning that what counts as hi-tech today is likely to be outdated in just a few months’ or years’ time. But it is safe to assume that technology will play an even bigger role in the mortgage market in the future, to the benefit of both brokers and their customers.
IT revolution is far from over
Chief executive, Mortgage Brain
Given that I have no desire to follow in the footsteps of Gerald Ratner, it will come as no surprise to anyone to learn that I am a huge believer in mortgage technology.
However, even allowing for my inevitable bias, I have been both surprised and pleased by the extent to which intermediaries have seen the benefits that technology can bring to their business. While not everyone has clasped the software warmly to their bosom, most have at least allowed it to live under their roof.
This is not a huge surprise. Advances in systems’ speed, accuracy and record-keeping have all combined to give tech-savvy brokers not just the edge over their competitors but also the tools to ward off the threat posed by price comparison sites and others determined to wrest business away.
And more choice is not the only threat that brokers have had to counter. Thanks at least in part to the rise of technology in every other aspect of people’s lives, everyone now expects things to be done more quickly and efficiently, including obtaining a mortgage, and if they cannot easily find what they want, they will go elsewhere.
As a result, technology has had to move ahead faster than ever. These days, the services that brokers can deliver and the speed with which they can deliver them have been massively enhanced.
The improvements have been astonishing. Gadgets such as mortgage apps and mobile technology have helped. Mortgage sourcing systems have also been significantly enhanced to work on all platforms, and they play a pivotal role in the lives of brokers.
Compliance is also much easier to manage. Now, if the FCA drops by, information can be supplied at the touch of a button thanks in part to integrated point-of-sale and CRM systems. These have helped to streamline the administration process.
All of the above have given brokers the best chance of retaining and increasing their customer base in an ever more competitive marketplace.
Intermediaries who once sold just mortgages can now offer an all-encompassing financial services solution, and those who cannot or will not adapt run a very real risk of being left behind.
As for the future, consumers are likely to live more of their lives on phones and tablets, and connectivity between devices will increase.
Mortgage technology will need to similarly evolve and adapt if it is to meet both new and emerging trends as well as the ever-increasing demands of intermediaries and customers.
Mortgage technology will continue to be a dominant force in our lives. The revolution is far from over.