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Technology will benefit intermediaries

The right technological package can be a boon for business. It can improve service, cut costs and boost productivity all at the same time.

It’s no surprise then that lenders are pushing advanced technology to all stages of the mortgage process. Perhaps most significant has been the advance of technology where it matters most- at the point-of-sale.

Brokers are now able to make applications online with their customers sitting in front of them. They enter the characteristics of the borrower into an online site, click a button and receive a decision in principle from the lender in a fraction of the time it used to take.

This makes the life of intermediaries easier, helping them boost efficiency and service. And lenders know that attracting intermediaries, who now account for 60% to 70% of all originations, is key to their business. Improving their online service gives them a competitive advantage.

The advance in online applications has been a big winner for brokers too. Bank branches have had access to this technology for years, which has put brokers at a disadvantage. But since lenders have started providing intermediaries with similar tools, origination has moved away from bank branches and toward brokers.

Where is technology likely to take us in the future? It might still be some years off but a time will come when borrowers can receive a mortgage without leaving their homes. Having made progress in the broker distribution channel, online applications will also improve in the direct channel. Smart brokers will avoid being cut out of the process by anticipating these changes and move more of their services onto the web. Rather than an intermediary doing the initial data entry, the responsibility will shift to borrowers.

As well as online applications, the increasingly automated underwriting process will allow lenders to make quick decisions about applications in seconds. More intermediaries and borrowers will be able to receive binding decisions almost instantly. Now lenders are taking the possibility of digital signatures seriously, borrowers will soon be able to go through the entire process online.

Properly executed, these advances in technology can improve service and efficiency in prime and sub-prime.

The advance of technology is inevitable and its pace, if anything, will quicken. Lenders and brokers unable to keep up will find themselves falling rapidly behind their competitors. mike culhane is chief executive of The Oakwood Group

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