From Richard Griffiths
The press coverage of Network Data’s possible sale of its mortgageLink sourcing system (Mortgage Strategy November 6) included a comment from a sourcing system source who said: “Why would anyone want to buy mortgageLink? The sourcing system market is pretty much sewn up”.
It is rather gratifying when a competitor cannot see further than the end of their nose and is apparently oblivious to the bigger picture.
The source is quite correct to comment about the sourcing system market being sewn up – or should that read ‘stitched up’? – at the present time. However, I see the incumbent desktop systems such as Trigold and Mortgage Brain being consigned to the dustbin of history within the next two to three years.
There is overwhelming evidence that the present modus operandi of intermediaries is to use a desktop sourcing system to find a suitable mortgage, then dial in to the chosen lender’s website, re-key the client data to confirm the loan amount and so on, produce the Key Facts Illustration and place the business.
Desktop systems have reached the end of the road. There is nowhere for them to go from here. They cannot access the lenders’ affordability calculations but continue to use outdated income multiples. Connectivity to a lender’s website – where it exists – can be clunky.
Without a shadow of doubt the next generation of sourcing systems will be web-based and bring a host of benefits to intermediaries.
Access to lenders’ affordability calculations in the sourcing process so producing accurate loan amounts will be just one of the benefits brokers will enjoy.
This leaves all the leading desktop systems in a quandary – do they have the capital or the determination – or either – to reinvent themselves as web-based systems?
Trigold has already spent its way through £32m of shareholders’ money and twice postponed the repayment of a £5m loan to the Abbey. There appears to be little appetite for its shareholders to throw good money after bad into this particular black hole.
Most of the lenders in the Mortgage Brain consortium appear to be becoming increasingly disenchanted with the system they bought into more than five years ago.
Maybe a knight in shining armour will buy Trigold or Mortgage Brain and throw in the required redevelopment capital. But you have to ask the question – what is the point of paying the full price for either Trigold or Mortgage Brain which reflects their current distribution strength?
Both systems claim to have more than 20,000 users which I do not dispute, but these subscribers will desert in droves when the next generation web-based sourcing systems come to market. So what will an investor have paid their money for? Why not just buy the software rather than the user base?
This is why the mortgageLink software is proving to be an attractive proposition. For a new entrant it is relatively inexpensive option and provides rapid access to the market.
Admittedly, as for any of the sourcing systems, there is an extensive redevelopment programme to make the software web-enabled. I believe this is now the exclusive domain of the large software/services companies such as Vertex and Capita, that have the strength in depth and the extensive resources required for such a task.
But the benefits of getting this right – of being first to market – will be immense.
As the saying goes, build a better mousetrap and the world will beat a path to your door. A relatively modest marketing campaign should see a rapid and total swing among intermediaries away from desktop systems and towards the new generation of web-based system.