Roger Morris is managing director of em-financial
The mortgage industry should be aware of how new technology will change things. Building societies need the ability to recognise this development and leadership that understands the speed of change and can invest in technology to compete.
But most are far too institutionalised and cocooned in their own worlds to realise what is happening. At one time if we, as clients, wanted a loan we would have to send in our P60 along with three months’ payslips. Technology has just about removed the need for this by allowing online mortgages with automated income scales and credit scoring. With all this accurate information to hand, credit scoring has become an integral part of the mortgage industry. As for arranging loans, we again do this over the phone or via the internet with the cheapest lender we can find.
We have seen credit scoring come in with self-cert lenders and fast-track applications for existing customers. The next step will be to use recorded information on valuations and shared information from other companies or the Land Registry.
Either way, some lenders have been using this information for some time and GMAC-RFC’s long-awaited point-of-sale offer is expected to have this technology built into it. Edeus is also expected to launch with it, which will result in some instant offers.
Next will come the use of title indemnity and Goldsmith Williams is at the forefront of this, increasing the speed of completion for a remortgage to a maximum of five days down to the shortest time possible.
Societies must adapt to these changes or they risk becoming virtually extinct along with the oldest dinosaur of them all, the solicitor, who will play almost no role in the conveyancing process.
Joe Rabbit is head of intermediary development at Nationwide
The mortgage market has evolved and it’s not now unusual for borrowers to arrange mortgages over the telephone or internet without meeting an adviser in person. Increasingly, high street banks and building societies are offering alternative ways for borrowers to obtain their mortgages and some lenders even have subsidiaries that only offer direct mortgages.
The new lenders that use innovative technologies will undoubtedly have an effect on banks and societies as they gain market share. But this won’t be the death of traditional lenders, especially as more of these embrace technology themselves.
Banks and societies are investing in technologies that will benefit customers as mortgage processing becomes quicker and cheaper. But with around 60% of mortgage business being introduced by brokers, it is also crucial for banks and societies to invest in technologies that will benefit intermediaries.
Nationwide is developing an online proposition that will see instant agreements in principle and valuations automatically generated as well as provide a fully electronic application process.
With just five lenders securing over 50% of the mortgage market it’s unlikely new lenders will make a significant impact with their technologies. But as more people become accustomed to managing their finances online it is possible we’ll see a change over time. It could even be possible for lenders to introduce remote advisers allowing mortgage interviews to take place anywhere in the world.
There is a need in the market for new technologies and more firms are making use of what’s available. But most borrowers still want to speak to a lender or intermediary in person, particularly if they need advice.