Keep IT in check

Technology is a vital part of the modern mortgage industry and plays a role that will only grow in importance. But there are signs that all the flashy websites and whizzy online systems are starting to erode the relationship at the heart of the mortgage industry - the interaction between lenders and their customers, whether they are brokers or borrowers.

The introduction of regulation with its emphasis on compliance and reporting necessitated more advanced IT. Lenders and intermediaries realised this could also benefit customers, bringing speed, flexibility and efficiency to a complex process.

Developing this technology requires a huge amount of time and money, an investment not all mortgage companies can afford. It’s no wonder organisations that have spent vast sums on their technology are keen to place it at the heart of their service offering.

That’s all fine if it works properly and, more importantly, if it’s what the customer wants. But it must not overshadow the reasons why technology was introduced in the first place – to help borrowers and brokers, not hinder them. There is a danger that companies are becoming obsessed with creating ever more complex and advanced automated systems. The mortgage industry should remember that technology is a business enabler, not a strategy in its own right.

The strength of this industry lies in its experts – the advisers, case handlers and underwriters who talk to one another about individual cases and the most suitable products, combining their knowledge to ensure borrowers get the advice they need to make the right decisions. If we rely too much on IT there is a danger that customers will become just a cog in some great machine and their needs become secondary to the mortgage process.

Kensington recently carried out research among 500 brokers which showed that though technology is useful, they still want to enjoy a one-to-one with lenders. An amazing 95% of brokers said they used lender websites, although the online facilities they used varied. Intermediaries said they turned to lender websites for: submitting applications (81%); obtaining approvals in principle (73%); obtaining product information (68%); downloading applications (67%); and tracking applications (62%).

But only 13% of intermediaries said they used lender websites to get KFIs. This is probably due to the rise of sourcing systems and their ability to compare mortgages and provide details on a wide range of products. Yet brokers also said they often double-checked with lenders the accuracy of the KFIs they got from sourcing Tsystems, particularly in the specialist sector. Surprisingly, the research found that over half (53%) of intermediaries felt sourcing systems “worked badly” when searching for non-prime cases.

So, new technology is great at giving intermediaries speedier access to all the things that old technology such as post, fax and phone was pretty slow at delivering. But when brokers were asked about their favoured routes for submitting applications, less than two-thirds said they preferred to submit applications directly via lender websites, whereas more than a quarter said they still liked to submit paper-based applications. That figure is a big wake-up call for the lenders who seem intent on forcing all their intermediaries down a purely electronic route. If they carry on, they risk alienating a large chunk of brokers who want the freedom to choose how they do business and mix and match old technology and new as it suits them.

You only have to spend a few minutes speaking to brokers to find out that not all lender websites and online systems are delivering what intermediaries want. Some sites work perfectly well and are easy and intuitive to use. Others are clunky and confusing. Annoying for advisers are those systems that allow them to complete an application online, seemingly successfully, only for the lender to come back with more questions and demands for additional information later.

Online applications should take paper-based forms as their template, then use technology to improve things and make the process more efficient. Online applications should check addresses, for example, along with banking details and credit card numbers, alerting the intermediary to any problems while they are filling in the form rather than throwing up a query several days later.

But the biggest headache that users of online systems complain of is poor or unavailable support when they face a problem with a lender’s website or have a query the online system cannot answer. All too often advisers have to contact understaffed telephone helplines where they are kept waiting for ages before they eventually get to speak to an operator. Even then they are not guaranteed an answer to their question and worse still, there is often no back-up such as the option to fax through an application. This happens when companies rely on technology at the expense of the personal touch.

That’s why it is so important to provide intermediaries with real multi-channel distribution, not just for “Annoying for brokers are those systems that allow them to complete an application online only for the lender to come back with more questions later”technical support but also so they have the option to speak to a real person if they prefer. Many brokers want to get additional details on a product, enquire about particular criteria and speak to their case handler or even the underwriter about individual cases.

If lenders don’t provide brokers with a means of speaking to them, not only will this frustrate advisers and limit their options, but it also sends out the message: “We don’t want to talk to you and we don’t want to listen to you.” You only have to look at how well packagers have fared in the regulated marketplace to see the continuing importance of the personal touch. Before Mortgage Day commentators predicted the demise of packagers, pushed out primarily by advances in technology that would make it easier for advisers to deal directly with lenders. Many thought this would make packagers superfluous.

But Kensington’s research shows just how popular packagers still are. Almost two-thirds (65%) of intermediaries use packagers to submit their mortgage applications, with over half putting more than three-quarters of all their new non-prime business through packagers. And although 68% of brokers prefer to source their own products before submitting an application to a packager, 60% say that their packager often comes back with an alternative product option, meaning they have an even greater range of mortgages to select from before making a final decision. This added value service is not just the result of the packager’s technology; it is based on their knowledge of the marketplace.

Intermediaries continue to use packagers because they trust their knowledge and expertise. Computers cannot create that level of trust, it only comes about by personal contact.

Because of all the benefits of speed and efficiency that technology brings, it is easy to think this automatically translates into better service. But that is simply not true – just ask the advisers left hanging on lender support lines, or those who discover the products they have carefully researched via the web are no longer available.

Advisers are particularly suspicious of lenders who use technology to trumpet developments and facilities that turn out to be less than they expected or worse, just gimmicks. Take decisions in principle, for example. This is a great idea for the adviser that wants to go back to their client with a quick answer but intermediaries say that sometimes these decisions come with so many strings attached that their clients are eventually turned down or offered a deal that is not as good as they had expected. At best this is poor service, at worst it is downright deceitful.

The only way to get service right is from the ground up. Develop an extensive range of good products offering value for money and competitive rates with consistent underwriting criteria, backed by great support and efficient administration. Then and only then consider the best way of taking this offering to your customers. Technology is an important part of this mix, but it must put people first and be complemented by traditional communications.

Over the next few years the way mortgage business is done will change radically, with more technology in the form of HIPs and e-conveyancing, developments to adapt to.

But it is important we don’t lose sight of the customer and their service needs in the swirl of this revolution . In the final analysis it is down to us to control technology – before technology ends up controlling us.

Alison Hutchinson is managing director of Kensington Mortgages