Open standards must work for all

The vision of open standards in the industry is exciting for brokers but lenders and sourcing systems must be convinced there is something in it for them, says Frank Eve

My fellow Mortgage Strategy columnist Richard Griffiths pointed out in his column recently that in theory, Origo should be able to add considerable value to our industry but he feared rivalries and deep-rooted commercial interests will be an obstacle to the adoption of open data standards in the mortgage market.

If this is the case then the mortgage industry and particularly brokers and distributors will have lost an opportunity to deliver better service to their clients and reduce costs for lenders at the same time.

Lenders and intermediaries share a common agenda driven by regulation – the need for accurate product data and, in a market where margins are under threat, the need to reduce costs and provide better, more compliant, services to borrowers. These factors now drive the need for better understanding of e-commerce priorities and the integration of systems throughout the industry. Now is the time to eradicate unnecessary and time consuming processes.

Griffiths is correct in that Origo can only act as a facilitator. It can provide a forum for intelligent debate on matters of mutual concern but it cannot energise the adoption of open standards on its own. It will need the commitment of the lender marketplace. The mortgage market differs from the life and pensions market in the nature of the lender community. Although there are more than 150 lenders the market is dominated by a small number of large institutions. These larger lenders have taken shareholdings in rival sourcing systems and trading platforms. These organisations have developed proprietary functionality and connectivity to lender systems and are understandably reluctant to re- engineer. Any initiative must recognise their respective market positions and aim to engage and foster support from them. Priorities and structure will have to take account of the position of these sourcing systems and platforms. The lender shareholders will need to feel confident agreed standards will not conflict with their commercial considerations.

Lenders, in common with life and pension providers, have adopted a strategy of offering online services to advisers through their own extranets. Some see these as offering a competitive advantage and do not want to share this functionality on various platforms where the advantage may be eroded. But these systems may need to be coupled to ensure ease of use for advisers and distributors who access many such systems. They may also need to be deployed more widely as the mortgage market continues to adopt a multi-tied approach to distribution. This has been the experience in the life and pensions market.

Any costs should be offset by the savings gained and the ability to use the same data standards over and over again. This is an exciting opportunity for the intermediary mortgage market but the real question is whether lenders will seize it.