How technology can transform lending


It is often said that necessity is the mother of invention, and for the current mortgage market that certainly seems a suitable maxim.

With competition in the housing market continuing to rise, there is an ever growing need for lenders to offer innovative solutions that will provide faster and more efficient mortgage applications for today’s consumers.

Housing demand is increasing at all levels of the property market and buyers are finding themselves facing off against a growing number of competitors in the race to buy property.

These issues present a huge challenge for the mortgage industry – but also open up new opportunities for lenders to embrace innovation and meet growing consumer demand for faster and more consistent mortgage applications.

To take advantage of these opportunities, lenders should look to financial technology to help them transform the lending process. This is a key way for lenders to meet the needs of buyers, many of whom are now looking for a service that will help them quickly find the most appropriate product for their circumstances.

Unfortunately, many lenders are still lacking in this area, with an Iress survey earlier this year finding 53 per cent of intermediaries ranked lenders systems as average to very poor.

Innovative lenders are focusing on speeding up the process of getting a mortgage by providing detailed packaging guidance and publishing full lending criteria online to enable brokers to better prepare their clients in advance of an application.

Except in the most complex cases, automated decision-making using published criteria can streamline the lending process and save applicants and intermediaries time.

Instant access to documents can also speed up the process. Secure, online portals are allowing brokers and their clients to send and receive documents instantly, and it is good to see that more lenders are now embracing digital in this way.

Technology also enables valuers to submit reports online, giving lenders the information they need instantly at the click of a button.

These online systems give brokers more information and control about the progress of their cases.

Real time, online case management updates give brokers greater transparency, as they allow advisers to instantly view the status of their cases instantly, 24 hours a day. Systems like these can vastly improve brokers’ working lives by reducing the amount of time they need to spend on the phone chasing updates.

The smart lenders are also looking beyond credit score when considering applications. Intelligent, analytics-driven profiling which analyses market sector risk and borrower profiles can provide a much more insightful assessment of individual credit risk. This can help match applicants to mortgages that are more suited to their specific circumstances, which in turn helps to improve consistency when it comes to application.

All of these developments enable lenders to examine each application on its own merits. For example, when considering buy-to-let applications, firms can adjust the rental calculations based on regional rental market conditions or the applicant’s ability to withstand void periods.

Innovation is key to helping lenders address some of the challenges the housing market faces when it comes to the imbalance in housing supply and demand. Those brands that meet the growing needs of consumers for more efficient and consistent mortgage applications will likely become the first choice for buyers in the future.

Adrian Whittaker is sales director at New Street Mortgages