Improving technology is not only going to change the way people apply for mortgages, but is also establishing new customer expectations, said a selection of industry voices at a Mortgage Strategy Leaders Forum panel.
Gathered to discuss the changing needs of mortgage borrowers, Andrew Montlake, brand director at Coreco Group, kicked things off by pointing out that the products available today is ostensibly the same as those on the market two decade ago.
Liz Syms, chief executive at Connect for Intermediaries, pointed out that because lenders are trying to capture market share by offering something different to their competitors, that criteria has changed massively, however – although lenders are competing on either criteria or rates rather than both.
Mortgage Strategy editor Rebekah Commane, who chaired the panel, asked whether or not there is likely to be an increase in more complex borrowing cases.
“The ways that people are earning income is changing,” said Montlake, adding that “there’s always something messing up what you previously considered a ‘vanilla’ case… there are more borrowers becoming what I’d call a decaf latter with a twist.”
On how these changing circumstances will affect the future, Esther Dijkstra, director of strategic partnerships at Lloyds Banking Group said that it’s open banking that will really change things.
“In the future – 10, 20 years from now, open banking will have led to improved customer knowledge, and in turn, far more individual products,” she said. “Open banking will also allow lenders to underwrite more complex cases.
“It should provide a rounder picture of peoples’ circumstances, so we may see new things such as more intergenerational products,” she added.
“Open banking isn’t very visible yet,” commented Montlake, “but in 20 years it will offer a more detailed, a more exact science, for lenders to underwrite on.
“I see this resulting in a two-tier lending system – vanilla cases, which will be easier and quicker than ever to process, and specialist cases, which will still need the attention of brokers.”
Indeed, Syms pointed out that open banking is unlikely to allow lenders to take highly specialised factors into account, such as retained profit.
Montlake also talked of the possibility of some of the world’s biggest technology companies entering the vanilla mortgage market. “For Google and Amazon, this is the next logical step.”
It’s worth pointing out that in August this year, Google partnered with four banks in India to allow for fast and pre-approved financial loans through the Google Pay app.
Syms replied that this would leave more room for specialist brokers, and Montlake agreed: “Brokers were born in the specialist market, and that’s where we’ll thrive.” He also added that technology can’t look people in the eye and get the soft facts, “and that is still incredibly important.”
“Don’t forget blockchain,” insisted Cammy Amaira, director of sales and marketing at Tipton and Coseley Building Society.
This is something that HM Land Registry is taking very seriously, recently announcing that is exploring how blockchain technology can be used to ‘revolutionise’ the land registration and buying and selling of property as part of its Digital Street programme.
Furthermore, in April, the first digital mortgage deed was entered into the land register using a digital signature.
On the subject of what brokers can expect in the future, Dijkstra commented that the next generation of borrowers will most probably have a perception that financial services is easy. “Click, click, click, done – just like opening a bank account.
“Some from this group of customers may not consider the long-term elements of taking out a mortgage, and will need advice.”
On the other hand, Dijkstra continued, the notion of what a ‘complex case’ is may differ between customers and brokers. A lack of financial confidence or experience may see some customers seeing themselves as having a complex situation actually being vanilla.
At the end of the session, an audience member asked that, if he were a young broker today, what should he concentrate on?
Syms answered that brokers should embrace technology “so that you can compete process-wise. Having good technology will give you more time to focus on your specialist knowledge.”
“Be aware of where your customers are coming from,” said Dijkstra. “The digital world means that they may not be coming just from referrals.”
The entire panel was adamant, however, that providing stellar customer service will always be the most effective tool that a broker can sharpen.