Mortgages  

Leeds uses tech to tap into underserved market

Leeds uses tech to tap into underserved market

The chief executive of Leeds Building Society said his business plans to make a “very significant” technology push this year, and explore underserved areas of the mortgage market.

Speaking to FTAdviser, Peter Hill said the tech developments – set to be installed in the second half of 2016 – will be a “complete game-changer”.

This follows a number of digital moves within the firm throughout 2015, including the replacement of its call systems, moving onto a cloud-based system, introducing a mobile app and making it easier for branch customers to operate.

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Mr Hill pointed out that investments into technology since 2013 have reduced the time it takes the firm to process an application by 25 per cent.

In its full-year results, the building society reported a 34 per cent increase in operating profit, increasing to £105.8m against 2014’s figure of £80.9m. However, Mr Hill said the likelihood of seeing a significant increase in profit from here is limited.

He said the lender is hoping to tap into underserved markets where it sees demand, such as holiday lets and its interest-only ‘part and part’ lending proposition.

Commenting on the challenges he foresees over the next year, he described the interest rate environment as “tricky”. He said: “For borrowers it’s fantastic, with the average rate on a two-year fixed being below 2 per cent.

“But on the other side of the balance sheet, for savers it is really tough, and it has been tough for a long time. So if interest rates continue at this very low level, it’s going to continue to make it pretty difficult for them.”

Mr Hill also said he expects the challenges and uncertainty over the UK economy and the referendum to create instability and have a depressing effect on the market this year.

Ray Boulger, senior technical manager at John Charcol, said: “Out of all of the lenders, the building societies are the category that are being much more innovative at the moment.”

Mr Boulger said: “Leeds often look at things that most other lenders will not, and I have found them receptive to looking into new ideas.

“It is good to see a lender come out and actually say it is looking at underserved areas of the market, because it will encourage others to look into those sectors, which means Leeds won’t get a disproportionate amount of that business.

“It will definitely be the building societies, rather than the banks, that will lead the change this year,” he said, adding that interest-only is a large untapped market.

“I will be interested to see what changes Leeds make to their criteria for interest-only.”

katherine.denham@ft.com