MortgagesSep 3 2021

Lenders’ tech strategies lack transparency, brokers say

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Lenders’ tech strategies lack transparency, brokers say

Both big high street lenders and specialist buy-to-let lenders have announced tech updates this year. In August, Virgin Money told brokers it would accept electronic signatures on residential and buy-to-let mortgage declarations.

It also extended its partnership with Capita by five years in July to use the provider's mortgage orientation software, OmigaDigital, which integrates broker and customer portals.

Smartr365, a mortgage customer relationship management platform, recently announced a host of new lender integrations, with TSB, as well as Leeds Building Society, Accord and Aldermore.

On the specialist side, Accord rolled out its application programme interface software to all its brokers who use Iress, Twenty7Tec and Mortgage Brain in August.

In its interim results published last month, Leeds Building Society put its more than doubled half-year profit in part down to its savvy technology investments which have sped up service levels.

And Coventry for Intermediaries announced in late-August it now receives an equal amount of new business enquiries from brokers via its web chat tool. In July, the lender had credited its mortgage growth to tech investments such as this.

But as the wave of investments continue, brokers have taken a pause for thought on what really sits behind them, and how far lenders have got in tackling the "friction" inherent in the mortgage application process.

Martin Stewart, co-founder and director of mortgage broker network The Money Group, told FTAdviser: “Sometimes it is difficult to see exactly where the lender has invested some of that money. 

“Some innovations can be truly wonderful to behold, but they are few and far in between. More often than not, it can appear to be solutions looking for problems to solve.”

Stewart added the increased lending activity resulting from the stamp duty holiday served as testament to the work which still needs to be done.

“The recent heavily active market with the stamp duty land tax holiday and the volume it created only went to prove that we are as far from a mass market digital mortgage industry as we were five years ago.

“There is friction at many levels from the broker, to the agent, to the lender - and don’t even get me started on the lawyers. There is an element of ‘emperor's new clothes’ about a lot of what is going on at the minute.”

Tony Hall, head of mortgage sales at Saffron Building Society, told FTAdviser: “I don’t think any lender is not transparent on purpose. But perhaps they are sitting in the queue for new technologies as the creators of the systems try to keep up with demand.”

Hall explained: “I hope that one day we will have a system like some European countries, where you can get a decision on a mortgage in significantly less time than in this country, and can complete so much faster as it integrates with conveyancing and all legal systems.

“The UK is way behind with this and other countries’ systems. It takes time and of course investment.”

AI a 'pipedream'

Hall said it was almost “a pipedream” to think artificial intelligence could solve the complex, specialist mortgage cases Saffron deals with, at least in his lifetime.

“At present, a huge majority of our completed applications would have been an instant ‘no’ if we relied solely on technology.”

David Hollingworth, associate director of communications at L&C Mortgages, reckons lenders’ platforms will never truly be ‘finished’.

He told FTAdviser: “I suspect that we are now in a world so dominated by technology that it’s pretty much impossible for ongoing investment and development to ever be finished.”

He continued: “We are seeing and have seen improvements that will make a difference but it does take time.”

Looking further ahead, Hollingworth said the mortgage market was starting to see the use of open banking emerge.

“Although it’s early days and will take time to see what benefits it can bring and how customers will respond,” he added.

Open banking allows mortgage lenders to reduce the time it takes to review the data they require for a mortgage application, by providing a window into a customers’ bank inflows and outflows.

Irony of investments

But some brokers think the gap still remains between those who are and aren’t investing in technology upgrades. 

“The only ironic thing I would say is that those investing in their technology are the ones that already invest in technology,” said Corey Whelan, director of Cambridgeshire Money.

“Accord, which has just opened up its API, already has a really nice system in my eyes. But I suppose the time saving is still a positive in itself.

“The smaller lenders are obviously not in a position to compete technology wise, so there is still a gulf of difference between keying an application between a small regional building society, compared to a larger lender.”

Whelan said it “would be great” to see more smaller lenders’ systems improve to make it easier for brokers to use them, which he said “in turn is likely going to increase the amount of business being put their way”.

Luke Spellman, a self-employed Coventry-based mortgage broker, agreed. 

“For me, [a lender’s mortgage platform] does differ quite a bit between smaller and larger lenders,” he explained,

“Smaller lenders do tend to require much more documentation than larger lenders do, such as traditional high street banks.

"Larger lenders have invested a lot more into automating their service, meaning more valuations can be completed online, less documentation, and in some cases no documentation is required.”

But Saffron’s Hall said even small lenders had their road to technology mapped out, suggesting brokers won’t have to wait much longer for this. 

“We are in the process of upgrading our systems over to one that offers integration into more technologies that are on the market, and can save brokers time by pulling through their information along the chain, rather than submitting the information three, four or more times.”

ruby.hinchliffe@ft.com