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For many years, companies such as Amazon have made use of technology to improve the customer experience.
Others across various industries have pushed technology investment up their priority list, perhaps to meet new regulatory requirements or to upgrade legacy back-office systems for greater efficiency.
Although the mortgage sector has moved on from being paper based to a stage where the mortgage journey is embracing the advancement of technology — such as e-verification, pre-population tools and online affordability checks — it is lagging behind other parts of the finance industry.
Increased expectation
There is now an expectation that brokers and their customers should be able to manage mortgages in the same way they manage other services.
Virgin Money head of intermediary sales Richard Walker says: “For brokers, this means how they interact with customers; making sure they understand and utilise the technology available in a way the customer expects and understands.”
Due to historic low interest rates, demand for mortgages has never been greater, with a focus on affordability and consumer appetite.
Rather than threatening our jobs, technology enhances how we perform, improving efficiency
“Now more than ever, brokers need to consider that the technology available is there to assist them with their business, support them through the application process and give them more time to focus on providing customers with the right product and advice,” Walker explains.
Pushing the need for technological change within the market are the fintechs. As they continue to establish themselves in the sector, traditional brokers are having to adapt and consider the solutions they provide.
Twenty7Tec entered the market in 2014 with the aim of making it more efficient and effective. It provided advisers with real-time information to help them both meet regulatory requirements and give customers the best advice, while also reducing the administrative burden.
Full automation of the mortgage industry is not going to happen but tech can do the heavy lifting
Since 2020 there has been increased growth in housing demand, but this has been outstripped by the additional volumes of mortgage searches and mortgage documents that are prepared for customers by advisers.
Twenty7Tec chief executive James Tucker says: “We’re at the height of the market, but we’ve not had a significant rise in the number of advisers to meet this increasing demand. To carry on servicing customers and avoid working 14-hour days, advisers need to be more efficient.
That’s where technology plays a vital role.”
‘Serious inroads’
Through the development of application programming interfaces and other technology, fintechs such as Twenty7Tec have been making “serious inroads” into the amount of time that brokers spend on administrative tasks, according to MagiClick UK chief executive Mark Lusted. This leaves more time for giving good-quality advice and getting to know the customers’ needs.
Looking to disrupt the adviser software market, Twenty7Tec revealed last month it was looking to break into the financial advice market with plans to acquire a practice management system already operating in the space.
Many brokers would like a single platform that can ‘join all the dots’ in their workflow
At the time of the announcement, Twenty7Tec said it was in advanced talks with Bluecoat Software, which is used by financial advisers and mortgage brokers to process and administer new business.
Should the deal go ahead, it will enable Twenty7Tec to make a play for the wealth management market and challenge existing software providers, including Intelliflo and Iress.
There has been a steady stream of technology mergers and acquisitions over the past few years, but Lusted says the industry has “not reached a point yet where consolidation is inevitable”.
He adds: “That said, many brokers would like a single platform that can ‘join all the dots’ as far as their workflow is concerned, so I predict that, if we don’t see a number of mergers over the next few years, we will at the very least witness more integrations between third-party systems.”
The fundamental change will be getting all the people who work in conveyancing to work online
However, Association of Mortgage Intermediaries (Ami) chief executive Robert Sinclair thinks “full automation of the mortgage industry is not going to happen”, with most consumers at some point in the mortgage process still wanting advice or confirmation from an individual.
Sinclair believes technology should be put in place to do the “heavy lifting” such as capturing and reading data, to allow more time for consumer-facing roles to improve the customer experience.
Despite predictions in market commentary over the past decade, so-called robo advice has not made the role of broker redundant. Sinclair notes that, although the advice arena is seeing advances in technology around data handling, the information that comes out of the system is still being interpreted by humans.
By standardising the language used on each major platform in the mortgage sector, we hope to create greater clarity
Tucker agrees: “One thing that has become abundantly clear to mortgage advisers over the past couple of years is this: technology enhances every one of us.”
“Rather than threatening our jobs, it enhances how we perform. That theme is set to dictate the market for a good decade yet, I’d wager.
“The pace of change means that the market is going to look very different in just two to three years’ time and technology is going to play a very significant role in that.”
Change and adaptation
With last year’s stamp duty holiday and historically low rates, the mortgage market has been at its busiest for several years, which is why now is the perfect time to invest in new technology.
But are traditional brokers struggling to keep up with the pace of tech adoption to meet client expectations?
It can become too easy to focus on the present rather than invest time in looking at new technology to support brokers and their customers. As technology advances, Walker says, “it will be the brokers that embrace this change who will really thrive as their customers’ expectations turn more towards a tech-led process”.
To carry on servicing customers and avoid working 14-hour days, advisers need to be more efficient
He adds: “It’s important that brokers understand the advances in tech and what it means to their business. A good business development manager can play a vital role in explaining how it works and what it means.”
Meanwhile, many brokers have been waiting for the major technology platforms to deliver solutions for them, instead of developing their own in-house platforms.
This is because it doesn’t make economic sense for smaller brokers to invest in their own technology. Smaller lenders, new lenders or small building societies may struggle to invest in new technology because they share systems with other institutions.
It’s important that brokers understand the advances in tech and what it means to their business
In recent months, the main sourcing systems such as Mortgage Brain, Twenty7Tec and Iress have started to build more end-to-end processes to allow companies to plug in and use more of their resources.
This change is “a really big shift” in the mortgage market, according to Ami’s Sinclair.
He says: “It will help in terms of people being able to buy or buy in to a particular system and get the best end-to-end process out of that”.
Collaboration
Collaboration between tech providers is equally important if brokers and their customers are to reap the most benefit.
Tucker says: “We recently agreed on an industry-wide set of terms and language with Iress and Mortgage Brain relating to system integrations.
By standardising the language used on each major platform in the mortgage sector, we hope to create greater clarity over what new technology does and how advisers can benefit.”
If we don’t see a number of mergers over the next few years, we will at the very least witness more integrations between third-party systems
Technology has already markedly improved and streamlined systems within the sector, but there is more progress to be made. Although many advisers have access to the tech they need, the adoption of these new solutions has been slower than expected.
Twenty7Tec’s Tucker says: “This needs to improve if we as an industry are to provide the service that customers are increasingly likely to demand.
“For those who haven’t done so yet, they risk getting left behind because customers who choose an adviser who uses technology to its fullest will experience a more efficient and effective advice process.”
Another challenge exists around the conveyancing process. There has been a clear need for all parties in the mortgage process to accept the same identity check, but MagiClick’s Lusted says the conveyancing process has a long way to go.
Brokers must make sure they understand and utilise the technology available in a way the customer expects and understands
Conveyancing technology providers such as Smoove have “a clear ambition to address these issues”, he says, adding: “It will be interesting to see if such improvements happen over the next few years.”
Ami’s Sinclair agrees with Lusted that conveyancing has “one of the biggest problems” of the sector, suggesting that the integration of technology into the information flow of property “will be the key change” required.
He adds: “The fundamental change will be getting all the people who work in conveyancing to work online, instead of sending documents by post, to speed up the process.”
This article featured in the May edition of MS.
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