In the second of two blogs following on from a discussion on technology in the mortgage space at the UK Finance Annual Mortgage Conference, I’m exploring the challenges the industry is facing with adopting tech and how it could make better progress by answering more questions that came up during the session.
As I mentioned in a previous blog, the mortgage sector has been trailing behind compared to other finance providers in terms of digital transformation. There is great potential to use tech to streamline the process for the customer and to make their journey smoother, but only if the sector can overcome the hurdles it faces.
What would help technology adoption in the mortgage market?
Technology adoption did accelerate during the pandemic, as much out of necessity as anything else, as the various lockdowns meant that new, remote ways of working, such as video appointments, were mandatory. This has created a bit of a snowball effect with new fintech, partnerships and in-house innovation coming to the fore and we must make sure we keep this momentum going.
What government-held data would you digitalise to support the mortgage process?
The Government definitely has a part to play. Pending a successful conclusion of its Making Tax Digital initiative, whereby tax returns are submitted and verified electronically, the logical next step would be to make this information available digitally to consented third parties. This would remove the need to produce SA302 forms and HMRC Tax Year Overviews for self-employed customers who are required to evidence their income when applying for a mortgage.
Why do you think adopting blockchain technology within the mortgage industry has yet to take off?
The blockchain technology itself is still relatively new so there is a healthy degree of caution across many sectors, not just mortgages. Negative connotations with cryptocurrencies and budgetary pressures have also played a part but we are starting to see new use cases where trusted data is required to be shared across multiple parties, which would lend itself nicely to mortgages.
How can technology make it easier for both new and existing buy-to-let landlords?
Property technology can be used to help landlords in the buy-to-let (BTL) market identify potential investment opportunities, taking into account a range of factors including valuations and rental trends for a given area through to EPC data – given the proposal for rental properties to be EPC rated as ‘C’ or above by 2025.
Furthermore, open banking can be used to evidence rental incomes from existing properties for a portfolio landlord seeking to add additional properties to an existing portfolio together with any other income sources. It can also be used to track rental receipts, including shared tenancy arrangements.
How can a smaller lender affordably buy into fuller digital journeys?
Smaller lenders don’t need to make multi-million-pound investments in order better use technology. Increasingly, many are looking at a software as a service model with digital ‘out of the box’ journeys pre-configured. This gives them the ability to deploy quickly and easily and customise at a later date if they so choose. This allows them to spend more time concentrating on product innovation, service quality and customer retention.
How can technology help to align customer journeys for the core mortgage market with the specialist mortgage market?
Technology definitely has the potential to align customer journeys for the core mortgage market (i.e. the first mortgage market) with the specialist mortgage market (such as second mortgages, taken out by the customer while their existing mortgage is still in place, with the property on the first acting as security.) Speed and surety of decision are key to both markets, as is ensuring that accurate, trusted data from sources such as open banking is available from the outset, together with a flexible decision engine that can process the data to help align journeys.
In many cases, the technology we’re talking about here is already available; the mortgage sector just needs to make the most of the opportunity it offers. Ultimately, the technology has to provide tangible benefit to customers and the optimum balance with human interaction must be struck – only then can we give customers a truly seamless journey and make one of their biggest life decisions as painless as possible.
Read my article about the impact of technology on customers’ experience and their journeys →