The mortgage market has taken huge strides forward in recent years from what can only be described as a pretty low-tech base.
As a tech provider who works with all links in the mortgage chain from the largest lenders through to the smallest of intermediary firms – and everyone in between – we are constantly being regaled with inadequacies and breakdowns in the mortgage tech chain from a variety of sources.
From our perspective, we are always looking for ways to streamline the application to completion process for our users and working with like-minded service providers who can add real value.
Despite information security, data privacy and compliance cited as top priorities, many intermediary firms tend to struggle with digital transformation projects.
As such, last year we teamed up with Nivo to deliver a new facial recognition ID verification service.
The system helps to navigate the previous requirement for certified ID, usually provided by a solicitor.
ID is verified by using facial recognition artificial intelligence (AI) to compare an applicant to their nominated document such as a passport, driving license or national ID card.
As well as being quick and simple to use for all applicants, the system eliminates human error associated with hard-copy documents and mitigates potential fraud.
I’m citing this partnership as it’s a noteworthy example of how AI can work in the mortgage market.
This is also a component that lenders fully appreciate but, as highlighted in a recent article in the Financial Times, they need to tread carefully.
The article entitled UK regulators warn banks on use of AI in loan applications highlighted how UK financial regulators have warned banks looking to use artificial intelligence to approve loan applications that they can only deploy the technology if they can prove it will not worsen discrimination against minorities who already struggle to borrow.
The watchdogs are increasingly pressing Britain’s biggest banks about the safeguards they are planning to put in place concerning the use of AI.
The article added that high street banks are exploring ways to automate more of their lending, including the use of AI and more advanced algorithms, to decide who to lend to based on historical data held on different types of borrowers, who can be grouped by categories such as postcodes and employment profiles. Â
I agree with a greater implementation of tech by lenders and it’s very clear that they need to ensure this balancing act is weighted correctly.
The tech trajectory amongst lenders has been an interesting journey. The more traditional lenders have had a plethora of obstacles to overcome and heavy investment has been made in updating often antiquated systems.
New lenders have entered the market with a variety of innovative tech-based solutions but some have been more attuned to the needs of the intermediary market than others.
Generally speaking, the pace of change in broker tech continues to leave the majority of lender tech in its wake.
The challenge remains for lenders to evolve and adapt at a similar pace for it to have any real impact on the mortgage journey. And this includes back-office functionality as well as broker/customer-facing ones.
Here at OMS, we are constantly in dialogue with an array of lenders – large and small, mainstream and specialist – about how we can help improve speed and efficiency, and there are some inevitable hurdles which continue to crop up.
Costs
We can’t ignore cost implications. Whether done internally, through an external company or as a bolt-on, implementing technology can be costly, especially for those lenders with legacy systems that they are struggling to migrate away from.
For new lenders, it’s all about ensuring that they opt to work with the right tech partners to ensure that advisers can access their products and best service the needs of their clients.
Security
We’ve all seen the scare stories around a variety of cyber threats. All firms operating in the mortgage market need to ensure that they are well protected by constantly reviewing data security protocols, ensuring they are aligned with digital strategies and that they support compliancy procedures.
Cultural shifts and training
Whatever the size of the lender, it’s important for everyone involved ‘buys’ into the digitalisation process. This will ensure that borrowers and intermediary partners are getting the most out of any tech enhancements being introduced.
There is little point in implementing the most cutting-edge technology if staff or advisers don’t know how to get the best out of it.
The tech journey has many twists and turns still to come and it’s those lenders and intermediary firms who stay ahead of the curve who will continue to benefit the most.
