Our collective journey with technology is advancing at pace. The pandemic accelerated the adoption of many technology solutions, streamlined processes, and put a focus on productivity.
It also increased the volume of workers in society who rely on complex or multiple sources of income to pay their mortgages. Life and technology have both become more nuanced.
Today, the power of technology is mind-blowing. The opportunities – and traps – it creates. We can use apps and sensors to predict a person’s heart attack before it happens and deploy emergency medical care before they have even begun cardiac arrest.
Machine learning can and does solve many customer queries, removing the intense irritation of waiting hours on hold listening to a recording telling us how “important” our call is to whichever company we might be ringing.
But while listening to some brokers, I have heard a few say that they believe the difficulties of getting good decisions are on the increase.
As Government support dwindles and interest rates surge, getting some decisions is becoming harder. One broker I spoke to mentioned that working from home was preventing learning and experience at a lender they used frequently.
I’m not convinced that this is happening across the board (it isn’t the case at Newcastle) nor that this is purely a result of working from home, but it might be a feature of less collaboration within some lenders.
When our industry began to fall back on that phrase to excuse the blanket rejection of borrowers who didn’t fit the (at the time very simplistic) algorithm, it was understandable, if infuriating, for borrowers.
However, his point is that it feels like we’re not in so very different an environment now.
The growth of our industry’s reliance on technology, unless it is accompanied by access to manual underwriters for brokers as it is with us, may become a problem. Life is more complex, and it needs time to understand the vagaries and subtleties of borrowers’ circumstances.
Not only might the new working regime encourage less reflection – Teams and Zoom are great but more difficult for contemplative thinking – but the lack of further incidental conversation and oversight in a shared space may have encouraged some to focus more on ‘getting things off their desk’.
There is an additional danger too. Technology, algorithms, their application and the volume and quality of data available – it renders how the industry used technology more than 20 years ago shockingly restrictive.
Yet that very progress in an increasingly complex world where nuance is so important to making the right decisions, also means that in the pursuit of efficiency, fringe borrowers are still being lost as they were before but perhaps for different reasons.
If we are to become more sophisticated at the way we understand and interpret lending risk then we must attune what we have to the modern borrower. That is no easy task when data-driven behavioural analysis is only as good as the data upon which it is based.
If we do not collect the data of borrowers simply because they do not easily go through the mortgage application system, how can we expect our systems to underwrite them sensibly – let alone intelligently?
Put five underwriters in a room, computers included, and offer a little space and time and the combination of experience and talent is more than the sum of the parts – isn’t there the experience and data in that room to make just as (if not more) informed decisions when it comes to those borrowers who are underserved by big data?
Take a self-making, newly self-employed but soon to be employer, brave and entrepreneurial person – if big data fails them and if there is no room for underwriting expertise in the process, then the system will fail too.
In a world hurtling towards AI as the answer to all our challenges, I’m of the view that we should take a step back to remember the value of perspective and experience that works to compliment technology that exists.
People are intrinsic to the purpose of a building society and that includes understanding the value of colleague experience and expertise in the underwriting process as well as our purpose to our Members.
If you are finding decisions that used to go your way are no longer as straight-forward as they once were, it might be that circumstances have changed – or that technology is showing no mercy. Whichever, talking to a mandated underwriter will mean your case gets the consideration it deserves.
Michael Conville is chief customer officer at Newcastle Building Society
