Cloud-based software-as-a-service (SaaS) platforms are now significantly tested and trusted by many lenders of all sizes across the market.
The advantage of SaaS based systems is their flexibility and interoperability with other, existing technologies. For lenders this is a key consideration – balancing the advantages that improving functionality brings with the pressures of investment cost is always going to be paramount.
This is where partnerships and collaboration can really excel. And for the majority of lenders in the UK, the pressure on margins is demanding increasing investment in efficiency.
Nottingham Building Society spoke to mortgage brokers across the UK and found that two out of five intermediaries said the mortgage process is the same or slower than it was two years ago. A third said lenders needed to invest in better technology to streamline the application process and help borrowers secure their homes more quickly.
At Ohpen, we are partnered with Cognizant, one of the largest worldwide professional services, business process outsourcing and technology consultancies.
Together, we stand ready to help UK mortgage lenders reimagine how their processes work. This is a key component of transformation, and one that is sometimes overlooked.
It’s tempting to think of installing a new technology platform as a like for like replacement or a patch integration. But the plain fact is that technology has changed at such a pace that this approach means any new system is going to be out of date before it’s even implemented. What’s important today is having a system that has access to updating itself as the environment changes.
Last year the Open Property Data Association (OPDA) polled 5,000 homebuyers who had bought or sold in the previous five years. They found that 57% believed the homebuying process would take under two months from the offer being accepted to exchanging contracts. Unsurprisingly, 46% found that it took between three and six months and 16% did not complete for at least six months. Even though the majority of those surveyed were not first-time buyers, it still took 62% of them more than three months to exchange.
In September, research commissioned by Santander estimated the economic and social impact of the UK’s antiquated homebuying process, costing consumers and the economy at least £1.5bn every year. Santander’s report, Fixing the Broken Chain, based on independent economic analysis from WPI Economics and a survey of over 2,000 consumers by JL Partners, found that 23% had seen their transaction fail. This
alone is costing consumers £560m each year, with a further £950m lost to the wider economy, alongside additional consequences caused by a complex and slow process.
There are over half a million (530,000) failed housing transactions each year in England and Wales. The economic analysis shows that the direct cost to consumers of this through expenditure on elements such as mortgage and solicitors’ fees that consumers cannot recoup, is £560m annually. This is 40% higher than the £400m estimate used by the Government earlier this year. The research reveals that approximately 85% of people who experienced a transaction reported some sort of financial loss. While the average cost stands at £1,240 per failed recent transaction, one in five people reported losses in excess of £2,000.
Santander’s report also pointed to the fact that difficult and stressful processes deter activity, causing housing misallocation and reducing the liquidity of the property market. The buying experience is so disheartening that 28% of respondents told researchers they are less likely to move again. By contrast, a more streamlined process would make 88% of people who moved recently more likely to move again in the future.
Not all of the problems with the homebuying and selling process in the UK are down to technology that is no longer up to the job. The fragmented value chain and a very real shortage of qualified professionals in the conveyancing and valuations industries is a big challenge. But fragmentation is everyone’s problem when ot comes to lost time and money.
There are basic technology changes that could be made by lenders which would dramatically improve the borrower and broker experience. Cognizant’s analysts have found user experience at the broker end of a transaction is “mediocre due to disparate data systems for capturing and collating document and other required information for submitting a mortgage application”.
The challenge is compounded by “siloed infrastructure islands within lenders’ technology landscapes” resulting in higher costs and reduced flexibility.
This impacts on lenders’ ability to respond to market need with more appropriate product offerings – ultimately, harming the consumer. It is also creating a huge cost burden for lenders reliant on manual processes for collecting, extracting, and cross-referencing information from documents.
Cognizant calculates that document management in the mortgage origination process costs UK and Ireland lenders approximately £0.5bn and necessitates the employment of 4,700 people. Currently, 30 to 40% of the mortgage application cost is allocated to document management.
If that isn’t an investment case, I don’t know what is.
Jerry Mulle is managing director at Ophen
