Connecting Intermediaries and Lenders

Mortgage Tech - Predictions & The Future

19th July 2017

"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten" Bill Gates

Such a quote could not be more relevant for the world we live in.

The talk of 'Robo-Advice' and 'AI' knocking on the door to snatch your customers and whisk them away to the digital world of no return is an interesting one. A little far-fetched for mortgages, but still paints a great picture of how things could go, if you use a little imagination.

Like many, I feel confident the future of our mortgage industry will not be one where we hand over complete control to the machines, neither will it be solely powered by the traditional face to face mortgage adviser.

The landscape we play in will focus far more on the 'hybrid' approach in the coming years, empowering the customer to make their own decisions and engage with advice in a way that suits them. You know, the whole "meeting the needs of your customer" thing that so many other industries have managed to achieve.

Lenders, Brokers, Mortgage Clubs and Networks (to name just a few), all need to realise the industry is changing. Many will be surprised at how fast this hybrid approach will gather momentum. The last thing you want to be is left behind. Now, really is the time to engage with technology suppliers and get a feel for what is out there.

"Digital Advice" (although I don't believe your customers really care what we call it), is a place where the traditional ways of thinking, knowledge and experience is combined with the efficiency and power of technology.

This 'hybrid' or 'blended' engagement model will become mainstream in the future. Not only for mortgages, but for many other areas of financial services. Believe me when I say, things will start to change very quickly. In fact, it's already begun.

My Predictions for 2017 and Beyond

"Intermediary user numbers will drop by 20% in the next 5 years"

Let that sink in for a moment… 1/5th of intermediaries will not be here in the next 5 years. The 20% of intermediaries that don't make it in this changing world over the next few years are likely to disappear due to the efficiency of others. Advisers, firms and networks that do not embrace technology, do not continue to evolve and meet the needs of their customers, will feel the pressure as others in the industry find ways to better service those customers. The old saying "We have always done it this way" will do you no favours.

Those that embrace technology and survive, will be more profitable than ever in an ever-growing market. More lending, better efficiency and fewer intermediaries all adds up to a more profitable market for those that look to thrive in it.

"25% of all Mortgages submitted in 5 years will be via digital channels"

This won't be execution only, or robo-advice. But a true 'hybrid' model which empowers the customer to utilise technology at their convenience, and in a way they feel comfortable and familiar with. While calling on the strengths of human interaction and experience to give the final advice, cross sell and provide reassurance in what the customer is doing.

Let the customer add value and feel in control, technology add the efficiency and seamless working platform and the adviser to utilises their knowledge and experience to give the advice.

"Big Data and AI will replace 90% of manual underwriters within 10 years"

Our current perception of the 'Vanilla' client is set to change. Machine learning and big data will allow much of our industry to be underwritten without human interaction. Yes, there is most likely still going to be a future need for true specialist products to be manually underwritten. This I have no doubt of. But how we currently class as a 'specialist product' is soon to be re-written.

AI coupled with vast amounts of on-demand data (in part fed by the Open Banking revolution), will create an entirely new landscape for machines to crunch numbers (which is what machines do best).

Instant offers, data transfers with no real need to scan and upload documents. Statements pulled directly from the bank, spending habits and trends analysed. Instant valuations via AVMs, conveyancing and customer authorisation all performed instantly via APIs. Costs go down, processing times speed up, and risk becomes far easier to quantify. This utopia is a way off, but it will happen.

We are on the edge of an unbelievable transformation within the mortgage sector. Let's embrace it and finally start to catch up with other industries. The next few years will be make or break for many people and we are here to support those that want to lead the pack.

When it comes to tech, the hare beats the tortoise every time

10th January 2017

On a quiet evening over the Christmas break, in the hope of being able to switch the TV off for a while, I found myself reading Aesop's Fables to my children.

The story of the tortoise and the hare, known to most of us, seemed a good place to start – it had animals, tick, there was a race, tick, and there was a meaningful life lesson at the end of it, big tick.

When I was young this tale was a particular favourite. Nothing wrong with being slow and steady it taught us, keep working hard, diligently moving forward, and you will eventually win the race.

Unfortunately, this message appeared totally lost on my children, and a healthy but unexpected debate ensued. Surely, it was pointed out to me, the hare should simply have set an alarm on his iPhone to wake him up to ensure he completed the race ahead of the tortoise?

After some discussion, I concluded that they were right. In ancient Greece where these tales supposedly originated, the tortoise may well have eventually defeated the hare. But today? No chance. In the modern world, the hare gets out ahead, and technology keeps him there until the race is ran. Of course, the tortoise can use technology too, but he's always going to be a tortoise, there's only so fast he can move.

The most exciting part about working in technology, particularly in the mortgage industry today is being the hare. Get out in front, set the pace, adapt to changing conditions quickly, and never ever stop for a rest. If you do that those big lumbering tortoises won't catch you - their very nature means they simply can't move fast enough.

The same goes for Intermediaries and Lenders in today's mortgage market. Ask yourself, with all the technological change going on around you, do you want to be the tortoise or the hare? Do you want to be setting the pace, or always playing catch up?

And if you want to be the hare, shouldn't you be working with other hare's to help you achieve that, rather than a big lumbering tortoise?