Following the financial crash in 2008, the Mortgage Market Review (MMR) introduced new rules in 2014 that proposed to enforce the distinction between advised and non-advised sales with the aim of enhancing sales standards. As part of its recent follow-up Mortgages Market Study (MMS), the Financial Conduct Authority (FCA) has called for further simplification over choice and pricing for consumers.
The MMS acknowledged that current advice and guidance rules are a barrier to innovation. To avoid inadvertently breaching existing rules, lenders and intermediaries shied away from developing execution-only sales tools. An opportunity for simplification that requires clarity is when a remortgage journey enters the area of advice. Other barriers some lenders face include legacy systems, resource, and budget limitations alongside changing product demands.
Much of the innovation that lenders have so far adopted has largely focused on the application process, such as better automation and the use of API technology to remove the pain-points of rekeying customer data. Whilst focus on the development of technology has helped many parts of the mortgage market, the process of researching and applying for a mortgage remains disjointed. This is reflected in the MMS noting that online tools are lacking in giving users the transparency and high-quality information they seek.
Currently lenders focus on how to build automated process, but fail to pinpoint the pre-application stage that can save time, resource, duplication of customer data and understanding of a pre-qualified lead. Obviously keen to ensure that advice elements of a mortgage journey are watertight, lenders remain reliant on intermediaries for mortgage business, so look to digitally innovate the broker experience as well as customer to enable quicker loan drawdown.
Customer onboarding technology has proven positive in other sectors such as insurance, where creative use of APIs has reduced the amount of information a customer has to provide. Such technology applied to the mortgage market could allow users to fully understand mortgage options with a chosen lender, start an enquiry, provide all requisite documentation and manage the entire process through to completion online. Digital onboarding will become the first cog in a process that will work best when it is aligned with a suite of fully integrated digital applications for customers, lenders and brokers such as the platform offered by Burrow (part of the DPR Group).
Whilst the MMS recognises that current regulation forces customers down the advice route and has restated what exactly qualifies as non-advice, there are still opportunities that lenders can harness to improve the customer pain points experienced before the advice process begins. In order to reduce costs and bring speed to market, lenders are understandably focused on existing opportunities that are available from ‘out of box’ solutions. By choosing an innovative technology platform partner, lenders and brokers can complete a process of digital transformation that will see them set for a profitable future.
