There is not a lender in Britain who will not have been challenged over the past year. Lenders have been faced with multiple challenges: coping not only with Covid-19 and staff working from home but also responding to announcements such as the government-mandated payment holidays.

These are again front of mind as we plough through a third national lockdown.

Banks which also fund other lenders have had the dual challenges of not only managing their own lending books but also ensuring their investments in other lender/s are still performing.

It can be the latter which may lead to the most uncertainty, especially if you cannot get the information you need, when, and in the level of detail, you need it.

This is more particularly the case as this type of funding is typically in sectors in which the investor bank has less expertise. An example of this is buy-to-let or short-term lending, which is usually the reason for the investment in the first place.

What has been highlighted in the past year is how essential it is that banks and funders can receive up-to-the-minute reports on their investments from the lenders in which they have invested.  This is helpful both in terms of judging performance and in order to report back to shareholders and the FCA where that is required.

The past year has demonstrated how strategies, such that used by Landbay of putting technology at the forefront of its proposition, plays a vital role – particularly in helping to manage new or unexpected demands.

Where non-bank lenders have investors, which almost all do, it is the collection, organisation and dissemination of data that is so essential.

Initial set-up

As Covid-19 began to take its toll on the nation’s health, it led to the instigation of the now familiar, first lockdown and furlough.

Many lenders found that organising the government-ordered payment holiday at short notice, when their own staff resource was either furloughed or working from home, proved to be difficult, if not impossible to implement immediately.

At Landbay, we set ourselves three goals which no doubt mirror those taken by lenders across the mortgage industry.

The first was to implement new processes to facilitate mortgage holidays meeting all regulatory guidelines.

The next goal was to enable fast, accurate decisions to be made after requests from borrowers to enter and, later, exit a mortgage holiday.

And finally, we aimed to monitor the performance of our borrowers’ mortgage holidays’ performance against the wider industry.

However, as a non-bank lender we understood that another key need was to communicate with the funders who lend via Landbay’s online platform.

Factoring in remote working

Our funders had two reasonable demands. They needed accurate data on the performance of their part of the loan book, as well as immediate access to ensure that their investment goals were being met.

It was therefore essential that we could access the up-to-the-minute information they require. With staff working from home our solution had to ensure that we could do this remotely at the touch of a button.

To provide this information we had to be able to accurately monitor all activity from the borrowers who took payment holidays.

This was from application to post-completion to build a composite picture of their risk tolerance and aspirations. This is essential, even in more normal times, to enable us to accurately predict lending trends and plan accordingly.

With our ability to build solutions that enable technology to do much of the heavy lifting, our IT team delivered a facility which met all three goals as well as those required by investors.

It also allowed anyone in our customer service team to create reports, access up to the minute data on customers, assess their situations and make decisions in agreement with them that were always based on their best interests.

With this instant access to client data, distressed customers could be instantly identified so we could make fast accurate decisions on mortgage holidays rather than taking a more blanket approach seen by some other lenders.

The outcomes

The outcomes have been better than we could have hoped. We were able to provide customers with decisions on payment holidays within 24 hours of receiving the required information.

We could also provide funders with the instant, up-to-date information they needed.  While industry mortgage holidays levels varied from 18% to 30% during the first wave, the peak impact for Landbay was just 7.8% by book value.

This decreased rapidly and we now have not a single borrower on our book with a payment holiday.

Being able to respond positively to the unexpected demands generated by Covid-19 while meeting the requirements of funders was essential.

Our approach of technology combined with the personal touch, ensured the right borrowers received the support they needed and providing funders with the confidence that their investment was being well managed.

Such a technology-driven approach combined with the transparent use and management of data is essential to the running of a modern non-bank lender, and to the bank funders utilising such a platform.

Julian Cork is chief operating officer of Landbay