It has been interesting to observe how different industries have adapted to the lockdown.
On the one hand, we have seen young start-ups and tech businesses pivot, transforming the ways they engage with their clients and minimise the disruption caused by Covid-19. Other businesses and professionals, however, have found it more difficult to react.
Looking at the mortgage market in particular, the coronavirus pandemic has proved challenging. Property valuations must now adhere to social distancing regulations. Some lenders have also retreated from the market as a result of the economic uncertainty surrounding the crisis.
What’s more, when we look at the experience of brokers and lenders in particular, it has become clear that their reliance on cumbersome and outdated practices has made it particularly difficult for them to continue operations.
Indeed, I believe that these trying times will spark a technological revolution – the likes of which have not been seen in the property market yet.
Having turned to tech solutions to overcome the direct challenges posed by the lockdown measures, many brokers are now witnessing just how beneficial such tech is.
In this time of crisis, the mortgage industry should be on the lookout for new opportunities. That’s why now is the time for lenders and brokers to embrace technology to ensure the appropriate systems are in place so they can weather this storm effectively.
Using apps to communicate with multiple parties
We know that communication is key to building a successful brokerage. Clients look favourably upon brokers who are responsive, knowledgeable and available to offer quick advice.
While emails and phone calls are the most common avenues of communication, consumers are becoming aware of the benefits on offer from using apps or online platforms to manage enquiries.
The benefits of financial technology – or fintech – are just as obvious for brokers as they are for consumers. After all, staying in constant communication with both lenders and clients can prove difficult, particularly when managed over email.
Brokers must have an effective record keeping system in place, and typically, this is manually updated. Naturally, this can result in records being lost and updates being slow.
Tech platforms change all this. They offer brokers a single, online location that can be used to manage their conversations with clients, lenders and other third parties.
We are already seeing such platforms provide brokers with direct access to organisations they must regularly liaise with, including HMRC and Companies House.
Delivering a tailored service
Typically, mortgage brokers have shied away from using technology. Rarely are customer relationship management (CRM) systems used, for example.
Instead, many brokers manually go through the know your client (KYC) process and then set about speaking with different lenders, slowly compiling a list of the available products and rates.
This is extremely time-consuming and, as such, there is a limit to the number of mortgage products that will be considered. Thankfully, tech-enabled platforms are modernising this outdated approach.
To make this core process more efficient for the broker, online platforms are available which have access to a list of all the mortgage products available on the market. By inputting details about the client, the platform uses this information to deliver a list tailored to the needs of the borrower.
Suddenly, a process that could take weeks can be finished in hours – the broker saves time while the client receives a more comprehensive view of what is available.
Using AI to establish risk
Establishing the risk profile of a prospective borrower is another challenging process. This is because brokers must compile and review documents to fully understand their client’s financial profile.
This is where existing technology can once again help. Brokers are now able to use artificial intelligence (AI) algorithms to quickly process data, extract relevant information from official documents and seamlessly establish the risk profiles of their clients in minutes.
Advanced algorithms can also be applied through machine learning (ML) to evaluate non-numerical factors that could impact the credit report of a prospective borrower.
Already, we are seeing AI and ML being used to establish a client’s digital footprint – by this, we are referring to an individual’s behaviour and public profile online, informed by their activities on social media, employment history, publications and memberships.
While still in its infancy, assessing one’s digital footprint is an effective way of enhancing the more rigid credit checks currently employed. AI ensures this is both achievable and affordable.
Modernise or risk being outpaced by the competition
The above examples may not ignite the exciting images one thinks of when discussing tech’s future potential. However, I believe this is part of the problem – futurists sell dreams of where technology will be in decades’ time, which often means we overlooked the practical and accessible ways it is transforming industries today.
Mortgage brokers need to appreciate that their industry is changing – their clients want a better, more convenient service to be delivered through tech. Indeed, this is true for consumers in their day-to-day lives, so people will no longer accept that the mortgage market is lagging behind.
Covid-19 has forced professionals involved in the mortgage space to step back and assess the manner in which they operate.
And once as the lockdown is slowly lifted, brokers must readily embrace tech if they are not already doing so. If not, they run the risk of quickly being overtaken by their competitors.
Cathy McPherson is group commercial director at On The Money – an advanced platform offering consumers the opportunity to manage all their finances in one place. She has over 35 years’ experience working in marketing and commercial sales.
