Meanwhile, about 1.6 million customers are expected to refinance their homes in 2024, according to UK Finance, as a large portion of people who moved during COVID now face higher monthly repayments as fixed rates end.

These challenges have been exacerbated by the legacy technology systems still in use by many lenders that are not designed to handle the rapidly changing demands of today’s mortgage market.

They often involve multiple disparate systems and siloed data, making it difficult to access customer information in one place or respond quickly to market changes as employees must access and rekey data across the disconnected systems. The transition away from these legacy systems has been slow, leading to ongoing challenges.

To overcome these unique hurdles, lenders need the ability to differentiate from their peers with innovative solutions that challenge the status quo. One way to do that is to embrace new technology or partnerships at pace, but this is difficult due to the time and effort needed to build, in addition to the perceived risks involved.

The significant costs associated with overhauling legacy systems and replacing existing integrations can also be daunting, particularly when considering the necessary training for staff and the potential for service disruptions during transition periods.

The power of the mortgage ecosystem

When it comes to building out partnerships and the mortgage ecosystem, it’s important to recognize that these challenges are not insurmountable. The process has been de-risked somewhat through the advancement of API technology, which has allowed different systems to seamlessly integrate and create a best-in-class experience.

We’ve seen partnerships offer lenders an opportunity to achieve a competitive customer experience and the efficiency enhancements expected from an optimal home-buying journey by integrating essential third-party functionality via vendors that specialise in specific parts of the value chain.

Mortgage journeys tend to have more integrations than any other business line. At nCino, we’ve seen up to 12-20 integrations in a lender’s ecosystem, covering anything from broker aggregators, KYC/KYB, credit agencies, Open Banking, Document OCR, through to address lookup, core banking, and servicing. These vendors offer real-time data and functionality that maximizes the value across the ecosystem to achieve a market-leading experience.

The ecosystem approach can feel like a more labour-intensive option than working with a single supplier. However, when costs are factored against efficiency and experience gains, plus the benefit of working with experienced suppliers, long-term benefits can be achieved.

The speed to market will be faster than building in-house and by partnering with a robust platform, you can benefit from their roadmap and innovation and realise the value and return of your investment more quickly. Plus, the total cost of ownership and maintenance costs will be lower, with the onus on the partner to maintain the integration.

It’s not a one-size-fits-all approach. What’s great about the ecosystem is that it allows lenders to choose the partnerships they want for the types of customers and product needs they serve. This way, lenders can truly build differentiation from their competitors with an ecosystem specific to their exact requirements.

To achieve this, it’s important to prioritise an origination solution that’s cloud-based and API-driven, and that allows for seamless integration to the ecosystem. Prebuilt integrations can provide quicker access to solutions, reducing the need to build from scratch.

Next steps

So, how can mortgage lenders embrace these new technologies in a cost-effective and risk-free way? It starts with creating a comprehensive technology strategy that aligns with wider business goals. An agile approach is recommended, with changes made incrementally rather than attempting a full overhaul.

Overcoming internal barriers to change is another key step. Current vendor assessment and RFP procedures can often serve as significant barriers, which begs the question if procurement transformation may be key to unlocking true mortgage transformation; alleviating the headache that might come with exploring new vendors.

Ultimately, partnership and collaboration are vital to successful transformation. Even the most sophisticated digital platforms and technologies cannot guarantee success in isolation. While it’s easy to select multiple vendors and piece together an ecosystem, an experienced partner will provide guidance on the holistic customer journey.

Experience teams can design a journey that can visually present third-party data, making sure it’s woven seamlessly into the user experience. It’s more than just an integration and a data model — it’s a presentation and interpretation of data in a clear and understandable format through the entire journey.

The challenges facing the UK mortgage market are complex, but with the right approach, the right partners, and the use of emerging technologies, lenders can navigate these changes, pivot as needed, and continue to provide excellent service to their customers.

Thomas Chaplin is head of mortgage, EMEA at nCino