As the Covid-19 crisis continues to take hold in the UK, its impact on businesses is becoming more severe. Thousands of workers have been furloughed or made redundant, while bankruptcies and business closures have cost billions in revenue.
As with many other industries, Covid-19 has posed a significant challenge to the UK mortgage sector, and lenders and brokers have worked tirelessly to keep on top of an ever-changing market and evolving customer demands.
However, whilst the pandemic has brought unprecedented disruption to the market, it has also accelerated the need for new technology – and it’s been encouraging to see key players embracing the digital platforms on offer to help them during the crisis.
The mortgage market has historically been slower to adopt tech-based solutions than other industries, but Covid-19 has prompted lenders to implement much-needed innovation in order to improve their internal processes and, ultimately, future-proof their business models.
To this end, practical digital solutions have come to the fore over this period, not only aiding the seamless transition to home working for lenders, but also helping them to process cases efficiently amid the uncertainty.
Specialist lenders embrace the ‘push for digital’
For the specialist lending market in particular, technology has made it possible to manage the unprecedented increase in demand from borrowers affected by the current challenging economic conditions.
By implementing tech-based solutions, specialist lenders have been better able to adapt to the ‘new normal’ and support intermediaries and end customers while working remotely.
We have even seen a number of specialist lenders turn to artificial intelligence (AI) technology to help them keep in contact with customers during the pandemic.
Many specialist lenders have introduced automated customer service ‘chatbots’ enabled by AI to take on elements of customer liaison, reducing pressure on capacity and ensuring a smoother journey for borrowers.
Technological innovation has also enabled critical elements of the mortgage application process to proceed despite the disruption caused by Covid-19.
Traditional surveyor valuations have in some cases been replaced by Automated Valuation Models (AVMs) or Desktop Valuations to allow specialist lenders to process applications efficiently within the constraints of the market environment.
Working closely with funders has been key here, with some lenders in the specialist market gaining support from their funders and wider valuation market to put alternative solutions in place so they can meet demand for new business.
Looking ahead to the longer-term
Given the tremendous benefits that technology has delivered for the specialist lending market over the course of the pandemic, embracing digital-led platforms should be the long-term focus for lenders in this area.
Indeed, the introduction of tools such as AVMs and chatbots during the crisis has paved the way for future innovation in the specialist arena, and lenders will be at the helm of this development.
For example, there may be an opportunity for specialist lenders to work with technology providers to further drive the development of open banking in this space, as a way of improving financial inclusion for underserved customers.
Going forwards, and particularly as the number of customers who fall into the ‘non-vanilla’ bracket is expected to rise following the crisis, technology will be an essential resource for specialist lenders, enabling them to capitalise on the increased opportunities available.
Specialist lenders should continue investing in this technology and consider the various ways it could help their business in the long term – all the while ensuring that the momentum our industry has gained during this period is not lost.
Steve Seal is managing director of Bluestone Mortgages
