Fin tech company, Nivo, set up the group which aims to find ways in which technology can help make things easier for consumers and brokers and drive conversion in the second charge arena.

United Trust Bank, Together, Optimum Credit, Paragon, Norton Finance, Shawbrook Bank, Central Trust, Equifinance Step One Finance, 1st Stop Home Loans and Selina Finance are among the lenders involved.

Representatives of the companies took part in an inaugural meeting via Zoom to launch the group and discuss findings of Nivo’s initial market research.

Market recovery

Following the meeting, Nivo revealed there was a consensus the market would take 12 to 18 months to recover to pre-Covid-19 activity level.

However, the acceleration of digital adoption across the industry was highlighted a positive development.

Speed

Attendees agreed there was a need to deal with speed and simplify the customer experience and this was the greatest driver of market growth in an industry where slower deal times increase the risk of drop-outs.

Given the high drop-out rate and effort involved through the course of a loan, conversion rates are highly sensitive to incremental reductions in customer effort and deal time, so digitisation can make a big difference even when only applied at certain points of the customer journey.

Driving growth

Although reducing costs and improving efficiency was an important goal, the majority of lenders were most focused on increasing awareness and driving growth in the market.

Based on pre-C19 volumes, Nivo’s research estimated that driving 10% growth in the sector would be worth an additional £40 million of income to lenders and brokers, so the Steering Committee homed in on how technology can be used to achieve this.

Staying up to date with the latest technology as new solutions and technology evolved was also seen as a significant challenge to the industry and there was discussion around the benefits, and considerations, of consuming Software as a Service (SaaS) to reduce the risk of in house technology development.

Next steps

Group members concluded collaboration was important going forward to improve customer experience and broker productivity, with the outcome of increasing deal speed.

The following three areas were identified as priority focus areas:

• Improving broker <> lender engagement – especially around reducing the effort of the back and forth communication and increasing clarity of what lenders need from brokers

• Land-registry E-signing was acknowledged as a good initiative to pursue for both purposes of cost reduction and reducing deal time

• Income verification – Some believe that raw open banking data may not be immediately helpful and there was constructive debate around the extent to which income verification could be helpful – Nivo plan to shape some concept thinking for further discussion.

Mat Elliott, chief development officer at Nivo, said: “There’s a real opportunity for technology to help drive the recovery in the Second Charge market.

“We are proud of the results that we’ve proven so far by focusing on making things easier for customers and brokers, and we see so much potential to make things better.”

He added: “I’m delighted that most of the biggest players in Second Charge lending have agreed to work together with their peers and competitors to discuss and help develop FinTech solutions to benefit the industry.

“The future of the Second Charge market will be shaped by forward thinking companies and individuals who understand that being better connected is the route to a bigger, more successful industry.”