“It’ s not all about efficiencies – the customer needs to be at the heart of everything you do, and so really understanding what the benefits are to the customers and brokers [is vital]”

Jonathan Evans, Skipton Building Society

“It’s really important that integration start in the core database of the broker firm or the lender firm ... that’s where you get the maximum benefits and, obviously, reduce massive risks”

Neil Wyatt, Mortgage Brain Group

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How will technology revolutionise mortgages?

Advancements in technology could radically change the way the industry operates, as the latest Mortgage Introducer Executive Insights discussion hears. Simon Meadows reports

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JONATHAN EVANS

SKIPTON BUILDING SOCIETY

NEIL WYATT

Mortgage Brain

Industry experts

TECHNOLOGICAL ADVANCES are transforming every aspect of our lives, it seems, and the mortgage industry is no exception. The development of technology is proving a game-changer for the sector, helping to deliver new solutions and, where possible, better outcomes for consumers, brokers, and lenders alike. To gain an insight into just how significant these new innovations are proving in a long-established industry, Mortgage Introducer brought together two key experts to share their unique perspectives, based on their collective experience of the mortgage world. Jonathan Evans is national account lead at Skipton Building Society, a mutual lender for 170 years. Neil Wyatt is sales and marketing director at Mortgage Brain Group, a provider of mortgage-sourcing software and electronic trading and website services for mortgage intermediaries.

Although there was a slight dip in the early months of 2019, the mutual banks’ market share has grown to more than 3% of broker business since the royal commission began. The sector’s growth has corresponded to a drop in loans settled with the major banks, as well as regional banks aligned to the majors. On top of this, an independent report by KPMG has demonstrated that mutual banks, credit unions and building societies managed to grow their residential lending by 7.3% and customer deposits by 8.5% in 2019. The report noted that this was down to their increased investment in both people and technology to meet customers’ needs. Read more about these investments over the following pages.

Our panel initially addressed the thought processes that underpinned the implementation of new technology. “It's really trying to understand what the benefits are to your customer,” explained Evans. “For us, when we're dealing with mortgage brokers, is it adding value to the broker journey? Can they see more customers as a result of the technology that we’re allowing them to use, that improves the customer experience?” He added, “We do a lot of research and evaluating before we implement any technology. So we need to understand what's currently available, what's upcoming, where we should invest the money” Evans said it was important to manage a technological change, to help brokers along the journey so they could see the benefits of it. Skipton was looking at ways it could improve efficiencies and save costs internally, while best serving its customers. “You've got to be able to actually say. ‘I will get a return on that investment,’” agreed Wyatt. “Is there a tangible cost benefit? That could be operational efficiencies; that could be being able to move people into other roles that drive more revenue for businesses.” He continued, “It's hard to be an early adopter if the technology is not tried and tested. I think for any business, understanding the sort of technology partner you are using – what their roadmap is, what their strategy is, what their ownership model is – I think they're all really important factors that people should take a little bit more time to consider.”

banks may have to worry about driving a profit, customer-owned banks work for their customers. Thank you to the representatives of the customer-owned banks who took part in MPA’s roundtable. It is always great to speak to those within these organisations about how they are working with brokers. Thank you also to the brokers who took time out of their day to take part in the discussion. Read more about what they all had to say in the pages ahead.A recent KPMG report showed that customer-owned banks grew their residential lending in the past year. Why do you think they did? The customer-owned banking sector has continued to grow over recent years, particularly as borrowers and brokers look for alternatives to the major and second-tier banks. Released in November, the KPMG Mutuals Industry Review 2019 found that mutual banks, credit unions and building societies had grown their residential lending by 7.3% in the year previously. Taking the lead in answering this first question, Stewart Saunders, head of broker distribution at Heritage Bank, said the royal commission had been a key driver of the increase the mutuals have seen as customers look elsewhere.

Each contributed to a fascinating discussion about technology in the mortgage business today. Opening the conversation, Wyatt shared that Mortgage Brain has been in the market for thirty years. He acknowledged that the pace of change had probably been slower than in other industries, but that technology was evolving within mortgages. “It's important to us, and the technology that we build and develop and share with customers – mortgage providers, mortgage distributors, and people in the advice process – is actually making meaningful differences to their businesses on a day-to-day basis,” Wyatt stated. Skipton has over a million members, Evans shared, and a strategic ambition to help 50,000 first-time buyers into home ownership over the next five years. “From a lending perspective, we process roughly, on average, over 1000 transactions per week in the mortgage operation,” he said. “So having and using technology is a must – but we also don't want to lose our human touch.”

The experts considered the integration between lender and broker systems. Evans explained that Skipton had integrated its affordability and criteria systems with external parties. “Brokers can accurately capture affordability at the same time as comparing other lender affordability models as well, to see what the maximum loan is for the customers, rather than having to individually go to each lender's website,” he said. Wyatt noted, “It's really important that integration start in the core database of the broker firm or the lender firm.

To me, that's where you get the maximum benefits and, obviously, reduce massive risks.” He added, “Simple mistakes when you re-key data can be so costly for the end customer.”

The panel turned its attention to open banking. “I can see a use case for a mortgage lender [seeking] to validate income, and we've seen some recent movement on that with anonymized bank statements now being accepted from open banking providers by some of the largest lenders in the UK,” remarked Wyatt, adding that automated income verification presented an interesting dynamic. “We're probably more likely to see the use of this technology in lenders before we see it coming through into the broker and point-of-sale world.”

The technology developing around APIs – agreements in principle – was next on the agenda. “We have no common standardisation,” reflected Wyatt, who explained that Mortgage Brain was passionate about simplifying a process from which all lenders could benefit, thus allowing brokers to make informed decisions around which systems they used and ensuring that all systems could benefit from the technology available. “From a commercial viewpoint, we are going to do that in a really open and transparent manner,” he asserted. “We have hundreds of brokers in feedback groups, hundreds of brokers piloting things for us. We're really confident that what we're building takes all that pain away from the broker – and, more importantly, allows a lender to have one integration point out to multiple distributors in the UK. There is a significant cost saving there for lenders.” Evans reasoned, “More education needs to happen within this space; the software providers need to step up and actually educate the brokers better and manage the change process better. “Distributors certainly need to get involved with it as well, and other industry stakeholders, to help brokers understand the benefits. I think there's a lot of work to be done on the API side of things, when we’re talking specifically about application processes.” As the conversation drew to a close, what did our panel believe was the future for technology within the mortgage industry? “Collaboration is key, innovation is key,” emphasised Evans. “We are open to developing technology. For the lender, it's not all about efficiencies – the customer needs to be at the heart of everything you do, and so really understanding what the benefits are to the customers and brokers [is vital].” Wyatt believed that over the next 12 months there would be innovation in the lender space. “We will see the adoption of technology,” he concluded. “I genuinely believe we will see more integration and we will see more lenders being able to actually take business from brokered systems straight into their own systems, which will benefit the whole marketplace.”

In 1853, Skipton set out to help people create a better future by providing a good place for people’s savings and helping them own their own homes. More than 170 years later, its purpose remains the same. Based in Skipton, North Yorkshire, its specialities are mortgages, savings, financial advice, legacy planning, and insurance. It has over a million members and is seen as having world-class levels of employee engagement by Best Companies, and was voted the third-best big company to work for. From its people to the environment and communities it serves, it’s aiming to help build a better future.

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With over 25 years of rich industry experience, Neil Wyatt has been with Mortgage Brain for the past three years as sales and marketing director. He proudly leads the customer-facing teams across sales, marketing, and operations. Previously, Wyatt held roles in mortgage lending and distribution channels and was instrumental in the growth of Platform Home loans (Co-operative Bank plc) between 2015 and 2019. During his tenure he transformed its mortgage operations and processing teams, and increased sales growth from £340m to over £5bn, while impressively reducing average processing times by more than 10 days.

Mortgage Brain

NEIL WYATT

A multi-award-winning mortgage industry professional, Jonathan Evans is dedicated to helping advisers effectively navigate the complexities of the UK mortgage market, increasing brand awareness of Skipton Building Society for Intermediaries, and providing innovative solutions to brokers. Evans is passionate about providing education on industry topics and trends, empowering advisers to make informed decisions for their clients. He has a proven track record of driving business development and collaborating with distributors, to achieve successful outcomes. Evans is keen to stay up to date with the latest advancements and regulations to provide insightful guidance on best practices and compliance.

Skipton Building Society

JONATHAN EVANS

IMPLEMENTION

Published 21 Aug 2023

INTEGRATION

Technology could transform the mortgage world

Source: Ice Mortgage Technology

of lenders surveyed believed technology could help improve the mortgage application process

thought it would simplify the entire process

said it would reduce time to close

said it would minimise data entry

Blockchain technology – a digital ledger of transactions distributed across an entire network of computer systems – came under the spotlight in our discussion. Evans pointed out that, ordinarily, a borrower would have to provide identification and address documentation several times. “The use of blockchain technology, implemented properly, can actually result in the customer only having to provide that once – it also speeds up the transactions,” he explained. “It can stop data breaches, it can improve security, and it can prevent fraud as well. “It is the underlying technology that sits behind it that can really move the industry forward, but that for me personally is a long way away.”

VALUATIONS

What, then, did the panel think of automated valuation models (AVMs)? “The use of AVMS among lenders has grown,” Wyatt recognised. “We implemented AVM technology in our core products. We think it is vitally important that the broker or the end customer can see the same data that the lender is seeing – albeit the lender will put their own risk-weighting on those numbers. “Like any technology, though, you need to make sure that you're using the same data sources. “So we've integrated with the UK’s largest provider of AVMs, which is used by the majority of banks and building societies – that data is there for a broker to use, free of charge. It's embedded into their system, and we sense-check that with the lenders.” He elaborated, “I think AVMs will become more widely used. The data will continue to become more robust and more accurate as more properties go through the transactions. Over time, lenders will get more confident with using that data for their own risk modelling.” Evans explained that Skipton did an AVM on every transaction, though it was not used for every lending decision. It enabled the lender to compare it to the report a surveyor was filing. “By having AVMs and having the confidence as a lender to trust them and use them and gather the data to actually understand how accurate they actually are,” he said, “in certain cases, it can mean making a mortgage offer within a couple of hours.” He added, “They're very effective, and our view is we do want to explore it further. Can we do it at higher loans-to-value? Hopefully.”

For over three decades, Mortgage Brain has been at the forefront of mortgage technology in the UK. It prides itself on being the most widely used and preferred provider of point-of-sale, compliance, and sourcing software, electronic trading, and website services for intermediaries. It offers technology-driven sales processes designed to support businesses, from initial client contact to completion and beyond. Its suite of products is completely integrated to provide a total solution that is fast, accurate, and reliable, enabling its clients to operate in confidence that they can achieve the best deals for their clients more quickly and simply than ever before.

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AGREEMENTS

99%

74%

70%

67%

Evans declared that open banking and automatic income verification supported Skipton’s operations. “Sixty per cent of Skipton’s employed customers pass automatic income verification, which means that we don't need to see any bank statements or any pay slips,” he revealed. “That also frees up our underwriters to focus on more complex cases that do need the human touch. From a lender's point of view, yes – [there are] operational efficiencies, cost savings, better customer outcomes, a better customer journey, and it allows us to be a bit more speedy with our response on underwriting."

Wyatt concurred that the industry was still a few years away from the technology becoming mainstream in the marketplace. “There are other ways of using technology in the short term to actually achieve the same results,” he suggested. “If a broker were doing open banking at source, why could that same open banking call not be used by the lender? Now, there are ways that can happen that wouldn't necessarily need blockchain. I think, for me, it's around some commonality and joined-up thinking in the industry, which could help us in the short term.”

How technology could bring mortgages up to speed

Source: UK Finance/Cognizant

89%

Percentage of customers surveyed who believed the loan application

30–45 days

Time, on average, it takes to complete an end-to-end mortgage process on a property

19%

Percentage of the current time that mortgage applications could take if using digitalised processes

4.1 days

Time the end-to-end process could take (33 hours) instead of the current 21.6 business days (173 hours)

2016

Year in which approval numbers for buy-to-let mortgages peaked, at just less than 240,000

as stressful as the home-buying experience or more so

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