Intelligent Mortgage Sales : The Future Possible

This blog is in two parts – come back next week for part 2, Buying a home: the future possible.

I’m going to start this blog with a quote from the Science Fiction author, William Gibson who is widely acknowledge to have coined the term Cyberspace back in 1982.

 “The future is already here – it's just not evenly distributed.”

As I read the finance and technology press and look to separate fact from aspiration across a plethora of websites, blogs, commentators and the latest Kickstarter star, I can see a great deal of interesting,  competing and sometimes compelling technologies being developed.

Mobile payments, contactless payments, screen sharing systems, augmented reality apps, digital banking, instant this and instant that.

But in my view these new technologies and concepts often lack a joined up and fully formed end to end proposition.

The digital journey too frequently has a number of blind alleys and dead ends.

So in this blog, I’m going to look at some of these emerging technologies and review what is already in our real world of house buying and where the future connected and evenly distributed future may take us in the mortgage world.

The Digitalisation of Everything

The growth of the Internet can be seen as underpinning and also driving technology in all aspects of our lives.

The “One second table” displayed at http://www.internetlivestats.com/one-second/ shows statistics from the popular internet sites such as Twitter (over 8,000 tweets), Instagram, Skype calls, Emails sent (over 2 million) and so on, but the telling figure for me is Internet Traffic – 30,000 gigabytes per second, up 18% since I first looked in early December  when I started to research this blog.

Mobile and smart technology

The key statement from recent CSS insight research is that consumers see their connected devices as a single platform. And consumers expect a consistent experience across all devices

Back last June, FCA CEO Martin Wheatley gave a speech in which he said “A key debate I think for all of us, … what are the challenges and opportunities presented to firms by technology?”

He stated a key objective is to make sure positive developments those that genuinely promise to improve the lives of consumers or clients - are supported by the regulatory environment.

He noted priority areas might include the likes of mobile banking; P2P (now a £500m business); online investment; money transfer; wearable tech; big data; and next gen data processing - in many of which he said “London is already a leader”.

So regulation per se should not hold back the development of smart technologies in  retail finance.

Wearables and smart assistants

According to an IPSOS survey, nearly 1 in 5 US Adults plan to buy wearable tech this year. Seven in ten (70%) say having a wearable device that seamlessly connects with other devices is important – more of the interconnectedness through digitalisation. Over 400,000 smart watches were sold in the UK last Christmas and this month there has been a two day Wearable Expo with 300 experts ready to explain the next big thing.

Nationwide have been at the forefront of wearables in the UK - Google smartwatch (Android Wear) users can now use the timepiece to check their account balances with the Society, enabling members to speak to their watch to pull up real-time account balances on the go.

Banks such as Barclays, U.S. Bank, Wells Fargo  and Nationwide are investing and developing wearable technology apps and services.

Intelligent Environments launched their Interact Smartwatch App for the Pebble Smartwatch over a year ago.

Canada's Toronto Dominion Bank followed in the footsteps of WestPac NZ last December to deploy the Moven app which is designed to keep users informed of their spending behaviour and  encourage them to make better choices about how they use their money on a day-to-day basis.

Are Channels Dead?

These consumer based technology developments are changing the way financial institutions engage with their clients and other businesses. Channels in particular need to transform themselves.

Commentators like Brett King  have stated “banking is no longer somewhere you go, but something you do”.

Chris Skinner, author of the Digital Bank, notes channels are transforming from physical to digital, from distinct channels to access and from a product focus to a customer focus.

Lastly Dreamforce have predicted that in 2016 – digital interactions will outnumber branch interactions 300 to 1.

The “channel” of tomorrow which is needed today, must evolve to a true Omni-channel offering.

The Omni channel future

This connected and often first time buyer generation typically research and buy online whilst listening to social media feedback on the companies they look to deal with.

Execution only could therefore hold considerable appeal, as it will be better aligned with their usual buying behaviour.

The trick will be to engage the consumer – in particular, the first time buyer generation - using technology to deliver a similar slick buying experience.

There will be opportunities for lenders with a compliant, smart and joined up on-line offering and who can deliver a quality and efficient service as funding  eases and if the market grows as predicted.

It’s no longer enough to simply cater for iPad users; today a best practice proposition needs to be device agnostic and tailored appropriately to the context and the consumer.

The circle has be fully rounded, enabling on-line research via mobiles, tablets and the web, seamlessly transferring without data loss to an advisor if required and providing transparent Omni-channel  access to the originations process through offer to completion and finally the welcome letter/email/SMS.

Although currently a minor channel for most lenders, commentators predict the consumer channel will become more than a low cost self-service option and turn into a key channel to market.

In the mortgage world, the cost of acquisition inevitably rises as regulation changes and becomes more onerous. Likewise delivering a superior customer service can raise costs further unless processes are streamlined and highly automated.

Time to completion is often outside of a lender’s control, depending on third parties, house purchase chains and the unexpected. However, time to offer, valuation service pressures aside, is very much in the hands of the lender.

Third party added value on-line services and automation of standard processes can make a market-leading difference and provide an efficient and transparent service to the consumer.

Smart systems can orchestrate what were once manual processes into an automated series of processes, only calling out to mortgage origination staff when a case hits a risk or process boundary.

Once reviewed and validated, the satisfactory case should be able to be returned back into the straight through process.

Added value services such as address targeting – validating both the post code and that the applicant is known to live at the address, reduce manual intervention and later re-work.

In a similar fashion, sophisticated rules based credit/risk assessment services can do more than provide the traditional pass, refer or decline decision. They can generate and diarise a list of proof requirements for both applicants and the application and automate the chasing of such requests to lender service level agreements.

Where such automation, workflow and straight through processing have been implemented, alongside mortgage lending best practice, lenders have seen acquisition costs reduced between 35% and 40%, year on year and significantly reduced time to offer.

These are not future technologies, but already here and deployed by a number lenders. In part two next week, Buying a home – the future possible I will look at what that mortgage journey might look like in the coming years.