How far will mortgage automation go?
Written by David Ewing, Managing Director at Ingard
Long since talked about and now it’s hitting our marketplace. Lenders are finally using technology to its full advantage, carrying out instant checks on client’s income and expenditure.
By working with HMRC along with the banks and building societies, some lenders are now able to carry out the required checks electronically at the point of application, meaning clients will not need to demonstrate affordability through the provision of payslips and bank statements.
No, this is not fast track, nor is it the return of the self-certification mortgage. By accessing client’s income details and bank statements along with current credit file checks, lenders are able to accurately verify information provided on the application form.
This is, without doubt, a double-edged sword. On the one side lenders will be able to provide a faster, smoother and more seamless consumer journey, but what does this mean for the broker?
No further needs to obtain proof of income and expenditure is not the correct answer. In fact, a lenders ability to verify this information directly from the source, means brokers are, if anything, at an increased risk of being penalised for providing information that is subsequently found to be inaccurate or fraudulent.
The need for brokers to up their game has never been greater, not only to ensure they provide lenders with correct and accurate information at the point of application but also, as with the lenders, improving the customer journey as technology continues to stride forward.
Robo-advice, regardless of the varying positive and negative views across the industry is here to stay and whilst I personally feel we are a few years away from truly automated mortgage applications, the current hybrids mixing the latest technology with experienced advisers are able to provide a seemingly smooth experience for the client.
Less broker input in the ‘robo world’ will undoubtedly increase competition in the industry as these firms will be able to make their fees more competitive and possibly remove them all together which whilst this can only be a good thing for the consumer, it does create more of a challenge for the average broker.
Robo-advice, however, should not be seen as the brokers’ death knoll. Yes, we may see simple straightforward mortgages transacted with minimal if any human intervention, but for every one of these mortgages there are 3 or 4 where income is tight, a recent credit card payment was missed or any one of a plethora of reasons mean a case cannot be completely automated. These people still require the services of a real broker.
The current insurance market provides us with a good indicator of where our market may go. Today customers can go to a number of consumer websites and obtain life insurance, home insurance and unemployment insurance through a totally automated system. Despite this clients still prefer to deal with a broker who inspires confidence that the product is genuinely suited to their specific individual circumstances.
What will the future hold in the longer term? Sophisticated customer profiling, formed from data from customers’ income, spending habits and needs, teamed with real-life advisers aiding the sales process appears to be part of the next wave of developments. For now, however, do not underestimate the value a client places in, and is prepared to pay for, an experienced and qualified broker.