“The following piece about Eligible appeared in Mortgage Introducer on 25th March 2019. Click here to view the original article.”
Over the past two years, Eligible has conducted in-depth research with clients and advisers to understand how technology can enhance the client relationship.
We realised that in a rush to speed up applications, optimise fact finds and create client portals, the retention of the end client has been neglected. A great example of this: advisers talk to their clients once every two years! As a result, the client has mostly forgotten the things they had learned from their adviser.
The client journey is broken – clients remain scared by jargon and lack understanding when it comes to their mortgage.
The financial services sector has created its own barriers to entry with technical language that alienates the very people we want to help. Many clients are anxious about talking to their broker because they feel out of their depth.
Improving the client experience
Our conclusion is that what the industry needs and clients want is relevance in communication. One size does not fit all and for too long, people have acted in this manner and expected results to improve. We must learn to relay complex concepts in simple, relevant and personalised ways to each individual client. The good news is that technology has become more accessible to enable firms to do this.
Our focus is on bringing the idea of nurturing client relationships to the mortgage industry. This is fundamental to creating a lifetime relationship with your clients where you are advising them for 10, 20 – even 30 years!
In our research, it was clear that improving financial literacy for the end client was important for the health and viability of a long-term client relationship. This can only be done by contacting and engaging the client with information that is relevant to them at that point in their life. Once you can communicate effectively with your client, you are best-positioned to be their trusted adviser for life.
How does technology fit into the client relationship?
It allows advisers to turn their existing customer data into personalised journeys to nurture the client relationship and lead that client back to their adviser when it is time to remortgage. We want to make sure that more phone calls and F2F meetings take place between clients and their advisers. Our experience and studies have shown such interactions lead to happier customers and more revenue, and nothing can replace them in either the eyes of the client or the adviser.
Some food for thought – replace the words “big data” with the words “big understanding.” Data allows you to understand your clients better but only if you learn to act on what it teaches us.
A few years ago, if writing about how the pace of technology had changed the workplace, it may have been necessary to provide examples to serve as a gentle scene-setter.
However, the infiltration of technology into all of our lives has been so aggressive and encompassing that doing so doesn’t seem necessary.
While financial services as a whole appears to be redefined by ‘fintech’ on a daily basis, the mortgage industry has so far remained comparatively static. But why is this the case?
“The lag versus other areas of financial services is likely because of the relatively complex sales process for mortgages and whether they are advised or not.
“In the case of lifetime mortgages, the potential vulnerability of some older customers and the traditional route of face-to-face has meant technology has not been a primary focus,” says OneFamily managing director (growth division) Nici Audhlam-Gardiner.
She also cites heavy regulation.
“While it’s been a decade now, it’s easy to forget what a systemic shock the financial crisis caused – and mortgages were at the heart of this,” says Eligible chief executive Rameez Zafar. “All stakeholders… had to reflect on what caused this and how to allow the market to recover without allowing the mistakes of the past to occur again.
“As a result, innovation was not ‘slow’ per se – but rather was constrained within an industry facing intense scrutiny, changing regulations, and lenders/brokers placing emphasis on financial conduct.”
Audhlam-Gardiner feels we are at a tipping point with tech in the industry.
“I believe further tech development is imminent,” she says.
“Initially the likely focus will be use of data and technology, for example the use of application planning interfaces with banks to collect affordability data from open banking, which can reduce the onus on the customer to provide information, as well as increasing accuracy.”
Zafar also points out that, “while other industries were being disrupted by tech solutions that led from the front-end by improving the customer experience and helping salesforces actually sell – technology in the mortgage industry became further entrenched in the back office.”
Landbay managing director of intermediaries Paul Brett adds that, “there are only a few major system providers in the market which are used by most lenders. This means that technologists with knowledge of mortgages probably don’t have that many companies to move between. This restricts the cross-pollination of knowledge which is the breeding ground of new ideas.”
“However,” he says, “there will be a tipping point, and due to the exponential nature of technological advancement once the tipping point is reached it’s likely we’ll see a lot of changes. The ecosystem of new services and technologies will galvanise itself.”
I need your clothes, your boots, and your mortgage documents
Robo-advice, software that uses algorithms and mathematics to provide financial guidance, has been making inroads in many areas of financial services – particularly wealth management – to the consternation/glee of many (delete as appropriate). At first glance it may seem ideally suited to the mortgage industry, but few people Mortgage Strategy spoke to on the subject agree.
“I personally cannot see a true robo-advice proposition taking off without any human input or influence. It becomes too risky for the company/advisor and regulator. The Mortgage Market Review was mainly focused on advice and that will need to remain,” says White Financial Services managing director Dan White.
Zafar, too, sees robo-advice as something of a dead end: “It’s very important to remember that the home-buying process is one often the largest financial transaction someone will ever do. They want to talk to a real person about this; someone who is an expert and someone they can trust.”
BespokeFinance founder Adam Hosker says: “Unless the regulator brings back execution-only, programmers building a robo-adviser will hit a wall… our clients are not vanilla, neither are there homes or lenders.”
He instead points to what he calls ‘cyborgs’ as a more likely development, a “mortgage adviser whose abilities are extended beyond usual adviser limitations by elements built into the back-office software.”
He paints a picture of this cyborg-advisor not hunting down Sarah Connor, but retrieving notification of a new case with all necessary documents to hand and verified via integration with credit agencies, open banks, and valuation models.
“The system would have sent out the IDD and checked sanctions list, retrieved back an e-signed GDPR Consumer Privacy Notice saved into the client’s file, without adviser interaction… the adviser [is] no longer playing administrator but ready to advise, all facts in hand,” he says.
One Mortgage System managing director Neal Jannels brings up some market research his company conducted, saying that one broker, “recently input a case 11 times from fact find to completion. If that takes 15-20 mins a time, you’re talking about a vast amount of effort for one user to keep reinputting and potentially 11 times that it can go wrong.”
“This is where technology can really make a difference, in terms of supporting brokers and saving them time.
His summary is positive: “Technology will never replace the experience and knowledge of an established broker,” Jannels concludes. “What it should be doing is making the client/broker journey as simple and effective as possible in order for the broker to turn cases around as quickly as possible… [to] replace the manual work allowing for time to be better spent dealing with new clients.”
Eligible, the digital mortgage platform based at Level39, has been recognised as the ‘Personal Finance Innovation of the Year’, in the Moneyfacts awards 2018.
The team beat off competition from Trussle and established names such as Natwest and Yorkshire Building Society, for their innovative solution with intelligent calculation and real-time analytics for users.
Eligible came out of stealth at the end of 2017 helping traditional mortgage advisors and lenders compete with purely digital brokers.
Eligible was founded by Rameez Zafar and Hasan Mustafa, both financial services executives with decades of experience working for the largest UK banks.
Borrowers and advisers find suitable mortgage deals earlier if lenders were more open with their criteria, according to the Financial Conduct Authority (FCA), but critics argue the solution is more complex amid fears the watchdog may issue new rules that restrict the market.
Lenders should be more open with their criteria, but it is not always that simple, according to James Tucker, managing director of sourcing system Twenty7tec.
He said: “As a general principle we completely support the publication of more black and white criteria rules from lenders, as this can often lead to intermediaries and their clients finding the right product quicker and easier – creating better client outcomes.
“However, I would also acknowledge that not all criteria are black and white and indeed there may be strategic reasons why lenders do not wish to publish certain elements of criteria to the market.”
It can be difficult for lenders to draw clear lines on criteria where underwriters take account of the borrower’s overall circumstances.
Jeremy Duncombe, directory of intermediary distribution at Accord said: “While we agree that lenders should make their criteria as clear as possible for customers and brokers, it’s important that customers are not disadvantaged by prescriptive rules which take away the ability for common sense underwriting.
“At Accord we pride ourselves on providing principle-based lending decisions, with underwriters taking into consideration each applicant’s individual circumstances.”
Nicola Firth, chief executive of Knowledge Bank said it is not a matter of lenders being more open but having the means to communicate with advisers.
She told Mortgage Solutions: “We have found that lenders have been happy to be open and transparent and display their full criteria on Knowledge Bank.
“I think the barrier has been that, up until now, there hasn’t been an outlet for lenders to display their criteria in a uniformed and consistent way.
“It has also been very challenging for them to notify all brokers, networks and clubs when their criteria does change and notifying everyone at the same time can be particularly challenging.”
Lenders were typically supportive of criteria being open and accessible to brokers.
Craig Calder, director of intermediaries at Barclays Mortgages, said: “We make our lending policy available to all mortgage brokers via our intermediary hub.
“We have also made our lending policies available on two policy comparison sites – Criteria Hub and Knowledge Bank – available to any broker who chooses to subscribe.”
Charles Morley, director of mortgage distribution at Metro Bank, added: “The more information and help that can be shared early on with both consumers and brokers, the quicker it will be for suitable products to be selected.
“At Metro Bank, we ensure that our criteria is both easily accessible and also straightforward for both consumers and brokers to navigate, with a simple to use affordability calculator on both our consumer and intermediary websites.
“It will be interesting to see whether an opportunity exists to work more closely with sourcing engines and aggregators moving forward, in order to provide a more transparent decision even earlier on in the process.”
Open APIs could be the answer
The solution may lie within the market movement towards open Application Programming Interfaces (API) from lenders, Tucker suggested.
He said: “The advent and continued development of API’s should however enable lenders to provide seamless and fast decisions to intermediaries and their clients without having to reveal the full extent of their criteria, and we are seeing significant investment in this area of technology already.”
Rameez Zafar, co-founder of broker platform Eligible, agreed.
He said: “Many of us in the digital mortgage space are reverse-engineering lender methodologies.
“However if we could integrate with lenders or if the key inputs could be exposed via APIs, digital systems could instantly provide advisers, and in turn consumers, with a more accurate shortlist of products and loan amounts.
“We don’t believe there is a replacement for the experience of the adviser, but we know that digital tools can help streamline the process for advisers, consumers and lenders.”