“The following piece about Eligible appeared in Mortgage Strategy on 8th August 2018. Click here to view the original article.”
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.
The regulator wants more technology and market tools to indicate suitable products earlier in the application process, it was revealed in the FCA’s interim report of its Mortgages Market Study released earlier this month.
More innovation is needed among lenders, brokers and sourcing systems, the financial watchdog added as it looks at ways to encourage market solutions.
No black and white solution
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.”
New platform provider Eligible.Ai promises to arm mortgage brokers with the tools to compete with emerging digital entrants, such as Habito and Trussle.
Fighting Habito and Trussle. Beat the Robo brokers. Eligible co-founder and chief executive officer Hasan Mustafa said the start-up wants to create a level playing field between established brokers and new players.
Consumer need for mortgage advice will stay strong in the future, but intermediaries could start to lose out if they fail to keep up with technological change, according to Mustafa, who has developed Eligible over the past 18 months with co-founder Rameez Zafar.
He told Mortgage Solutions:
“The pendulum has swung towards brokers – that’s why you have seen a lot of new players come in.
“Our view is that a good digital platform needs to be complemented with a high-quality advice proposition – they both need to work seamlessly together.”
Eligible aims to help brokers “go digital” by providing a white-label cloud-based software platform, designed to retain and build relationships with existing clients – and eventually onboard new borrowers.
The platform’s Mortgage Tracker works by taking brokers’ existing client data and providing customers with an individual customer dashboard branded by each broker– profiles are then mapped against lender criteria and products
When a customer is able to potentially save by remortgaging, an email alert is automatically sent out that links back to the individual’s dashboard where mortgage information and affordability can be updated and the broker can be contacted.
The system is to integrate lenders’ mortgage Application Programming Interface (API) as they go live and sourcing tools.
“The traditional brokers have trust, brand awareness and a significant pool of customers who have been very well served in the past.”
But advisers who offer a 30-minute application versus a five-minute auto-fill application will lose out in the long-term, he warned.
The intermediaries set to win are those who spend time giving advice – rather than data inputting.
Eligible is now in a live pilot with a “very-well known” client and set to officially launch into the market with the deal in the coming weeks.
Mustafa hopes that the platform will take away the worry for brokers to keep up with the latest market technology and tools.
He and Zafar have built the offering based upon feedback and conversations with brokers, clubs and networks.
“There’s been a lot of people in the industry who have given us some amazing advice along the journey.
“The product has been developed in very close cooperation with potential clients – both from a product journey, compliance and GDPR point of view.”
Eligible hopes to turn a profit by charging brokers a licensing fee for the software service – and then a revenue charge based on how many new and existing customers are converted.
After raising angel investment last year, the start-up is about to commence its first round of institutional seed investment.
Over the coming year, Eligible will focus on further fund-raising, along with product development and client acquisition.
But for Mustafa the ultimate test of success will be how many customers are converted into completions – and how many more clients Eligible enables brokers to proactively contact.
It’s not just the Habito and Trusle types that brokers need to keep on their radar. Check out our article on mortgage comparison tools and how they’re impacting brokers and consumer buyer behaviour.
The following piece about Eligible appeared in Mortgage Solutions on 15th January 2018. Click here to view the original article.
The mortgage industry is set to change in ways most people can’t even imagine – and data is the driving force, Dr Louise Beaumont (pictured) told Mortgage Solutions’ Women’s Executive Club at its December meet-up.
Lending will be revolutionised in the so-called Open Future, as consumers and businesses take control of the data they generate, and share it with third parties to receive better service and products, according to Beaumont, who is co-chair of the tech UK Open Banking working group.
She warned the mortgage industry could be set for an Amazon or Uber-style moment where a technology-based company uses data and technology to provide a simple service that turns the market on its head.
Beaumont said: “It’s those firms who are unencumbered by the past, who have no stake in what has been made that can absolutely disrupt it.”
Brokers that actively use data and technology solutions – rather than leaving it “rotting in CRM systems and excel spreadsheets” – are among those most likely to survive in the long-term, she added.
The New Year ushers in the beginning of Open Banking on 13 January, where consumers will be able to share current account data with third parties – shortly reading across to savings and mortgage data.
However, not all attendees of the Mortgage Solutions Women Executive Club were convinced.
One executive said: “Do you have absolutely no qualms about sharing your data?”
Another asked: “How much would you really share your data?”
How brokers can leverage data in the Open Banking future
There are basic ways brokers could look to use Open Banking current account data and API systems to provide better service and make business more streamlined, according to Beaumont.
She highlighted “pain points” that intermediaries should look to address and change.
First, that consumers hate keying-in information for mortgage approvals – because it takes time and people today want instant results.
Beaumont said brokers should also be looking at how to retain existing customers and onboard new customers digitally.
She added: “That is one of the determinants which will help decide which intermediaries really survive in the long-term – taking away the personal interaction where it’s not needed and doesn’t add value.
“This is not to say that human advice isn’t relevant – it is, but it needs to be informed human advice.
“Why waste 90 minutes with each customer asking questions when you can generate the information instantly.
“It’s this focus on the advice – not data gathering- reducing the admin.”
Beaumont stressed that brokers typically sit on data from customers – only using it prior to deal expiry with no real contact or relationship building in the interim.
And intermediaries should also be looking at getting data ready for GDPR – the data act coming in May this year targeted to give people greater protection.
Smaller brokers, with limited capacity for IT employees or staffing, should consider how and where software solutions can help their business function, according to Beaumont.
The future is now
There is one company that could be about to deliver the mortgage industry its Uber moment – or at least create significant disruption, according to Beaumont.
Eligible.AI is an early-stage company trying to solve a number of market problems for both lenders and brokers – including those outlined above.
The company is creating a software interface or digital mortgage platform from which both lenders and intermediaries can serve their customers and which borrowers will be able to access.
Beaumont said: “I think they might have something interesting and you might want to keep a weather eye out for them.”
Aside from Eligible, incremental innovation in mortgages is already subtly altering the market and how borrowers interact with both brokers and lenders, according to Beaumont.
In the wider mortgage market there are broad areas where young or fintech companies are coming in with point solutions – although none of these companies appear to have propositions that are hugely disruptive, Beaumont said.
This includes market-based lenders who are using peer to peer models to provide funding; mortgage auction sites; mortgage processing and work-flow software solutions such as lender snap; analytic firms such as credit sesame; and digital mortgage lending and digital mortgage brokers such as Habito and Trussle.
In the not-too-distant future, mortgage-related companies are expected to adopt or already offer key data and technology changes.
Beaumont said: “These are tactical point solutions – expect other people to do them.”
For example, using current account data to pre-fill mortgage applications, as well as an alternative to credit scores.
Borrowers are likely to be helped to budget for mortgage repayments with ‘safe to spend’ calculations on current accounts, for example.
Lenders may also start to give the options of more frequent, fractional payments weekly, for example, rather than a monthly lump sum.
Current account data can also be used to make sure the mortgage fits financial behaviour.
Looking for opportunities
In the future, companies that use data to offer holistic and dynamic solutions are likely to be the biggest winners, according to Beaumont.
She said: “Imagine a future where I have shared data on my current account and insurance.
“And my insurer can see that I have bought tickets to Dubai and I’ve had my diving equipment serviced.
“So I need to be insured for the travel, I need to be insured for the dangerous sport and I also need to have my insurance adjusted for the fact that my car’s going to be in a locked garage, not being driven, and that my home’s going to be empty.”
However, an attendee wasn’t sure that consumers always appreciate being approached with new services.
She said: “It’s a very fine line between looking for opportunities and annoying customers… I go to the Post Office to buy stamps or euros and they ask: ‘have I got travel insurance, have I got a mortgage’. ‘Yes! Just give me the euros!’.”
Beaumont replied: “It is about getting them at the time of need or want. They are pestering you at a point when it’s not appropriate.”
She added: “If people keep thinking they can push out big dumb, products with no personalisation, they’re wrong.”
“The following piece about Eligible appeared in FinExtra on 12th September 2017. Click here to view the original article.”
Today new fintech start-up Eligible comes out of stealth with an offering that helps traditional mortgage advisors and lenders compete with the new influx of digital brokers.
Eligible has been in beta trial for the last three months with its first client and expect to announce new deals soon.
Eligible’s platform acts as a ‘digital enabler’, equipping mortgage advisors and lenders with the right tools to increase conversion and retention by strengthening their relationships with consumers.
Eligible, through its launch product “Mortgage Watch”, is targeting the UK re-mortgage market with a SaaS model, which it monetises through a monthly subscription plus conversion fee. The UK’s mortgage market is worth £225bn annually, 70% of which originates via intermediaries who earn an estimated £1bn in annual procurement fees.
Eligible’s Mortgage Watch, with or without any CRM integration, uses smart algorithms to carefully manage and analyse lenders’ and advisors’ existing client data, and identify when homeowners have the opportunity to re-mortgage. The algorithms analyse whole-of-market lender criteria to match consumers with the right mortgage product and creates real-time alerts. This means Eligible’s clients will never miss any re-mortgage opportunity for their consumers. Eligible’s white-label platform also empowers advisors and lenders to provide an end-to-end digital journey, which enables consumers to complete their applications seamlessly and effortlessly.
Looking to the immediate future, Eligible is in advanced conversations with a few top players in the property and mortgage lending industry. It has big plans for its software, including lender API integration that could allow its intermediary clients to offer instant mortgage approval, meaning the process could be cut down from a matter of weeks to just hours.
Founded by Rameez Zafar and Hasan Mustafa, both financial services executives with decades of experience working for the largest UK banks, Eligible is based at the Level 39 fintech incubator in Canary Wharf. It’s emerging from stealth mode after 12 months in development following a high six-figure angel investment in January 2017.
Rameez Zafar, Co-Founder of Eligible, said: “It’s our mission to make the mortgage process fast and simple for advisors, lenders and homeowners alike. We think the best way to do this is to take a B2B2C approach – enabling the thousands of experienced and trusted traditional advisors to use better digital technology and algorithms in their work. We describe it to our clients as ‘we do the robo, you do the advice’.
“Our clients know they need to digitise rapidly, because it’s what consumers are demanding as new digital brokers like Trussle and Habito have emerged in the past year or two. These startups will need to spend large sums of money to attract homeowners and overcome people’s trust barriers. Buying a mortgage is a major life decision and consumers, at some point, like talking to a human being about it. Our model helps digitise and shortens that process, making it faster and more efficient, and empowering the traditional advisors and lenders to stay ahead of the game.”
With the accessibility advantages of a cloud-based platform and the robust security features of an online banking system, Eligible keeps all data and information incredibly secure.