“The following piece about Eligible appeared in Mortgage Solutions on 5th January 2018. Click here to view the original article.”
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.”