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Henry Woodcock

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Henry Woodcock - IRESS

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Intelligent Mortgage Sales : The Future Possible part 2

19 March 2015  |  2701 views  |  0

Intelligent Mortgage Sales : The Future Possible part 2

This is the second part of my blog Intelligent Mortgages Sales: The Future Possible.

Buying a home – the future possible

If we put ourselves in the consumer position, this is about buying a home, not purchasing a mortgage. Heart, not head.

How do we improve this experience? What could the connected journey, enabled by technology look like?

Let’s take a hypothetical couple – Simon and Lucy.

They are visiting a good neighbourhood in Northampton - I’ve been told there are many.

They see a house they like the look of and snap a photo.

An Augmented Reality App kicks in and shows details on the area – nearest schools (though Simon is not yet thinking about children), best real ale pubs (not top on Lucy’s agenda), but more importantly what the housing market is like in that area.

Such home buying apps have features that include the ability to:

  • Filter your search and save the properties you like
  • Personalise and organise your search – store notes, photos and videos of properties
  • Get your bearings – create pin markers on a map for key locations, like 'Work’ and 'Family’
  • Find out Buy to Let rental ranges (as an aside, recent research has shown that BTL investments have outperformed all mainstream investments over the past 18 years – between 9.7% and 16.3% depending on whether you had a mortgage or not)
  • Calculate affordability and likely eligibility

These apps are already here – for example, Barclays have the Zoopla property search app embedded in their Homeowner app which also allows the consumer to calculate affordability.

And new more sophisticated apps are being developed in the property and mortgage market space. However, currently many mortgage apps both on mobile devices and the web remind me of the early days of the internet, effectively providing “Brochureware” and simplistic calculators. That’s not to decry what they can offer consumers and brokers, just a realisation that they are generation 1.0 and we have yet to reach generation 2.0.

Finding a mortgage

Now back to our hypothetical couple, we have a target home, so Lucy asks Google (or Siri) to search for a first time buyer mortgage.

A number of aggregators are listed and the process of finding an execution only mortgage starts.

Or, their current account bank may provide a mortgage app as part of their mobile banking – so why would they need the aggregators and brokers?

Of course Lucy could download an app to source mortgage products, which can then recommend a local mortgage broker to discuss their requirements in detail.

But for my example, I am going to fly in the face of the FCA and allow the couple to source and buy the mortgage directly.

‘The Meerkat’ - other animals are available – and similar aggregators provide comprehensive mortgage sourcing, including buy to let. But just like the insurance aggregator, the consumer hasn’t access to one site covering the whole of market and Best Buy tables can provide “variable” results.

That aside, Lucy can compare the available deals and on selecting a particular product, the lender may offer the option to continue on their website or download an app to complete the fact find and mortgage application.

Just like the Internet of Everything, in this mortgage scenario a combination of data, connectivity and analysis creates value for the applicant and the lender.

As Lucy fills out the fact find to request a decision in principle, value added services in the background can be orchestrated to:

  • Prove who Lucy and Simon are
  • Confirm their address(es) and that they live there
  • Assess income and expenditure electronically, as long as the relevant data is available
  • Credit check both applicants and not only decide if the lender can lend, but also what proofs such as a P60 or bank statement will be required to support their application
  • Provide scan and attach via the mobile camera directly into the application

At the same time Big Data (one always has to mention Big Data in any talk on technology) and the Internet of Everything are at play to help the lender understand their customer and to infer and analyse in real-time.

Every interaction – checking tracking status, emails, SMS, purchase of insurance and the like are closely monitored.

This enables lenders to see what works and what doesn’t work, what channels and interactions the consumer uses, which in turn informs individual and enterprise engagement strategies i.e. where should the lender invest.

Smart originations

Keying in a full mortgage application can be a time consuming process, but agile systems just capture data relevant to the applicant(s) and product specific requirements to satisfy underwriting rules and regulatory compliance.

Property details can be validated by systems to select whether an automated valuation model will suffice or whether a physical mortgage valuation is required. Smart connected systems can request and provide a valuation booking in real-time and post the event into the applicant’s diary.

Direct debit bank details can be validated and on-line payment of product, booking and valuation fees made directly from a mobile app or via a website.

The whole transaction is fully documented and the consumer can download PDF files onto their device of choice or just read on-line in their personal mortgage portal.

For appropriate and validated cases, an instant offer can be made.

As the originations process continues, the app or a web portal will provide full transparency of the process with automated updates by in app messages, SMS or secure email.

The lender app now prompts Lucy & Simon to consider buildings and contents insurance – connected to an insurance portal it can provide quotes from dozens of providers. Lucy & Simon can select and pay for a policy on-line with their policy documents available for download or stored in their mortgage portal. The app also offers to store the claims and emergency help numbers and email addresses on their mobiles.

The connected story does not finish at full mortgage application. Smart originations platforms provide automated straight through processing to drive the case to completion and provide complete transparency to the consumer with fully automated real time case tracking, plus alerts for key milestones and chase ups for outstanding requirements.

Task orientated workflow and real time management, mean that exceptions can be dealt with by staff and following resolution of the exception, returned to the automated process.

Typically only validating the certificate of title and the final four eyes on the outgoing payment need direct user involvement.

Even here lenders are starting to offer conveyancers direct access to their origination systems through on-line portals, which allow them to manage their own cases and validate the certificate of title directly.

As the completion date approaches, the lender via the mortgage app, email or even post, provides a moving in checklist, including practicalities around utilities - gas, electric and broadband.

On Completion day, the mortgage app confirms funds release and provides social media links for the applicants to post positive feedback on Facebook, Twitter or whatever is the latest and greatest social network the lender wants to engage with.

The industry is not too far away from the future possible buying a home process.

Orchestrating all the data, processes and services and enabling joined up distribution across devices is very close for a consumer execution only sale.

A computer says “Yes” experience for today’s home buyer.

 

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job title Principal Consultant
location Warwick
member since 2012
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Principal Mortgage Consultant Key activities: Business Development; Pre-sales Support; Market Intelligence; Regulatory & Legislative Insight; Solution Design; Business Consultancy.

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