Sept 17 – Challenging Times
In this first AMI Mortgage Strategy column, I want to look at the key issues facing the modern broker in the post financial crisis but pre-Brexit world. Our market still faces huge uncertainty given the prolonged period of low interest rates which means that almost half of mortgage borrowers have never encountered a rate increase. We still have a fragile housing market subject to government stimulus intervention via Help to Buy, at the same time as taxation changes designed to control what some see as exuberance in the second property and Buy-to-Let market. The Financial Policy Committee are still working to control property prices and limit lender risk of loss exposure. The changes to landlord taxation have yet to bite and changes to the counter cyclical buffer for lenders has still to impact their capital positions. There has probably never been a time when consumers need more information, help and advice in order to achieve a positive outcome from their property transaction and funding. However this is also an environment where many consumers want to engage via technology, but the majority still express a desire for the advice element to be delivered face to face, or at least by a person they can speak to.
Firms now need to ensure that they have begun to embrace technology to keep from being isolated from the demand for advice by delivering a good mortgage with the correct levels of protection attached to it. However recent research evidence indicates that the starting point of a website combined with LinkedIn, Facebook and a Twitter presence seems a step too far for many firms. Nowadays most savvy consumers expect to be able to find the firm that are considering doing business with online. Indeed many will see an online fact find, application and document upload capacity as the bare minimum that is consistent with their delivery experience in other markets. With the delivery approach of Rightmove and Zoopla, the Land Registry moving to online title transfer and the case tracking visibility of many conveyancing firms, a new level of expectation is being set in our linked markets, never mind others.
Our lender partners are investing huge amounts in their ability to interact with their (our) customers quickly, efficiently and at times when they want to trade. It has long been the broker’s edge that we will work the hours for the business, but that may soon not be our USP. It will not be enough to expect lenders to “play fair” and the impetus to write earlier and earlier to their customers to offer retention products is in their direct commercial interest. All brokers can fairly ask for is access to the same products, at the same time, at the same rates and be paid a fair amount for the work done and the duty of care for the advice provided.
The investment in new technology that simplifies the processes and transactions reduces the unit cost for lenders and should speed the process for all involved. The plea for our sector must be to not stand in the way of progress but ensure we are at its heart. Lenders must build their new technology propositions with the broker option present from day one. For our part firms must look at how they work with technology to ensure great customer outcomes.
We will soon see more systems coming to market which will help brokers match customer profiles and needs with products – criteria based matching systems which can then be used with more traditional sourcing systems to ensure the best price. The advent of open banking standards will give consumers more control over their data and the ability to shop around more easily. Having software that interfaces into this space will be crucial.
The battle between app-based approaches which may work for initial enquiries and early data gathering, must switch seamlessly to the more traditional web-based portals for more complex and secure application and offer elements. I am sure that advice will remain a human thing, with the delivery of full algorithms that are truly advice being at the margins with significant risks. True robo-advice is a long way off.
What is certain is that the firms, networks and lenders who get this right will have the most sustainable businesses in the future. Those who chose to ignore or avoid the advent of technology in its widest form will struggle as consumer habits change.
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