The use of technology among mortgage advisers and the need to use customer data effectively to provide other financial services products for increased retained income has never been so great. However, the industry needs to gear up to the fact that technology never stands still and will continue to change in response to external pressures.
These pressures include competition from aggressive pricing and the emergence of bundling products, the changing face of regulation, and stakeholder expectations.
Some of these pressures have come about as a direct result of the refinance boom which is pushing the use of automated decision systems to new limits. This growth is expected to lead to consolidation both technically and operationally.
This movement towards unified web services architecture will provide more sustainable (cheaper) software and will allow end-user companies to achieve the software and infrastructure payback they require. This lays the foundation for creating a service oriented architecture providing for regulation control evidence, including pre-population of documents, record retrieving, and future prompting of sales opportunities.
As a result we will see a change in terminology and advisers will become familiar with e-sign legislation which will include:
• Paperless- all documents in electronic form and electronically signed.
• Hybrid – some documents signed electronically and some traditionally.
• Paper e-mortgage – originated electronically and traditionally signed.
Lenders are predicting a steady migration of mortgage financing transactions to the internet, and consumers and intermediaries are expected to apply online in increasing numbers for a number of reasons, including convenience, faster response times and streamlined processes.
Therefore, in the future the UK industry will see a change from reactive service through to collaboration service leading to pre-emptive services. Reactive services include search engines, FAQ’s, and online mortgage servicing. Collaborative services include co-browsing (where a third party can assist a consumer completing web transactions as the third party actually has access to the consumer’s computer remotely), instant messaging, and online chat. The move to pre-emptive service with personalisation, face-to-face interaction on line – virtual financial services, email alerts, status alerts and web intelligence has started so we can say the UK has reached certain parts of each service development stage.
The creation of an end-to-end transaction platform will satisfy refinance and purchase needs and create a true digital relationship. The benefits of creating the end-to-end transaction online go far beyond simplified loan processes. They include the building of deeper, long-term relationships that create more value for lender, intermediary and borrower.
Collaboration is now bringing together functions in the industry such as software suppliers, compliance services, and other service providers. With heightened regulation developments set for October 2004, the creation of compliant service companies to help supervise and advise intermediaries will prove a necessity. And companies such as 1st Software are already developing functionality for advisers that update value of assets, look at customer risk profiling and pre-populate automated financial reports for clients – all at the touch of a button.
So where will all this technical development lead? One key development is expected to be the creation of a ‘virtual bank’ and ‘virtual advisers’ offering a range of financial services products online with quick end-to-end processes. This will be in addition to current models of face-to-face and telephone sales.
However, the need for intermediaries to be able to sell across-the-board products through a range of providers is here now. Organisations such as Abbey are already offering a one stop shop for their products and more recently Scottish Life Mortgages has diversified its offering from just mortgage club and packaging to intermediaries to cover products such as personal loans, general insurance and credit cards. All this is designed to increase sales, the income of intermediaries, and greater customer loyalty.
Integration of products and services into ‘superhubs’ are just around the corner. Product providers will need to review strategies carefully to cater for distribution models. Demand for better end-to-end processing speed and accuracy will continue to grow.
The days of a consumer wanting to see an adviser on their computer with interaction available 24/7 are not that far away. The next generation consumer will have demands and expectations that fit in with the youth of today, playing games and completing school projects at the touch of a button. Remember the days when a passbook meant the world to some bank customers for recording and getting money? Who would have thought that today the majority of personal financial transactions would be through the ‘hole in the wall’ or online.
The benefits of continual technological improvement include super-sourcing capabilities, and product offering. Seizing the moment and embracing change will lead to successful future business growth in the financial services sector.
The next step will be to develop collaborative, pre-emptive technology.
True end-to-end processing will mean increased customer loyalty and opportunities for cross-selling.
Technology will assist in regulation with the development of compliance services companies.