Competition law is a barrier to lender collaboration on digital solutions – NatWest Insight Event
A broker said the two issues most advisers are interested in are automatic ID verification and the CRM system interface.
The lender then added that the current ‘race to get API technology out’ looks more like lenders trying to get one up on each other instead of working together to get everyone on board by Christmas.
Speaking on the panel last week at the NatWest local broker insight event in London, Rees said: “Quite rightly, we talk but we are very careful about talking within the boundaries of competition law.
“And it’s really important for competition law to play here because if we take technology and use it to homogenise what all the lenders do here, then we won’t support brokers better.”
He added it was important for lenders to innovate in their own right said they do try to standardise APIs, but added that what lenders do not want to do is to keep writing and re-writing APIs instead of servicing the customer.
NatWest: APIs will bring lenders into the broker process, not force them into ours – exclusive
Leon Rees, a chief technology officer and spokesman for digital strategy at NatWest, said: “We see that using Application Programming Interfaces (APIs) and data science will deliver better sourcing, better full mortgage applications, better decisions in principles (DIPs), better calculators, and most importantly on the data science side, better products.”
He added that APIs and data science will avoid broker integration with lenders’ portals and allow the lender to ‘come into your process.’
Rees explained the high street bank’s broker-focused digital plans at a Local Broker Insight event held at the Bishopsgate Institute in London last week.
Rees said everyone is aware that APIs are a channel but added that a transformational conduit breaks down information into the best journey for the customer and NatWest’s APIs are already in testing phase on a timeline.
He confirmed eight APIs will be in production from the end of the year with the document uploads and process improvement APIs expected out in 2020.
Brokers keen to test them out can ask for them, take a look and ‘start to play with them’ if they choose.
He added: “If you can sit down with the customer and say okay, I’ve got a NatWest API that has shown me your property and mortgage information, I’ve got a NatWest API that has shown me which of your sub-accounts are eligible to switch, I’ve done some sourcing and I’ve pulled that into a journey as well, you can provide a much better experience for the customer,” he added.
As a bank, NatWest is scanning other parts of the market and seeing other channels building these journeys and wants to make sure it can offer this technology and interact with other parts of the ‘mortgage ecosystem.’
The lightbulb comparison
Rees said APIs are like lightbulbs in that there are two formats which never change – screw and bayonet – despite the market evolving substantially.
This way, he said the bank plans to build a raft of APIs with different functions – DIP, scorecard, faster eligibility response and brokers will be able to plug into these and create a better customer journey.
“We’re going to combine this DIP with some other stuff, we’re going to write a companion app for our customers and we’re going to use the NatWest DIP to get that done,” he added.
Rees confirmed the bank is working alongside the sourcing systems Twenty7Tec and Mortgage Brain to deliver these functions to brokers.
Rees explained simplifying the document upload process is next, but the lender is getting ready to offer larger brokers partnership tools for the consumer.
“If you’re a large broker and you want to get really close to your customer and start integrating further up in their home-buying journey, we will give you access to our ability to verify income and expenditure, we will give you access to our ability to validate ID and we will give you access to our valuation engines for property as well.”
The bank continues to develop and test its customer analytics processes, which will eventually dovetail into broker Customer Relationship Management (CRM) systems.
This analysis will be used to assess customer affordability and where customers are at the edge of perceived risk, unearth better ways to assess them, said Rees.
He suggested the bank is keen to move to a data sharing place where brokers can use the APIs and understand how loans and customers perform to better inform the advice process.
Rees summarised that in essence, the bank wanted to remove bad process, optimise broker tools and give advisers back their time so they can deepen and broaden the customer experience.
The top mortgage broker stories this week – 12/07/2019
The incredible mortgage rates and competition over criteria in the buy-to-let sector were the subject of buy-to-let guru and Dynamo CEO Ying Tan’s blog which topped our reader’s hit list this week, followed by another story on the wealth of products targeting landlords right now.
Review this week’s stories again on Mortgage Solutions.
Buy-to-let lenders ‘making hay while the sun shines’ – Ying Tan
Buy-to-let pricing sees ‘unprecedented drop’ in July
Birmingham Midshires compensates customers for mortgage miscalculations
Broker-turned-lender Habito wins plaudits and raises eyebrows on launch – analysis
The judges’ and winners’ comments after the 2019 British Mortgage Awards
‘The biggest threat to brokers right now is the customer’ – Duncombe
Digital broker Habito to start lending mortgages – update
Mortgage advice consultation will mean borrowers get ‘right advice for them’ ‒ UK Finance
Halt needed on buy-to-let tax and regulatory interventions, cautions IMLA
‘This is a six month warning ahead of the senior managers regime’ – Scottish Widows
Open banking is still in the starting blocks – research
Consumers are sceptical about how much impact the initiative will have on their lives, with just two in five thinking open banking will help people throughout the UK and could improve the way they manage their finances.
The term ‘open banking’ is a problem it seems, with just one third of consumers finding it appealing and one in five considering it safe and secure. The industry needs to lead its marketing efforts with a focus on the tangible benefits open banking technology can deliver, rather than detail about the software itself.
By enabling consumers to provide more nuanced information to a financial institution, those with less access to credit could benefit most from new innovations. As a result, the 760,000 people who are under served by the market will be more receptive to open banking once they understand what they would get in return.
For customers across the social spectrum, open banking could help people better track and manage their finances in one place, as well as being able to show lenders the full picture of their financial situation.
However, consumers fear losing control with 73% of more financially literate consumers worried about the danger of wider access to their data. Two thirds of well-financially served consumers were worried they would be judged on their spending habits, or end up with a lower credit rating, with slightly less of the financially under served at 62% also concerned.
However, Clearscore said its research showed a large opportunity exists for those businesses able to use the technology to offer simple and accessible services with a clear, transparent value exchange.
The firm will launch Onescore this year initially to 500,000 users hoping to buy a home and will integrate open banking data to educate them on how they should change and improve their financial position to achieve that.
Consumers currently under served by the market will also be offered the chance to connect their bank account data to their ClearScore accounts. With their explicit permission, this data will be shared with ClearScore’s lending partners to see if the additional bank account data provides the consumer with improved credit options.
ClearScore will also offer a personal finance dashboard to its users to visibly link bank account data to a report section, combining their credit report and bank account data.
Justin Basini, CEO of ClearScore, said: “Open banking has huge potential to give consumers better control over their finances, especially those who have limited access to financial products. But unless the industry does more to explain the tangible benefits to consumers and create real products that make a difference, consumers will be the ones to miss out.”
Clearscore lists Vanquis Bank, Shawbrook Bank and Oakbrook Finance among its partners.
Know Your BDM – Andrew Sadler, Ipswich Building Society
What locations and how many advisers and broker firms do you cover in your role?
With us able to lend anywhere in England or Wales it gives me 58,000 square miles of mortgage lending to go at, and it can feel like I do that many miles each year. Much of my time is in London, Norfolk, and west of the M11. As well as around 170 firms, I also work closely with the club and network mortgage desks.
How do you establish and maintain a good relationship with brokers?
By being approachable and there when needed – I always try to return calls straight away and will always be honest. When you deal in the more quirky cases and niche areas, there’s always a lot to understand on a case so it’s important that the response is accurate.
What personal talent/skill is most valuable in doing your job?
Bouncebackability – you need to be persistent and be able to take the rough with the smooth. Accept the praise, acknowledge and learn from criticism, and always be positive.
What personal talent/skill would you most like to improve on?
Juggling everything that comes my way – it’s a constant job to prioritise everything that flies at you.
What’s the best bit of career-related advice you’ve ever been given?
Go home. No seriously, it’s all too easy to lose sight of the right work/life balance and you need to know when it’s time to switch off. It also works well to sleep on a problem and come back the next day with a fresh approach.
What is the most interesting/memorable property deal you’ve been involved in?
Two spring to mind; firstly, a £1.7m self build case we did last year for a beautiful house that no one else would lend on, and secondly my own first house, a small mews cottage just outside Ipswich which gave me an insight into the whole housing process.
If you were head of the FCA for the day, what would you change about regulation in the mortgage industry?
Interestingly, the FCA have started to review the area I’d choose, which is further support for ‘mortgage prisoners’.
What was your motivation for choosing business development as a career?
I like dealing with people and love that every day is different. An opportunity arose to look at either sales or admin, and I took the sales route. That was 23 years ago, and it’s been the sales arena for me ever since.
If you could do any other job in the property sector, what would it be and why?
I’d love to be a property developer of high end property… who am I kidding, I’d love to live in a high end property that I’d done up myself!
What did you want to be growing up?
A footballer – but that was never going to be, sadly.
If you could have one super power, what would it be?
Speed – I’d love to be able to run faster than a speeding bullet.
And finally, what’s the strangest question you’ve ever been asked?
… ha, not sure I can say! It was probably one at a conference after a couple of drinks – that’s when all the best ones come out.
Conveyancing could benefit from the support of brokers – Hickey
In a Mortgage Solutions’ article by John Phillips, national operations director of Just Mortgages, he concluded there is no point in a 24-hour mortgage when conveyancing takes weeks.
The biggest problem is the huge variability of conveyancing providers. Many buyers still use generalist high street lawyers. As Mr Phillips correctly points out, many of these still prefer snail mail to communicate, and almost none will have a portal for clients to access case progress, which does add many days to the process.
One factor is that, mortgage lending and broking may lag a little behind, but many traditional high street conveyancers have invested even less in technology and innovation.
Specialisation brings consolidation
The good news is that specialist conveyancing is evolving and as a result the industry is consolidating. In the last five years, the number of firms handling fewer than 25 cases a month fell by 10% from 3,662 to 3,278. And, the number handling over 50 cases a month rose by 31%, from 268 to 353.
While ‘big’ is certainly not always ‘best’, it can be a useful guide to the sophistication of the systems and processes that a conveyancer might have. And, as brokers are likely to be engaged by the home buyer before a conveyancing firm is instructed, they can advise clients what to ask and outline the arguments that conveyancers will use to attract the buyer’s business.
One of the key misconceptions that many buyers have, and one that is propagated by local law firms, is that in some way their local knowledge provides extra surety. Many will also argue that they are able to offer a personal touch, which ironically is what too few do.
Local knowledge less important
As most of the information that a conveyancer needs to process a case is now online, which in itself should dramatically speed up the process, the need for local knowledge is almost irrelevant.
The larger firms employ both technology and people to ensure that cases are processed expediently, but the reality being a phone call is much harder to ignore than an email.
The new ‘Transparency Rules’ for conveyancer pricing may also eventually help buyers to make more informed choices on costs, although this currently seems some way off.
Phillips’ conclusion that the buying process is only as quick as the slowest transaction in the chain is true, but if brokers, who do after all advise on circa 70% of mortgages, can help direct their clients towards conveyancing firms who they know do an efficient and timely job, then the whole industry would improve.
13 million Brits also want ‘data-death’ after they die
The Lifesearch study of 2,053 people shows the range of issues that people are failing to prepare for when it comes to dying, largely because they’re uncomfortable discussing the subject itself.
While the emotional well-being and financial security of loved ones are top death concerns, more than one in 10 are worried about the fate of their digital accounts after death but haven’t told the people closest to us what we want them to do.
Fears surround a range of factors including hacking of social media and email accounts and upset loved ones to keeping private data or messages hidden or wanting profiles to be automatically deleted.
Currently, when a person passes away, loved ones face substantial paperwork to deactivate social profiles and mail accounts.
Social media processes
Processes differ between sites and providers, but can include having to provide death certificates, sharing copies of ID, filling in forms and giving extensive information about the deceased – and some will only work with immediate family.
However, two out of five people would like to leave friends or family a digital legacy, where they can access certain assets such as music, photos and subscriptions. This could be an automatic process or even involve a nominated person acting on their behalf with their digital accounts after they die.
LifeSearch has launched its Let’s Start Talking campaign, which encourages the nation to be more open about uncomfortable subjects, including death, illness, money and mental health.
Emma Walker from LifeSearch, said: “With our online presence increasingly a part of every day life, it’s important that we consider what will happen to our social media profiles, email accounts and the thousands of photos, videos and memories that go with them.
“Understandably it’s something that not many of us are keen to discuss, but avoiding essential conversations about our digital life after death could leave our loved ones locked out, unable to take control or at the mercy of hackers should the worst happen.
“Protection all starts with one open, honest conversation so we’re urging the nation to start talking openly and honestly – if awkardly – about these issues that matter most, to not only safeguard their family’s future, but their own too.”
Government confirms cross-sector fiscal crime crackdown plan
Serious and organised crime is estimated to cost the UK at least £37bn each year. One in fifteen members of the public are now believed to be falling victim to fraud, with gang violence and drug trafficking regularly financed this way.
The plan was agreed between chancellor Philip Hammond, home secretary Sajid Javid, and heads of law enforcement, major financial institutions and legal, accountancy and property organisations.
The scheme sets out actions for improved levels of information sharing, resource pooling and technological innovation both in the UK and overseas.
Banking giant investors
Some of the biggest UK lenders including Barclays, HSBC UK, Lloyds Banking Group, Nationwide, RBS and Santander have agreed to invest £6.5m in 2019/20, in addition to the £3.5m committed by the Home Office this year.
In a bid to reform the suspicious activity reporting regime, all parties will work in partnership to create a funding mechanism to allow richer intelligence and improve operational effectiveness.
The report also outlines the broad-brush stroke goals of establishing a new crypto assets regime and the promotion of technological innovation to combat economic crime and outlined the new asset recovery action plan setting out a range of measures designed to claw back the proceeds of crime, including those held abroad.
Chancellor of the Exchequer, Philip Hammond, said: “The UK has one of the toughest systems for combating money laundering, but too many people are still falling victim to fraud.
“This crime fuels everything from drug dealing to modern slavery, fundamentally undermining people’s faith in our financial system and impacting economic growth.”
Chairman of UK Finance, Bob Wigley, said: “This plan provides a vital blueprint for how the public and private sector will work together to crack down on the criminals responsible and make this country the cleanest and most transparent for financial business in the world.”
Director general of the National Economic Crime Centre, (NECC) Graeme Biggar, said: “Having a detailed, up to date joint understanding of the threat helps ensure we focus our response where it will have the biggest impact. Our joint work has highlighted the scale and sophistication of the challenge, the extent to which fraud is now cyber enabled, the key role that corrupt or complicit lawyers and accountants and complex corporate structures can play in money laundering, and the importance of tackling money mules.”
“We will work closely with our partners in law enforcement, as well as with the private sector, civil society and the public, to bring those committing economic crime to justice.”
Alongside the Economic Crime Plan, the Government is publishing a new Asset Recovery Action Plan.
HSBC customers due compensation for unreasonable debt collection charges
The Financial Conduct Authority (FCA) said the bank has extended its redress scheme for customers who may have fallen victim to unnecessarily high fees imposed by HFC Bank and John Lewis Financial Services (JLFS) between 2003 and 2009. Both HFC and JLFS are now part of HSBC Bank.
The move follows a redress scheme set up by HSBC in 2017, to compensate customers who may have been stung by the historical charges. The scheme saw HSBC voluntarily agree to pay about £4m in redress to thousands of customers.
High charges for customers in arrears
Between 2003 and 2009, customers of HFC and JLFS who fell into arrears were referred to the firms’ nominated solicitors. On referral, HFC and JLFS levied a charge to the account representing 16.4 per cent of the balance as a “debt collection charge”.
The flat rate charge was identified as unreasonable by the Office of Fair Trading (OFT) in 2010, as it did not reflect the actual and necessary costs of collecting the debt.
In November 2010, the OFT imposed a formal requirement on HFC to stop adding a collection charge until it had varied or introduced new terms in its agreements with customers. JLFS was not within the scope of the OFT’s review but was carrying out similar practices to HFC.
HSBC told the FCA that HFC and JLFS stopped adding a debt collection charge in November 2009 and in 2010 reversed the charge from all live accounts.
The HSBC review
In April 2019, the FCA announced that HSBC was expanding its review to identify and compensate further customers who either have or may have paid unreasonable debt collection charges. In May 2019 HSBC confirmed to the regulator that about 18,500 customers who had not previously been contacted were written to as part of this process.
HFC and JLFS customers will be compensated where the records indicate they paid unreasonable debt collection charges.
Where the records show that customers paid their outstanding debt but do not determine whether debt collection charges were applied and paid, customers will be written to and invited to share their recollections. Customers will be compensated where their recollections indicate they have paid unreasonable debt collection charges.
Kensington issues £465m securitisation
The deal is the eighth from the lender’s Finsbury Square shelf, which the mortgage provider uses to securitise its owner occupied and buy-to-let loan originations.
The £465m deal saw significant demand from investors, said Kensington, leading to the transaction being upsized from an initial £325m.
All tranches were also oversubscribed after the upsize, said Kensington.
The wider market
After a slow start to the year on the back of Brexit uncertainty, the RMBS market has been very active in recent weeks, with seven transactions publicly placed with investors since the beginning of May, said Kensington.
Despite the increased supply of bonds in the primary market, Kensington’s transaction was able to attract a wide range of investors and achieved excellent pricing terms, it added.
Alex Maddox, capital markets and digital director, said: “The last few weeks have been very busy in the market with a number of lenders who haven’t previously used the securitisation route for funding bringing deals to the market. The continued strong investor demand for Kensington’s transactions is evidence of the market’s recognition of the high-quality collateral we originate.”
In June, the lender launched its Hero Mortgage for public sector workers including police, firefighters, paramedics, nurses and clinicians, the armed forces and teachers.
The home loan offers up to 5 x loan to income and a 55% debt to income ratio.