Alex Broad: How have brokers adapted to e-commerce and what has helped or hindered this process to date?
Sally Laker: A couple of years ago most of our brokers were not thinking about e-commerce at all, but that has definitely changed. Many lenders are now saying up to 30% of our business is online ‘ it may not be completely online from start to finish, but certainly the decision in principle is online. Brokers are forcing themselves to use it, because from a service point of view they can get a quicker answer and a faster decision than if they went through a processing centre. They have to do it to get a more efficient service for their clients.
John Malone: At the end of the day dealing with lenders is straightforward with regards to an agreement in principle (AIP) ‘ it is educating the clients that is the most important issue.
Richard Griffiths: I remember brokers 10 years ago saying they didn’t want daily updates and they wanted a floppy disc in the post every week. I think they’ve taken to e-commerce reluctantly. When we look at instantaneous AIPs, lenders providing tracking information back to the broker, telling them what is happening with the mortgage application, that is when we’ll start to see the curve pick up.
Martin Finegold: I think we have that today ‘ we see thousands of brokers using powerful sales tools to give better advice to their customers. We have progressive lenders with online real-time decision models that give brokers and more importantly their customers ‘ instant answers. It is a powerful package.
Neville Sharman: Abbey National launched its online decision and tracking system back in 2000 and we have seen over £9bn of business go through that system since then and 371,000 tracking enquiries as of yesterday. If you show advisers the benefits ‘ that they can get a mortgage decision they can trust in 10 minutes at the client’s home at 9pm, then they will use it.
Steve Haggerty: That is encouraging, because it is about people changing their working practices. Looking back to when we first launched Fast Fax and sent information out overnight to brokers’ offices, the idea was to cut down our telephone traffic. But brokers liked ringing up first thing in the morning to check how their cases were doing.
Alex Broad: What about progress in business to business e-commerce?
Michael Bolton: The interesting question today is not the merits of the B2B environment, that debate has moved on. Today it is the common trading platform (CTP), which doesn’t exist, versus the lender’s own website. So far lenders have definitely got the march over CTPs.
Rachel Williams: Even though CTPs haven’t taken off, do brokers really want to log onto a different website for every lender they deal with?
Russell Gould: The issue with lenders using their own systems, from a broker’s perspective, is that we have to learn to use 45 different systems, learn 45 different passwords so the CTP concept is definitely the right way forward.
Michael Bolton: We haven’t talked about CP121 yet, but with one-stop lending propositions coming up, HBOS could single-tie to certain distributors. Why would we need any other CTP or website?
Mark Lofthouse: Brokers are very willing to grasp any technology that will make their business more efficient. They will grasp online AIPs more ‘ the early signs are good, but it is a fledgling market. Whether it goes to CTPs or websites only time will tell.
Rachel Williams: How will regulation influence the debate?
Richard Griffiths: Looking ahead for a main driver for change, we have to look at the Financial Services Authority (FSA) and the regulations that will hit the market in two years’ time. That will force virtually all brokers to use technology to be compliant.
Sally Laker: From the average broker’s point of view, you’re right ‘ they consider their sourcing system to be their compliance tool. They are using lenders’ websites, but not to the extent that lenders anticipated. Features such as case tracking have not really taken off ‘ by the time you have logged on, got into it and worked it out, it is easier to pick up the phone.
Mark Lofthouse: Building on that I think we all know e-commerce is the way forward. However, over the last few months I have sat down with numerous introducers and asked them what they would rather have as a priority ‘ accuracy of data, online AIPs or online applications. Every introducer, bar one, said accuracy of data. They see that e-commerce will come, but we still have to increase the awareness and education.
John Malone: Moving on from that, I hear so much noise about regulation and how it will change things, yes it will change things, but many people are using regulation and technology as a commercial reason for recruiting intermediaries. Compliance is simple ‘ it simply keeps a record of the transaction. Technology will do that, but there are many people making it very difficult ‘ I speak to so many brokers on a daily basis and they are frightened, but they don’t need to be. They don’t have to join networks, they don’t have to do anything. As long as there is an approval kitemark, that should be sufficient ‘ a mortgage is a low-risk product.
Michael Bolton: Clearly in 2004, lots of us are thinking of the commercial advantage that can be derived from road blocking business from one route and routing it through another. However simple brokers may want it to be, they may not have that much freedom of choice.
Stuart Glendinning: Although we were glad Abbey National did side with IFonline rather than Mortgage Brain, it is disappointing it is only taking business through IFonline. We keep talking about customer choice, but we know there are thousands of intermediaries that use M2000 who would love to submit business electronically to Abbey and I am sure Abbey would love to receive that business. And what about the intentions of lenders backing Mortgage Brain ‘ is it their desire to put M2000, IFonline and Network Data out of business? All the lenders involved say that is not the case and they do not want to create undue market influence, but at the same time most of those lenders say they are too busy to develop links with us. They want to restrict competition to gain their own commercial advantage.
Mark Lofthouse: I have not seen anything to suggest we are out to put the likes of M2000 out of business. Interesting point ‘ but not true.
Martin Finegold: I don’t think you need to be suspicious ‘ it has become clear that road-blocking brokers is part of the commercial intent. The industry needs to decide whether the solution need to be lender-centric or customer-centric. A customer-centric model is an open platform with open technology that is available to all brokers and this is the business model we support.
Michael Bolton: We would look to roadblock in terms of consumer protection, by ensuring that those streams of business that come to us are compliant. Whether or not there is a commercial interest at play is a separate point.
Steve Haggerty: The whole concept of road-blocking or stopping paper-based applications is anathema. This is about customer choice, getting products to market and service ‘ I think few lenders will have the luxury to say ‘we only want business from this source and not from others.’
Neville Sharman: We accept sourced business from Mortgage Brain, M2000 and Network Data. We are not stopping that, we are simply not building in expensive electronic, integrated links.
Alex Broad: Do CTPs have a future?
Michael Bolton: I think CTPs have had their day. I am a big fan of electronic trading and one day I would like BM to turn off the tap to paper application ‘ unless they rapidly deliver what brokers want. The onus is on CTPs to demonstrate they can deliver.
Stuart Glendinning: CTPs have not even begun to have their day yet ‘ I see them as having a bright future. However, it is not clear what a CTP will be: will it be something that integrates with a broker’s website, or will it have a separate function?
Russell Gould: And it is not just about AIPs, it is about submitting a full application and the future will be that you can get an instant offer back. This will link into valuers and solicitors and the whole process will speed up.
Steve Haggerty: If CP98 hadn’t been delayed, we would have seen a lot more development by now. John was right to clear the mystique that surrounds compliance, but audit trails that can be provided by CTPs will be vital and this is where they will win.
Jonathon Whiteley: If we say that brokers principally use CTPs as a compliance tool, what sort of rule should the regulator have?
John Malone: Once we know what the regulation is, systems will have a major role to play. But moving on from there I can see lenders putting pressure on the FSA, so that CTPs get some sort of kitemarking, to ensure the systems provide the right sort of documentation to allow the introducer to be compliant.
Sally Laker: The broker will dictate what system they don’t use. Brokers haven’t got the time to change or re-learn systems and risk looking stupid in front of clients and this needs to be taken into account. They will have to have a choice.
Richard Griffiths: I am not sure if people take the MCCB seriously now, so it will come down to the FSA. I don’t think they will be helpful or proactive in talking to sourcing systems, and even the MCCB won’t recommend a sourcing system.
John Malone: I think there is a different attitude at the FSA, they are becoming more consumer-focused ‘ the consumer being the intermediary ‘ with the new high street division they have to be more pragmatic and Sarah Wilson of the FSA says that.
Stuart Glendinning: I think the FSA should have no role in systems such as ours, we will have to offer a compliant system, otherwise brokers won’t use it. They don’t have the right to vet our system and kite-mark it.
Alex Broad: Could you give me your thoughts on how you expect the technology landscape in the mortgage industry to be in five years?
Richard Griffiths: How many people will still be around this table? For a lot of people it is a big question mark. We have all got our different opinions.
Russell Gould: Compliance and accuracy of data is important. The test of time will be on the flexibility of systems for what brokers’ needs are.
Stuart Glendinning: I think the majority of business will be completed electronically. It will be evolutionary. I hope lenders are responsible and respond to customers’ requirements.
Rachel Williams is editor
at the power hour table
Michael Bolton head of mortgages, Birmingham Midshires
Alex Broad editor-in-chief, Mortgage Solutions
Martin Finegold group chief executive, IFonline
Russell Gould product development director, Charcol and Charcolonline
Stuart Glendinning director of mortgage channel, Mortgage 2000
Richard Griffiths managing director, Network Data
Steve Haggerty managing director, Home Loan Management
Sally Laker managing director, Mortgage Intelligence
Mark Lofthouse chief executive, MBL
John Malone national mortgage manager, Premier Mortgage Services Scottish Amicable
Neville Sharman head of intermediary aggregation development, Abbey National
Jonathon Whiteley publisher, Mortgage Solutions
Rachel Williams editor, Mortgage Solutions