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The next big thing

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  • 21/06/2010
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Kay McLellan rounds up the latest technological developments in the broker market and asks, are they increasing broker earning power?

There is no doubting the hold that technology has over us in the modern age and the giant strides that it has made in the last 50 years. Try to imagine a life without the internet, mobile phones, smart phones, email, Google, and it becomes apparent just how much technology has infiltrated our lives to the extent that it is almost impossible to live without, no matter how much of a technophobe you are.

Hardly a day goes by without some sort of technological advance being announced. The craze for iPhone applications has come to mortgages, with TrigoldCrystal, Legal & General and specialist broker Largemortgageloans.com all launching apps for the platform within the space of a week.

In addition, sourcing systems continue to evolve, with Mortgage Brain the latest to launch a revamped system, and lenders aiming to automate the lending process and improve their websites evermore, though perhaps not as quickly as some in the industry would like.
Yet, just how much does all this technology actually help mortgage brokers do business day-to-day? Or are some of the advances merely superficial bells and whistles, and a distraction from good old-fashioned client and market knowledge?

Certainly David Sheppard, managing director of mortgage adviser Perception Finance, believes that while technology can aid efficiency, the key tool remains market experience. He says: “The key is to understand the client’s needs. Technology can never better industry expertise.

Sourcing engines are valuable tools and extremely important, but more as a way to establish who is in the market and what other products are available. The most important tools I use are my brain and ears.

“However, technology helps the industry and helps brokers make money, without question. It is vital because those tools quantify and clarify what we say verbally to the client.”

Mark Lofthouse, chief executive of Mortgage Brain, says: “Thanks to the technological developments of point-of-sale and CRM systems, compliance within an increasingly strict FSA regime has never been easier.”

Other advances, from online submissions to automated valuation models, have significantly brought down the offer time from lenders after the initial discussion with a broker.

Jonathan Cornell, communications director of First Action Finance, says that in some cases, offer times have taken as little as five days. However, he adds that this is often where the house buying process grinds to a halt, and the inefficiencies in the system become starkly apparent.

He says: “A lot of solicitors analyse every­thing to make it a lean, efficient process, while at the other extreme they are still ‘old school’. Home Information Packs (HIPs) were meant to make things better, but they just didn’t work.”

Loss of control

As much as brokers can improve their own business practices to become more efficient, inevitably many of the key issues are out of their control.

Paul Hunt, managing director of Phoebus Software, says one of the biggest problems for brokers is the fact that lenders all ask for different information on application forms.

Origo Standards are another example of a widely-promoted idea which simply failed to live up to the hype. Hunt says: “Origo was meant to allow brokers to key in data once and offer access to multiple lenders. If Origo had worked, then brokers would have got more information up-front, but everyone does things differently.

“It is not difficult to automate the information; the hardest part is agreeing the criteria needed up-front.”

Lending staff continue to key in information once the application has been accepted, says Hunt, which only makes errors more likely.

Lender effort

Standardisation in any true sense across the industry is clearly a long way off, but mortgage lenders continue to improve their systems. Halifax has been quietly trialling an online broker application system, set to launch in the next four to six weeks. Cornell says he thinks the system is “incredibly clever”, but Halifax was unwilling to comment further until it starts its teaser campaign in a week’s time.

Co-operative Bank subsidiary Platform says its investment in technology helps it to work and communicate better with brokers. The lender launched its Clicktrack system last year, which allows intermediaries to monitor an application’s progress. It has also improved its administration process through a workflow management system pushing applications through each stage.

Lee Gladwell, Platform’s business development director, says: “There is no doubt that new technology is helping to make the mortgage industry more streamlined, so it is essential that lenders and brokers embrace it. It is making mortgage applications significantly more efficient and transparent, meaning brokers can deliver a smoother service to clients and keep them better informed throughout.”

Cornell points out that the process can only ever move at a steady pace. He says: “In this environment where compliance and risk win every battle, it is difficult to make things quicker. Lenders will also do things in their own time, quite simply, because they can.” He adds that some lenders are clear winners over others.

“The lenders that have browser-based online systems, which can be accessed anywhere in the world, have a big advantage and I believe the industry will increasingly move in this direction.”
Sheppard feels that the mortgage industry is moving along, but it continues to lag behind other markets. Nevertheless, he adds that the mortgage process would be considerably more difficult without the developments already seen.

As David Aylmer, business development and marketing director for TrigoldCrystal, says, the influence of technology on everyday life is helping to drive forward changes in business: “The last few years have brought about things such as broadband and 3G which has helped move people online. The market has to look at technology to reduce cost and improve efficiency, and that is driving it.”

Mortgage Solutions poll

Yet, when Mortgage Solutions polled readers on whether the technological advances helped them write business more efficiently, the response was distinctly split. Although 45% of brokers said technology helped them a lot, 44% said it had not helped them at all. Just 11% hedged their bets by saying technology had made little difference.

Of course, technology offers opportunity to business, but the constant investment in the next generation of devices is a major drawback. Cornell points out that moving to a more mobile business, with tools like iPhone applications, can lead to other problems such as phones requiring certain levels of capability in order to work and be secure.

Cornell fully believes that technology can make things far more efficient and reduce mistakes. But he says it will always lack the human touch which clients need: “Technology is very good at disseminating information, but people need brokers to translate the information that they are bombarded with. From that point of view, technology helps brokers get business. The research suggests that people want advice and they can’t get that from a machine. I don’t think technology will ever replace that.”

Maybe, as the poll suggests, there will always be those willing to embrace the myriad of technological wizardry on offer, while others will reject it as an obstacle to helping their clients and talking directly to lenders. Either way, there is no doubt that technology will continue to influence the way we live our lives and do our work whether we like it or not. We just have to try and keep up.

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