Major technological developments within the mortgage sector have been merely a talking point in the industry for a number of years, but this year the industry appears to have reached a turning point with the launch of two digital mortgage brokers to market.
But at the first mention of robo-advice during the Supper Club debate, a wave of groans and sighs from brokers went around the room.
“I’ve never even heard of it,” one broker said.
As the discussion developed, it was clear that attendees all had a very different understanding of how the model worked.
Many brokers made reference to lenders’ recent drives to improve direct to consumer business through the use of technology, in particular with video calls and self-service platforms available in some branches.
But chairperson Victoria Hartley, explained robo-advice is a completely different animal when the technology is adopted by brokers themselves. She explained that by using tools like chat messaging services and algorithms – intelligent calculations made by computers – the adviser industry had the potential to service more customers and at a quicker pace.
Brokers around the table were sceptical.
“I don’t think it would help us,” one participant said. “Our USP is providing a personal service to customers.”
Robots for remortgages
How about using this type of service at the fact-find stage of a mortgage application? brokers were asked.
Another attendee was more open to the concept: “If it works and someone gives me a program, I’ll buy it. We almost do robo-advice without the screen at the moment anyway.
“For example, if you’ve got a like-for-like remortgage and all you’re looking for is an interest rate and a two-year fix, why do you need me? A machine could almost do that. And I’m quite happy to have that machine in my office.”
Leeds Building Society’s James O’Reilly identified that one of the biggest problems when discussing the notion of robo-advice in the industry was that it was used as a catch all for any evolving mortgage technology.
“Robo-advice is the current term for lots of things. And over time that will become clearer, models will be successful, some will fall by the wayside and we’ll end up in a position where it will probably be called something completely different in five years’ time,” he explained.
But he caveated that with the need for brokers to find a lender that they could partner with: “I think the market needs to have that type of technological ambition, to say we can actually deliver an awful lot more through technology, but it has to work with the people in it.
“That’s always going to be the challenge; how quickly brokers can identify the lenders that can physically deliver using an advanced system.”
It pays to retain
On the theme of lender relationships, the topic shifted to retention fees, or product transfers as they were more commonly known by the brokers around the table.
The recent launch of Virgin Money’s product transfer programme was praised as a major step and a positive example for other lenders to follow. “It’s lucky Virgin have come into the market because they’re a reasonably sized player,” someone noted.
Attendees were generally unsympathetic to reasons quoted by some lenders that infrastructure and technology hindered them from introducing such initiatives.
“I think the case has been made clear to lenders for introducing product transfers. It’s whether they want to do it, isn’t it? They’ll all blame IT. Personally I think that’s a load of rubbish,” was one view.
However, this point was disputed by O’Reilly: “There is always going to be a technological issue. It’s also a big change, a big conceptual change for lenders to get their heads around.
“Lenders have to understand their business and how it will impact it. And that takes probably a bit of time. But I’d be surprised if there’s a lender out there who is just dismissing it.”
Service with ‘clout’
Brokers moved the debate on to discuss the service offered by lenders’ business development managers. Comments tended to be more positive, but there were exceptions.
“To be fair, the majority of them are spot on,” it was noted.
“But it tends to be the ones we do the most business with don’t want to know us.”
Another broker agreed that lenders’ business volumes had a big impact on service levels. “My biggest provider offers the most rubbish BDM support and has done so for the last five years. They don’t care, they don’t have to care.”
One of the best ways for a BDM to maintain a positive relationship with their intermediary distributors, was the ability to challenge underwriter decisions, attendees said.
“Someone who’s got clout,” a broker explained. “I think to some extent, the BDM ought to understand the underwriter’s mind.”
It didn’t matter to attendees where their lender contact was based, rather that they were available for brokers to get in touch when needed and answer any questions they had.
“You need a BDM who can return your calls,” said one.
“I sent an email to a lender the other day asking who we could speak to but they said no-one, our BDMs need to have family time.”
Market knowledge
Relationships are considered to be just as crucial, if not more so, in the new build sector, due to the quick turnaround time on mortgage offers expected by developers, which was described by one participant as “cut-throat”.
One broker explained that the new build sector has flourished in recent years thanks to government initiatives such as Help to Buy, describing it as “a self-perpetuating situation”.
But for brokers, understanding the market inside out is vital to getting business done.
“You can’t just go to any old mortgage broker and say there’s this new development, come and buy this house. If you’re talking about breaking into that market, you’ve got to have a relationship.”
As the debate came to a close, attendees were asked what one piece of advice they would give to a young person looking to start out at as a mortgage adviser.
“Don’t do it!” they responded first stifling giggles, but admitted in reality, few had any regrets about joining a well-paid profession which centres around helping people.
