A report from the Council of Mortgage Lenders, which is one of six trade bodies to merge into UK Finance at the end of this week, suggests the pace of technology or regulatory change is also outpacing mortgage lenders’ ability to deliver it, which is cited as another roadblock to wholesale change for some.
‘Innovation is therefore easiest within a stable regulatory environment,’ concluded the report, Digital Change and Mortgage Borrowers.
Digital change is radically altering consumer expectations in the mortgage market and “raising the bar for what borrowers expect from their home buying and owning experience,” according to the research.
The FCA has set up Project Innovate and a sandbox, both of which are central to the development of innovation policy and RegTech and the Bank of England also has a FinTech Accelerator programme that works with firms to understand how new technologies can be applied to central banking.
The report had several recommendations to offer the industry:
Tailor digital change to achieve individual business strategies
View digital as an enabler, not an end in itself. Base business strategies on customer segments and the interpretation of regulations.
Consider the application of digital changes beyond the mortgage transaction itself.
Ensure the customer is central to your thinking
Continue to improve customer experiences and offer customers a mix of digital and human interactions. Keep abreast of changes beyond the mortgage industry and understand how they may impact customer expectations within it.
Overcome legacy challenges to change your technology at pace, and adapt your organisation quickly
Recognise how legacy technologies, thinking and cultures may be holding your organisation back. Become an agile business to deliver future changes at pace.
Use digital to improve operational efficiency
Continue to improve operations. Use new technologies to free colleagues to add greater value to the customer or to the business.
Keep regulator and risk appetites in mind.
Collaborate to keep pace
Understand what your company is good at and seek opportunities to work with third parties who can complement or enhance your existing capabilities or add new ones. Form a working group to bring together
trade associations, regulators and governing bodies to discuss and overcome industry challenges.
CML director general Paul Smee said: “This report highlights the enormous potential of technology in the mortgage market – a huge, process-driven industry with more than 11 million customers. It is already enhancing what lenders are able to offer their customers, as well as improving the efficiency of work behind the scenes. The pace of change will not slow, and firms will need to ensure that their plans for developing technology are underpinned by the clearest possible understanding of all the implications of digital change.”