The mortgage application platform can integrate with existing CRM systems and offers recognisable features such as removing the need to re-key data and real-time updates.
Katie Pender (pictured), managing director at Target Group who designed Mortgage Hub, said it stood out from other platforms because it did not use legacy technology which limited the ability to make improvements.
Pender said Mortgage Hub aimed to “look at the failure points in an application process” and “use technology to provide a greater deal of certainty”.
She said the user experience was prioritised then overlaid with compliance later.
The technology was tested with brokers, clients, underwriters and lenders, and amendments were made depending on feedback.
Pender said: “When we built Mortgage Hub, we actually built it so we could offer point of sale mortgage offers.
“Brokers love the idea, as do their customers. Where we’ve seen resistance is with lenders. A lot of that is based on apprehension about the validation of automated decisioning and, also, some challenges around credit risk.”
Reliance on Open Banking
Pender said during her time in the mortgage profession, one of the main areas where errors in applications were found was when client’s expenditures were being assessed.
She said: “Working in mortgages for the majority of my career, one thing I know is that’s not always accurate. What a lot of lenders do is take the information provided by a broker then use profile data like Office for National Statistics (ONS) information and they find significant discrepancies between what is used in the decisioning and what customers’ actual affordability looks like.
“What we have done is introduced Open Banking at the earliest point of the journey and that can be used to see their actual expenditure rather than what they’re telling the brokers or ONS data which doesn’t give a true insight.”
By using Open Banking, Mortgage Hub can independently validate mortgage applications but as lenders still consider this similar to a human looking at a case, there was resistance around letting the decision take place on the platform.
She said Target Group would not have access to the data in this circumstance, as “it would just be so automated” but said lenders seemed to still want to look at the information themselves. Pender also said lenders preferred bank statements even though technological alternatives were more reliable, adding: “I think it gives them a level of comfort that technology is not giving them”.
She said the official implementation of Open Banking earlier this year could accelerate lender comfort, but noted that the technology was still seen as an enabler rather than digital progression.
Pender said the Financial Conduct Authority had tried to support automation in the mortgage market but they “had not gone far enough to look at regulations which allow technology to work to its full capacity”.
However, lenders are still skeptical about the security of Open Banking.
Target Group is partnered with Direct ID, a credit risk platform which utilises Open Banking, and Pender said the company found there “virtually no instances of fraud in that space”.
“But I think when it comes to mortgages and just due to the level of lending that takes place, we’re still seeing a great deal of apprehension.”
Pender said the platform had the ability to deliver fast, automated decisioning with the use of Open Banking, but application processing speeds would be closer to regular timeframes without it.
Other ‘fallouts’ in the process
Pender said properties could also stall or disrupt the mortgage application process, which Mortgage Hub will address by providing automated valuations as early as possible.
She said this was more likely to be accepted by lenders on remortgage applications over purchases as this would rely on a lender’s risk appetite.
“What it does at that early stage is it gives you certainty over the estimated value of the property, which means it’s giving you more comfort that the property is within the loan to value, which is intrinsically linked with product and criteria,” Pender said.
Ownership of the client
While brokers were on board with the platform for the most part, one point of contention was a feature which allowed Mortgage Hub to directly update a client about their application.
There was so much resistance to the feature that Mortgage Hub decided to permanently remove it.
Pender said: “That was unexpected to a degree. We believed that it would reduce broker workloads, but brokers want to make sure that they are seen by customers.”
How it will work
The Mortgage Hub is a core piece of technology which has additional functions which can be turned off and on, such as allowing for the use of Open Banking and giving individual updates immediately or rounding them up, without having to install additional features or upgrade the software.
It shows a timeline for each application and what needs to be done to help the case progress. It also shows users of how long each part of an application has sat with each party, so it is clear where any delays have been.
Target Group teamed up with behavioural scientists to design the platform who suggested changes such as the colour palette used to improve the cognitive experience.
There is also the capacity to integrate with conveyancers and Target Group is considering the use of blockchain to speed up the transaction process. It will consider sharing Know Your Customer data between brokers and conveyancers to prevent clients from giving the same information to multiple parties.
Additionally, the firm is in talks with a company that offers optical character recognition, which is the ability to convert the image of text into a machine-readable document.
Pender said: “Hopefully in the next quarter, we’re looking to incorporate that into Mortgage Hub. What that means is even with bank statements, it will still do what Open Banking does by looking at the transaction data then providing a summary.
“That will be available for those who still insist on bank statements.”
Mortgage Hub is ready to be used, and the Target Group is looking to partner with a lender to launch it.
