HSBC on brink of mortgage broker platform launch – UKFI conference
The system, developed in partnership with Capita, will return decisions in principle with live updates on application decisions, instant automated valuation results returned to the broker, which can be overridden for a physical valuation.
Consumers will receive electronic offers and messaging at every stage of the process fed by a workflow system intended to speed up both the underwriting process and drive the case tracking feed.
Greg Went, interim head of secured lending at HSBC, said: “This is not ground breaking at the level of each element, but packaged up, it starts to create a smooth simple process.”
Listened and learning
Matt Lowndes, managing director, London-based mortgage broker Coreco said: “We’re delighted that HSBC finally started to use intermediaries.”
But added that there’s a real pattern that challenger lenders Vida Homeloans, Tesco Bank and Sainsbury’s all share with no legacy systems, strong customer service and with the supermarkets, consumer data sets to feed into their process.
Lowndes said: “If this system is built off same technology as Tesco, I think it’s going to be great.
“These systems feel as if the lenders have listened and they are learning. It’s about making sure all parties in the process are talking to each other.”
Panel moderator and group chair of Mortgage Solutions Victoria Hartley asked whether embedding the broker at the centre of the system automatically creates a good outcome for the consumer.
Lowndes said if post was no longer being used and systems offered full disclosure allowing brokers to pre-empt any kinds of issues such as correctly spelt names, any updates from a system make a huge difference to service delivery.
“If we can get that in Application Programming Interface format on a Coreco portal as well, which the customer can log into, then consumers can also see more clearly the benefit of what we do,” he added.
UK Finance must lobby for smoother mortgage legals – UKFI conference
In its first ever mortgage conference, the new ‘super’ trade body formed of six merged trade bodies including the Council of Mortgage Lenders, was challenged to fight for a more customer-centric conveyancing process alongside its lender membership.
During the innovation session and a question on easing a difficult conveyancing process, Greg Went the interim head of secured lending at HSBC said the homebuying process consultation was an opportunity to ‘hold solicitors to account.’
“Where we can see it, it’s for us to use collective panel management to hold solicitors to account and inform the fact that consumer outcomes are important to us as an industry. It feels as if there is an opportunity because it hasn’t changed in a long time, to call out UK Finance to start to bang the drum for better outcomes,” said Went.
Lender HSBC is working with its legal partners to understand how it can incentivise and reward better customer journeys, said Went.
Another panelist, Matt Lowndes, managing director, Coreco said he had been visited by several conveyancing companies promising case tracking and digitised panel management and added, “that will be upon us soon.”
Tech Talks: Digital advice: ‘Some people will always want a phone call’ – Habito
Watts said if a deal is low loan to value and a remortgage, it is possible to get to key facts illustration or ESIS-stage without a human adviser, but the customer will choose the route they want to take.
For more, click below [04.04]
Watch parts one to four of the Tech Talks series here.
With thanks to our sponsors, mortgage software solutions, Capita
Tesco agrees to extend Capita mortgage servicing contract to 2020
Since the launch of Tesco Bank Mortgages in 2012 Capita has provided a full mortgage outsourcing service from its Glasgow-based office. The service spans, mortgage advice, telephony support, processing, servicing and arrears management.
Initially, this supported Tesco in launching a direct proposition allowing customers to apply via the web or receiving advice through the telephony channel. Last year Capita expanded the relationship further by supporting Tesco Bank launch mortgages into the intermediary market.
The Tesco Mortgage Intermediaries portal is based on Capita software and offers real time application placement, decision-making and tracking, as well as instant scanning and uploading, via a range of devices.
The portal aims to provide ease and convenience to intermediaries, allowing communication through the portal via message board, webchat or telephone. Since launch, 4,000 Brokers have joined the panel.
Benny Higgins, chief executive of Tesco Bank, said: “Since entering the mortgage market we have built our reputation based on competitive rates and a commitment to good service. Capita has been integral to helping us achieve that, which is why we have extended the contract.”
He added: “We are delighted with the performance of the broker portal Capita helped us to introduce last year. This was specifically designed to help brokers provide a great service to customers remortgaging or purchasing their home.”
Mike Barnard, executive director, Capita Customer Management, said: “We have a proud record of working with banks and other financial institutions to provide full end-to-end servicing for retail mortgage and loan products. This contract extension with Tesco Bank is testament to the success of the business in recent years and we look forward to continuing that relationship.”
Chatbots, application-free lenders and consumer hubs – Moving the mortgage tech debate on
At a technology debate held at the Connaught Hotel hosted by Mortgage Solutions and Capita Mortgage Software Solutions, lenders, intermediaries and distributors were invited to talk about the obstacles which remain, and how innovation is seeking to move them aside.
Advancements in mortgage technology have been made but it seems they have yet to revolutionise the mortgage process – but every one knows they will.
The ideal is a digitally joined up housing, mortgage and legal process allowing the consumer to transact in a way which is convenient to them, and in a shorter time frame – but this has yet to be achieved.
A game changing piece of technology, say the attendees, are application processing interfaces (APIs), which allow broker and lender systems to plug in to one another, removing the need to re-key an application into several lenders’ online applications after an electronic fact find has been completed. Achieving this synergy, they say, will do more than cut out repetitive administration – it will cut down processing times by passing the application straight from the broker’s desktop to the underwriter for a decision on the loan.
Close to rollout
Full online integration of APIs in the UK mortgage lending market is being worked on by a handful of stakeholders, although attendees said that behind closed doors a lender is close to rolling out its application-free mortgage process.
The hold up, says one distributor, has been two-fold. First the technology has been slow to develop. It has not been easy to link one system to another. The second barrier has been in the commercial terms which underpin the technology. These have not been agreeable to the firms interested in using APIs. These two factors now appear to be resolved.
One attendee said: “Where we are now is completely different. There are two or three credible organisations with the right commercial outlook which have the technology which can link us together. They may not be able to link 100% of the data on day one, but in the next 12 to 18 months I can see them being able to link 60 to 70% of the data.
A 12 to 18 month wait for a 70% link up of data is too long for some. One attendee said their firm was looking at ways around using APIs until the technology had been fully developed.
Forcing people to get advice
The importance of allowing a home buyer or remortgage customer to transact the way they want to was not disputed by the group, yet some in the room felt the spirit of this was compromised by forcing people to get mortgage advice, regardless of how experienced they were. Technology should empower not force, was one view – the opening up of guidance, rather than advice, was a solution.
Introducing the chatbot
Already a regular feature of many service industries – consumers are used to chasing parcels, discussing faulty goods or arranging a holiday with the use of a chatbot – but can this technology add any value to the mortgage process? One broker was confident chatbots could play an important role in the transaction.
This broker already used a chatbot, called a Digital Mortgage Adviser, which launched in 2016. It uses artificial intelligence to guide customers through mortgage advice, asking questions about their personal circumstances and life events.
“It’s like a Whats App messenger,” said the broker. “You go through that journey with the digital mortgage adviser, it asks you all sorts of questions, and then the chatbot asks the customer if they are ready to chat.” Human mortgage advisers work with the chatbot to step in and provide guidance.
The broker added: “An example of when human intervention is required would be for conflict resolution. If a borrower has asked for the longest fixed-rate possible and then says they want to remortgage in two years, a human needs to step in.”
Chatbots, it was agreed, were more suited to the vanilla market than the complex client market.
An interesting human element emerged from the use of chatbots, said one of the mortgage intermediaries. “We realised we were giving people too much information in one message. We would answer all their questions in one long response. People using the chatbot wanted the impression of humanity in the conversation so we started to break down the responses so they were more conversational.”
A central consumer hub
Most attendees were in agreement that when it came to technology the customer and not the firm creating the tech, was in control.
“The best way is the way the customer wants,” said one guest. Another said: “A good use of technology is being flexible to allow the customer to get what they want from the mortgage process.”
Aside from improving the speed of mortgage advice and process, using tech to create an inviting consumer experience was seen as just as important. “We need an online hub which consumers can click into to find self-help videos, communities of people looking for homes where they can share tips and talk to one another and then a facility which allows the broker to pop up when needed and carry out a Skype interview with the consumer.”
Looking to the future
Looking to the short-term future, six to 12 months, the group were skeptical any major changes would be seen in the market. Open banking was one suggestion, robots which analyse spending habits on bank statements was another. Further down the line winthin five years, significant changes are anticipated.
The definition of the intermediary is expected to change. One attendee said: “There will be two versions of intermediaries: those who offer choice and those who give advice. The two have always gone together until now.”
Another guest added: “There will be lots of changes in the intermediary model if that model is to be effective and competitive. There is talk of one adviser doing 500 to 1,000 mortgages – there will be a lot more efficiencies.”
See some of the highlights from the technology debate in our infographic below.
Unlocking the potential of mortgage market technology
From live access to account data through banking apps, faster payments, and faster processing, it’s clear these developments have the power to transform our industry and the customer service we can offer clients.
For example, banks are now able to use more advanced data analytics to understand customer needs, to better meet their expectations.
In the mortgage market, we have moved on from the one minute mortgage to the potential for automation and AI to provide advice to customers while generating useful data.
Buying a home is the largest purchase of a customer’s life and they should have the time to make sure they have made the right decision, with technology working with them to ensure it is as stress free as possible.
There are a variety of tools we can use to mitigate potential technology risks, not least sharing best practice around security threats and the latest developments along with deploying penetration testing.
The FCA has developed a sandbox which allows businesses to deploy new technologies and test them in a safe environment, working with the regulator before they are deployed.
We should focus on areas which add real value to customers, making the process less stressful while at the same time putting additional checks to identify vulnerable customers.
Protecting the vulnerable
Automation and AI systems have a built-in safeguard themselves – for example, if a system has a concern around a customer it will hand the case off to a human adviser.
Clearly there are many advantages to automation: technology doesn’t get tired and – systems permitting – provides 24/7 access to the market, as well as consistent decision making.
The ability to scan and attach documents, auto verify their authenticity, confirm a customer’s identity and cross-check with external data sources, are all examples of how technology has helped make customer lives easier, reduce risk to the customer and help lower costs for lenders.
However, while technological advances can make life easier there are always risks which need to be mitigated and managed.
With more data available online, and processes becoming faster and increasingly streamlined, the industry needs to ensure its cyber security and data checks keep pace.
The next great advance in the realms of automation and AI may not have even been thought up yet.
It is essential that lenders invest in new advancements in technology, and commit to developing solutions which can adapt to take advantage of next generation technologies quickly and flexibly.
This will be discussed in depth at Capita’s roundtable next week where industry leaders will debate and discuss how the industry can best achieve simple, innovative and responsible lender and broker technology – a full summary will be available in July.
Co-op Bank up for sale as it settles Capita mortgage servicing dispute
Alongside its sale announcement, the bank and Capita, which provides mortgage administration services to the Co-op and its intermediary arm, Platform, announced it had resolved a contractual dispute with Capita agreeing to continue providing services to the lender. However, Capita will halt work on its overhaul of Co-op’s IT systems.
Reports in September last year revealed that the two firms were at loggerheads after Capita claimed that Co-op Bank was withholding payment for mortgage services.
The Co-op Bank said it expects to report a “significant” loss for 2016 in its full-year results next month, although it predicts this is likely to be less than its 2015 loss.
In a statement from its CEO, Liam Coleman, to the Co-Op’s customers, he said the bank would also consider alternative options to build its capital position.
Coleman said: “We are stronger in a number of areas today than in 2013. We have worked hard to rebuild our customer proposition, differentiated by our values and ethics and strong customer service, which we know you value. We have also made considerable progress in fixing major legacy issues and making the Bank more resilient overall, underlined this weekend by the successful migration of our mainframe banking systems to our partner IBM, which marked a major milestone on our journey to turn the Bank around.
“I thank our colleagues for all their hard work and commitment to deliver this, and our customers for their patience and understanding during the recent systems downtime. However, our ability to continue to build capital for the future has been adversely impacted by the lower for longer interest rate environment and the greater than expected cost of fixing the legacy issues of the past.”
Co-op said its decision to embark on a sales process would have no direct impact on its products or its service to customers.
A spokesperson for the Prudential Regulation Authority (PRA) welcomed the move: “We will continue to assess the bank’s progress in building greater financial resilience over the coming months.”
Lenders told to engage with technology to have competitive edge
The findings, published by Capita and conducted among 82 brokers, showed that mortgage advisers placed great importance on the ability for lender systems to improve efficiency and the quality of service provided to the customer. Some 70% of respondents viewed the role of application systems as critical to the customer’s experience when transacting their mortgage.
Among the most important factors named by brokers was the ability to scan and attach application proofs, scored at 9.44 out of 10 on the scale of importance, clear instructions, navigability and ease of use at 9.07 out of 10, and an affordability check that replicates the calculations on lenders’ websites, also scoring 9.07 out of 10.
Keith Green, strategic product director at Capita Mortgage Software Solutions, said: “Our research suggests that technological developments in legacy mortgage sourcing and application systems have not kept pace with step-change improvements in customer experience elsewhere.
“Lenders need to use new and emerging technology to appeal to millennials – the next demographic of homeowners. Forward-thinking lenders, willing to embrace technological advances, will thrive if they can harness technology to strengthen customer experience.”
In a market where regulation is increasingly prevalent and constantly changing, Capita’s survey showed that brokers depended on lender systems to ensure they meet these challenges. Brokers said increasingly complex underwriting rules, such as those adopted in the buy-to-let market, meant they were also likely to rely more on lender software to navigate the requirements.
All things being equal, respondents said they would place mortgage business with lenders whose application systems were easiest to use, were consistent and which provided the best case tracking functionality.
Capita and Co-op Bank at loggerheads over mortgage processing deal
Capita won a £325m 10-year deal to manage mortgage processing operations for the bank’s three mortgage brands in November last year. However, despite claiming to have carried out some work for Co-op, Capita said that the firm has not been paid for its services.
As a result, according to the Telegraph, Capita’s chief executive Andy Parker warned yesterday there was “a high degree of risk” of litigation with Co-op bank over the contract to administer mortgages.
He added: “Everything is ready to go and the client is refusing to sign off for one reason only – if they sign off, they have to pay us. We’re still hitting targets and delivering for this bank.”
However responding today, Co-op denied that it has failed to pay, instead suggesting that Capita is not holding up its side of the deal.
“The bank strongly refutes Capita’s suggestion that they have delivered an element of the transformation programme which the bank has not paid for,” it said in a statement. “In addition, there are amounts which the bank regards as owing to it by Capita.”
It added that it is continuing to “work through” the problems with the programme and remained committed to operating its mortgage processing in a satisfactory manner.
Co-op Bank warns Brexit could damage mortgage growth
In the first half of 2016, £1.5bn worth of mortgages completed at Co-op Bank, up from £1.1bn a year earlier. Lending through intermediaries continued to dominate activity, with 86.4% of mortgages completed through brokers, compared with 87.2% at the end of 2015.
Co-op listed a number of factors that could impact the bank’s operating environment following the UK’s vote to leave the European Union, with a “possible contraction of UK mortgage market” named as an element that could hit its core loan book growth.
CEO Niall Booker said: “As noted by others, today’s market conditions are challenging for all retail-focused banks and the macroeconomic uncertainty following the result of the EU referendum, including the likelihood of lower for longer interest rates, may restrict our ability to grow revenue in the short term.”
The ongoing development of Co-op’s outsourcing contract with Capita for mortgage origination and service processing was also named as a risk to the bank’s mortgage business.
Last year Co-op entered into an agreement with Capita to hand over its mortgage processing operations for the bank’s three mortgage brands.
A handover of new mortgage loans to be processed by Capita is now likely to be “significantly delayed”, with “material uncertainty” surrounding the extent and implications of the delay.
“This could result in any of the following: increased costs; reduction in the transformation scope; and increased legal risk for the Bank. Consequently, there is a risk of an adverse effect on the bank’s mortgage business and its Updated Plan,” Co-op said.
Co-op Bank reported another period of losses before tax in its interim results, but has slashed this from £204.2m in the first half of 2015 to £177m a year later.
The bank said its overall business performance is due to legacy issues as it seeks to transform IT infrastructure and invest in digital banking, which it explained is “required to address the historic under-investment in systems and processes”.
Co-op hopes to achieve sustainable core operating profitability by late 2017.
Booker added: “As we’ve said many times before, addressing the Bank’s historic legacy issues will continue to impact our overall financial performance until the end of our plan period.
“Spending on the continued delivery of our significant remediation and transformation projects has been higher than planned during the first half of the year but the bulk of this spending is offset by other one-time gains in H1. The increasing focus of future project spend will be on those projects generating a positive net present value, and which are more focused on business needs going forward than remediating past problems. This is positive.”