This is the first up-and-running partnership of this type for Halifax Intermediaries and all users will have the functionality to automatically submit an application securely after requesting a Decision in Principle (DIP) within two weeks.

Brokers can submit mortgage DIP to Halifax Intermediaries with one-click through Smartr365’s Application Programming Interface (API) connection without re-keying data. The timesaving is in the region of 30 minutes per app, said the firm, alongside time  efficiencies offered by the online fact find on the customer-facing portal and the document upload functionality.

Conor Murphy, CEO at Smartr365, (pictured) said: “We know that generating DIPs is one of the most time-consuming tasks a broker faces day-to-day, and it’s why we’re pleased to be simplifying this process in partnership with Halifax Intermediaries. Having the best tech with the widest range of efficiencies will be crucial for brokers to succeed in the 2021 housing market, and that’s exactly what we are providing.”

Ian Wilson, Head of Halifax Intermediaries, added: “Launching this API platform integration is a perfect first step in delivering an efficient and digitised mortgage journey for our intermediary partners and their customers. We look forward to working with Smartr365 and other technology players to deliver this”.

Smartr365 has signed relationship agreements with a raft of distributors including Legal and General Mortgage Club and Brilliant Solutions but despite its investment and ongoing support relationship with L&G’s fin tech department, expects organic not mandatory take up from advisers over time.

On the Smartr365 cloud-based platform, Murphy said his approach is to work directly with the big six lenders covering up to roughly 75 per cent of the mortgage lending market, but its relationship with Iress and other providers will bring more functionality from mid-tier lenders in the next quarter.

Murphy added: “We believe our tech is every bit as good as any consumer-facing technology, so we’re licensing our tech to brokers but envisage them putting it in front of their customers.”

“We take inspiration from businesses which are very focused on design and user-experience in the wider fin tech space. That’s what the mortgage industry needs. Mortgage sourcing is sourcing at the end of the day and you need to understand what the product is, but it’s how do you package that up using tech in a way that makes it easy for the end consumer to use and makes it easy for them to get what they want but keeps the intermediary in the process,” said Murphy.

The firm signed a deal to harness Iress’s Lender Connect software in March last year, allowing DIP submissions to TSB, Principality and Darlington Building Societies.

Murphy founded both Hammersmith-based Capricorn Financial and Smartr365 Technology and continues to operate as CEO for both businesses.

The lack of innovation is likely down to the rising issue of brokers becoming data prisoners to their technology platforms.

This happens when technology providers hold brokers prisoner through complex methods of storing data and prohibitive contracts remove the ability to switch to a better platform or deal.

How does this happen?

There are two ways brokers can find themselves as a data prisoner. The first and most common is through mandated contracts.

Many networks push brokers to use certain technology platforms. Platforms winning new business and retaining clients in this way have no need to grow and improve. This hinders competition and eliminates the need for meaningful development.

Additionally, contracts can trap users as data prisoners through rolling agreements and confusing break clauses.

It is now commonplace for brokers to be tied into three-year rolling deals which renew automatically if not explicitly terminated, or for firms to charge impossibly high fees for ending their agreements.

In other instances, some platforms make it challenging for the broker to switch due to the data retrieval methods offered.

There may be no consistency in the format that client data is shared with the broker which makes it difficult, if not impossible, to mass migrate to another platform.

This ties the business to the platform unless they have the time and resources to migrate all data manually.

Brokers mandated to stay put can also find further problems down the line.

Some technology platforms charge fees for data storage over a certain allowance, or for onboarding new users.

This is essentially a tax on success, putting a fee on expanding teams or growing offerings, and ties brokers into expensive, outdated platforms indefinitely.

A barrier to success

It is these practices which stunt competition. Brokers stuck with outdated systems are unable to provide the best service to their clients and compete within their own market.

Additionally, this stunted development opens our industry up to potential Uberisation.

The national lockdown in March presented a prime opportunity for technology development in the mortgage market, and many stepped up.

As a result, consumers now expect more from their brokers in terms of a streamlined, remote mortgage application executed through technology.

We need to harness this innovation. We’ve seen a significant uptake of technology over 2020 and many brokers are now able to offer clients online fact finds, digital ID verification and seamless integrations between stakeholders.

Unfortunately, there are still brokers tied down with outdated technology unable to deliver to the required standard, but it is great to see change on the peripheral.

A moral obligation

We all have a part to play in the change our industry needs.

In the short term, networks need to give members the freedom to choose the right platform for them and brokers must be aware of the issues.

The repercussions could lead to being stuck with outdated technology, a tax on your growth, and, ultimately, the loss of clients.

On a longer basis, we need to work together to create a market which supports development and pushes the big players to invest in change.

To date, some 2.6m deferrals have been granted and with the recent news that the scheme is being extended to July next year, this number looks set to increase even further.

The scheme has undeniably acted as a lifeline for many borrowers struggling financially as a result of the Covid-19 pandemic. However, as a result, processing the deferrals has been a huge undertaking for lenders and has increased pressure on their resources at a time of already reduced capacity and disturbance.

Processing bottleneck

This has resulted in manpower being drawn away from other areas of lenders’ business, such as processing mortgage applications and helping first-time buyers. Moreover, as they struggle with constrained capacity, high-LTV lending is being reduced. This not only impacts the market generally, but disproportionately impacts younger borrowers, who are already suffering the worst financial impact from Covid-19.

Brokers have also been on the front lines when it comes to explaining the potential consequences for those borrowers looking to defer. However, the real impact of payment holidays may only start to come to light as those who have taken one look to remortgage and complications arise.

Very little was known in the early days – and arguably still is – as to the ramifications for those taking advantage of the scheme, other than the fact that it wouldn’t leave a mark on their credit score.

How lenders will view a recent mortgage holiday when a client looks to remortgage is not set in stone, but there is a strong likelihood it will not go in their favour when it comes to assessing affordability.

As borrowers are unable to carry over their mortgage deferrals, those currently on a mortgage holiday and seeking to remortgage may therefore find themselves stuck, with a product transfer their only option.

Brokers’ expertise will be vital here – but only if they have the right tech available to give them the time to step in and help.

More challenges yet to come

In an already busy market, time management will need to become an even bigger priority for mortgage brokers moving forward. For example, brokers could potentially face a lot of dead-ends when contacting clients nearing the end of their fixed rate deal, as many still be on a mortgage holiday and thus unable to remortgage.

Activities like these not only waste brokers’ time, but can also damage their service levels. There will also be borrowers coming off a payment holiday who face reduced purchasing choices and who need specialist advice to get the right deal – only brokers can offer this, and they need to be ready to step in and pick up the pieces.

A digital hand

As with most things, technology can really help here, as the right tech platform can help brokers organise and manage their client relationships more effectively. The truth is that brokers need more than just a customer relationship management solution.

They need to provide a consistent, repeatable, efficient and fast process for the entire mortgage journey, which will mean centralising and automating their workflows.

Automatic reports, updates and correspondence not only set the timeliness of communications with clients, but also the tone.

As a result, brokers can focus on serving their clients and promoting the areas that bring the biggest revenues, such as new business leads or upselling protection, rather than chasing empty remortgage leads.

A previous article by Bob Hunt on advisers’ duty of care recently raised this important issue.

His piece missed a key point, though.  

While advisers are the first line of defence against mortgage fraud and they can be liable if fraudulent activity occurs as part of a mortgage transaction, they do not have to fight the battle alone. There is sophisticated technology available to support them in defending both themselves and their clients against financial criminals.  

Defending advisers 

The most common type of fraud in financial services is identity fraud. ID fraud made up 61 per cent of fraudulent activity in 2019 according to Cifas, with 87 per cent occurring online.  

An additional threat is income fraud – in the mortgage industry, these incidents occur when borrowers pose as someone they are not, or claim an income they do not receive, to obtain a mortgage.  

We saw this most prominently with self-certified mortgages in the lead up to the 2008 financial crash. 

Even if fraud only appears in one per cent of cases, the money in question could be substantial. For example, there were 58,890 home purchase mortgages completed in December 2019 alone, totalling £11.9bn, according to UK Finance, meaning fraudulent cases could amount to as much as £119m per month.  

Protecting against ID fraud requires a robust solution for ID and address verification.  

Performing these checks manually can be costly, cumbersome, and time-consuming. However, through digitisation and automation, these checks can be seamlessly integrated into an end-to-end mortgage process and improve the speed, efficiency, and cost of verification.  

Combined with advancements like open banking to connect directly to customers’ accounts and verify income, technology is working to make it easier for advisers to meet regulatory requirements at the touch of a button. 

Protecting clients 

Of course, advisers must also protect their client against the threat of data breaches, which could concede personal information, client money or both.  

The risks of borrowers publicising their property transactions via social media and the risk of fraudsters using these details to target emails are important, but it is also important to note that simply being an adviser makes you a key target for financial criminals.  

Email is notoriously unsafe and sharing confidential documents through this medium is not only bad practice, it’s dangerous. 

Again, this threat can easily be reduced by using a sophisticated tech platform that digitises data, allowing it to be stored and shared securely via the cloud. This provides an additional barrier between client information and fraudsters.  

The crucial point here, and the point that advisers must be aware of, is that your duty of care against fraud is vital, but you are not in this fight alone.  

By adopting the right tech platform, you can significantly increase your line of defence, and simplify your work in the process. 

We have moved quickly to develop and adopt sophisticated technology to continue business as usual, as much as possible; but, of course, it has not all been plain sailing.

An immediate challenge was finding a way for brokers to access, store and send client data securely from home.

This would not have been possible without the option to digitise data and host it via the cloud, making it immediately accessible and distributable from anywhere with an internet connection.

This not only saves hours for all parties by reducing waiting and admin times, but without it, the continuation of business of any kind would not have been possible.

Sophisticated technology can also be used to verify identity online, allowing a crucial stage of the mortgage process to continue remotely and safely.

The software underpinning this can be integrated into tech platforms and then tailored with lenders to ensure it meets their requirements. This is an innovation which we need to take forwards beyond Covid-19.

Use technology to maintain strong relationships

A further challenge the industry currently faces is the broker’s old enemy – product transfers (PTs).

The current market environment has made PTs an important way to keep activity moving, but this is not a trend which we should be comfortable with in the long term.

The complications of conducting home valuations and a dearth of attractive products has caused the number of PTs to rocket.

This has made it essential that brokers are finding ways to maintain strong client relationships so they can step back in as lockdown eases.

While they will never replace the real thing, video conferencing is the best way to do this – apps such as Microsoft Teams and Zoom have successfully bridged the gap.

Video conferencing is likely to continue when ‘normality’ returns, as both brokers and clients recognise the advantages of cutting back on travel time and transport costs.

Keeping a workforce motivated

It is equally as important that managers and business leaders look after their employees, ensuring they have a motivated workforce which can continue to perform.

Studies have found that an employee’s motivation increases if tasks are engaging and rewarding.

It’s not rocket science, but minimising admin and repetitive tasks can boost engagement and create a more productive team over lockdown. Once again, intelligent tech is the answer.

As a by-product of coping with the challenges of remote work, our industry has found ways to eliminate the time spent waiting for the post or travelling between meetings.

We’ve created a more streamlined mortgage process for client, lender and broker alike.

What we took for granted

The changes enforced by Covid lockdown have led us to review and reconsider everything we previously took for granted or accepted as ‘the way things are done’.

There was nothing fundamentally wrong with many of these methods per se – from requiring paper copy documents for ID verification through to meeting clients face-to-face.

But we can all agree the innovative solutions embraced by the industry to help us navigate lockdown’s block on business as usual, have made us fundamentally better businesses.

The technology that is supporting us now is what will help us thrive moving forward.

Technology adoption is no longer an option for getting ahead of your competitors, it is a requirement to ensure you aren’t left behind.

In the role, he will create a commercial strategy for Smartr365, focusing on customer success processes to ensure users get maximum value from the platform both during and after their initial purchase.

Grimley will also lead a reorganisation of the commercial side of the business, which will involve streamlining processes and resource allocation.

He has previously held roles at TrustPilot and WeWork where he experienced integration of software as a service (SAAS) technology into businesses, which is something he will continue in his career at Smartr365.

Grimley said: “The main issue facing the mortgage industry is that the technology has often been overlooked when it comes to innovation and development.

“I’m excited to be working with a company that focuses on leading these changes and streamlining the mortgage process for brokers and their clients.

“The mortgage market is resting on their laurels and traditional views; it’s time for a shake-up.”

Conor Murphy, chief executive of Smartr365, added: “Smartr365 has always been differentiated from the rest of the market by our tech-first approach and our commitment to delivering great customer service for both our users and their clients. It’s essential that every part of our team shares that ethos, and Billy fits the bill perfectly.

“We’re excited to get going. Billy’s extensive experience of SAAS technology and customer success models will be a great asset to Smartr365’s growth as we continue to focus on delivering an unrivalled broker platform.”

The coronavirus outbreak and social distancing restrictions knocked the property and mortgage market sideways.

But out of the disruption, brokers are transforming processes and finding tech solutions to streamline business.

Time to take stock of technology

In recent years, there has been a spate of companies offering solutions for home working, customer engagement, client bank management and faster case applications and submissions.

Take-up has slowly been filtering through to the market.

But the downtime enforced by Covid-19 has meant a rush of advisers are now exploring these services for the first time.

And many technology companies have reported an increased demand for products, as a result.

Conor Murphy, chief executive of Smartr365, said: “There has been a clear acceleration in the adoption of technology, from remote working tools, to CRM platforms and digital ID verification.

“We’ve seen growth in both engagement and sales figures as brokers embrace the technology available to support their business and clients through the lockdown.”

New tech here to stay

Many advisers are realising now is the time to make the digital changes that will keep them relevant with customers, not just now, but into the future.

Practices adopted at this time will continue after coronavirus, according to Mark Lofthouse, chief executive of Mortgage Brain.

He told Mortgage Solutions: “We have experienced an increase in demand for us to build new websites for advisers and sourcing plug-ins for those who have a website, which enables customers to self-service and then contact the adviser to progress.

“About 24 per cent of advisers don’t have a website, and the effect of coronavirus is that we’re seeing more advisers embrace the digital channel.”

And the brokers who are using this time to build their digital expertise will find themselves better placed to ride out the Covid crisis and come out in good shape.

Rameez Zafar, chief executive at Eligible, which offers software to manage client databases, said: “Many business owners and managers lived through 2008 and know in these types of markets you need to be decisive and embrace what’s changed.”

Maria Harris, financial services consultant and founder of Digital Cat Consultancy, said: “Now that we’re starting to see the first tentative lock-down exit plans, it feels like social distancing and reduced office-based working is going to be here in some format for the foreseeable future.

“For brokers and lenders to survive and find a way through the long-term impacts of Covid, embracing digital technology and being able to adapt quickly to new solutions and potentially a different shape of market is going to be key.”

Security barriers overcome

In the past, security concerns over technology have prevented wider adoption, with some areas of the market distrustful of wider digital services.

A constant stream of data hacks and the increase in fraudsters plays into these fears.

However, technology has fought back against these threats.

Harris continued: “The biggest industry barrier previously to using digital channels was security and managing risk, so we’ve seen a corresponding uptake in tools for electronic identity and verification, anti-money laundering etc, which has helped mitigate any concerns around impersonation or identity fraud.

“These solutions have been around for a while and some came directly from the Financial Conduct Authority (FCA) sandbox so it’s encouraging to see them now getting the traction and credit they deserve.”

For example United Trust Bank, of which Harris is a non-executive director, has recently extended the use of its facial recognition ID verification tool, removing the need for customers to meet face to face with solicitors to prove their identity.

The changes will ultimately benefit the customer who will stop having to perform the same checks multiple times, Harris added.

Innovation on steroids

Out of the current crisis, we can expect a spate of innovation and reinvention, as start-ups and innovators work to create solutions for the new normal.

Existing system providers have been rolling out new functionality and tweaking offerings to help better support the industry with working.

At the same time, banks, lenders and providers have been quickly working to improve desktop and automatic valuation models that don’t require physical visits to properties.

Ross Boyd, founder of mortgage comparison site Dashly, said: “Times of economic disruption are almost always followed by innovation and businesses generally being more open to new models and technologies.

“We saw that after the global financial crisis when countless new platforms emerged, and it will almost certainly happen again this time round.

“In fact, we could see innovation on steroids such is the magnitude of the current economic crisis.”

He added: “What we’re also now seeing is larger, more established firms that previously hoped to build these tools in their own roadmaps becoming more open to working with smaller technology partners to utilise the technologies far more quickly.”

Tech firm mergers

James Tucker, chief executive of Twenty7Tec, said he has seen the current environment as an opportunity, with more time to work through and find solutions with his team, as they ask “what can we deliver on really quickly that will add value to the market at the moment?”.

The market will be forever changed by the Covid crisis, according to Tucker.

He said: “Processes and experiences that are not great from the customer point of view are going to be replaced by slicker tech with brokers who want to embrace that.

“There’s no way customers are going to want to fill-in papers, they are going to want to do it online.”

However, it could also be a time where a lot of consolidation of tech firms takes place, as some smaller firms struggle to access funding in the current climate.

Tucker said we could see some small firms potentially go out of business but added that Twenty7Tec is “very much in the market for acquiring businesses”.

New functionality will also allow brokers to submit full mortgage applications without re-keying the data entered during the DIP process.

The API integration will be live from the second quarter of the year. 

Conor Murphy (pictured), CEO of Smartr365, said: “A simpler submission process means a smoother application for brokers and borrowers alike, and that’s exactly what our partnership with Iress delivers.  

“We’re building on our existing lender connections to cover even more of the market. Our platform is designed to reduce admin and help brokers focus on tasks which deliver value, and we look forward to working with Iress to do this.” 

Iress executive general manager of product, Andrew Simon, added: “We’re delighted to welcome Smartr365 to Lender Connect. 

“We’re committed to ensuring that Lender Connect remains an open and inclusive platform that simplifies the mortgage journey both for customers and advisers.” 

The lender is currently live with five broker firms piloting its pre-population API link which works through the Smartr365 and Twenty7Tec systems.

This pre-populates the Barclays application system with details from the fact find, reducing the amount of data the broker has to re-key.

“There’s still some re-keying – obviously every fact find, every sourcing is different so the question set isn’t necessarily standard,” Craig Calder director of mortgages at Barclays told Mortgage Solutions.

“It takes all the data that’s within the fact find and sourcing and pre-populates it into the Barclays application system.

“It takes all the bits that it possibly can and then leaves the bits which are more specific to Barclays or might be questions which have not been asked in a fact find,” he added.

API roadmap

Barclays is also working on an API which will enable brokers to track cases that it expects to go live in the second quarter of this year.

A submission API that will be an end-to-end submission without the need to come into the Barclays application system and a soft-decision API which will give a soft footprint decision in principle (DIP) are also in development.

The latter is currently available on the lender’s website but not as an integrated API.

“The soft decision will definitely be next year, but I’m hoping the rest of it will be this year,” Calder said, although he added that like any big program, “timelines are fairly fluid”.

“That’s our roadmap,” Calder continued.

“We’ve talked to brokers and platform providers about what does a sensible roadmap look like.”

Lot of learning

Barclays is only working with Smartr365 and Twenty7Tec at present as these were the two that were “most advanced at the time” it was looking to begin work.

However, Calder acknowledges that in time every lender will have to work with all of the providers, but doing so at one time will slow the process down.

“We’ve done a lot of learning with those two providers, our teams internally and broker partners,” he continued.

“Everyone operates slightly differently, everyone asks slightly different questions, everyone asks for things like identification at a different part of the journey.

“So by being able to tweak and course correct at every part of the journey it gets to absolutely meet the needs of the broker submitting the case, us as the lender and ultimately the customer,” he added.

Writing in a contribution for Mortgage Solutions, Calder explained the aims behind APIs and how they will evolve the mortgage broker and customer journey.

These prompts may come from a range of sources, and they can sometimes present positive options for borrowers who are coming to the end of their fixed term.

However, there is a significant group of borrowers who are being prompted to switch early on in their deal, and this is where problems may arise.

Switching in-deal has found great success in the US, where mortgage deals tend to have longer fixed-terms and, more importantly, no early repayment charges (ERC). These two differences between the UK and US housing markets may seem small, but their impact is considerable, especially when considering the suitability of mortgage auto-switching tools.

US versus UK

The average fixed term for a US mortgage is 23 years, whereas in the UK the average fix is 3.5 years. American borrowers also do not face early repayment fees for choosing to change deal during their fixed term. In the UK, the early repayment charges can be significant with varying conditions between lenders.

Due to these fluctuating terms, there is no one-size-fits-all approach when it comes to remortgaging in the UK, and to assume otherwise could lead to expensive consequences for consumers, from a rise in overall expenditure to foreclosure due to unaccounted-for fees.

At the end of the day, whether or not a switch will benefit the client comes down to a full understanding of ERCs and both their short and long-term impacts, so that both brokers and their clients are as informed as possible when the time to remortgage comes around.

For example, individual borrowers’ circumstances play a vital role when it comes to switching deals mid-term – advisers need to fully understand all aspects of each product, along with the factors facing their clients, if they are to offer useful advice for those considering a switch.

The bigger picture

The prevalence of switching offers is a direct consequence of the continuously falling interest rates we have seen over the last three years, which have led to a steady rise in demand for in-deal switchers.

Homeowners are keen to capitalise on offers which promise lower overall repayment rates, but once the fees of valuations and solicitors have been factored into the final savings amount, an initial saving of £5,000 might work out to less than £20 a month. This considerably reduces the incentive for the homeowner to switch.

Furthermore, even if the proposed new deal does provide a significant saving on monthly payments, it is unlikely that this would be better in the long run. The saving generated by running down the current deal to the end of the ERC period, and then choosing the cheapest available product, would often be greater.

More simply, even if the new deal is cheaper than the current deal, it is still unlikely to be as cheap as waiting and taking the best deal at the end of the ERC period.

An adviser’s primary function within the mortgage process is to provide complete and trustworthy advice to their clients.

Without a proper understanding of ERCs and the costs associated with switching mortgages while the borrower is tied in to a deal, advisers are unable to fulfil this duty.