On April 12th England advanced to the eagerly awaited second step of the government’s Covid roadmap, re-opening non-essential retail including pubs, restaurants, hairdressers and gyms. Combined with the successes of the UK’s vaccine rollout, this latest rule change marks another milestone in the return to ‘normal life’.
The mortgage industry has also been heavily impacted by Covid, but as we approach what will hopefully be the eventual end of pandemic restrictions, it’s important that the industry sets its sights on something more ambitious than a return to the previous status quo. Covid has provided an unparalleled opportunity for new tech and new processes to come to the fore and the mortgage industry should look to build on the progress that has been made over the last year.
Tech adoption
While the government’s Covid roadmap sets a timeline for the removal of pandemic restrictions, the mortgage industry’s roadmap should focus on consolidating and building upon the advances made during this period. The pandemic has acted as a strong catalyst for the adoption of new technology, and the industry is making progress in the way it implements these solutions.
One such area where tech has come to the fore during the pandemic is the increased adoption of automated valuation models (AVMs). Many lenders have increased their reliance on AVMs over the last year as social distancing restrictions made in-person valuations more difficult to conduct. Although they may not be the best solution for every situation, AVMs can cut down application times and improve the customer experience in many cases. As such, this is a great model for how technology should be embraced by the industry.
There has also been more widespread adoption of Open Banking technology during the pandemic. February 2021 was a record-breaking month according to the Open Banking Implementation Entity (OBIE): over one million Open Banking payments were processed in February alone, compared to just 300,000 in the whole of 2019. If the mortgage industry can continue to capitalise on this progress, it will bring real benefits to the market, such as increased access to financial products and more efficient lending decision processes.
The benefits
The lenders that integrate more technology into their post-pandemic business will soon begin to reap the benefits. Increased Open Banking adoption, for instance, will enable lenders to assemble a more holistic picture of the finances of any potential customer, while more data sharing will allow for better decisions to be made more quickly.
Lenders won’t be the only beneficiaries of increased tech adoption though; when properly implemented, these solutions will make life easier for brokers and borrowers too. More efficient information sharing will enable brokers to automatically pre-populate paperwork, for example, saving them time and reducing the risk of human error.
The more holistic view provided by Open Banking will also be important for borrowers with complex financial histories, including those who have been affected financially by Covid, as brokers will be able to provide lenders with a much deeper and more accurate picture of their customers. As a result, borrowers will have a better chance of getting a fair deal that’s right for them.
Be ambitious
In reality, much of this tech adoption was already underway pre-Covid, but the pandemic provided the urgency and the opportunity to accelerate this progress. The mortgage industry has proved its resilience over the last year as it continued to operate in difficult conditions.
Now, however, the potential post-pandemic recovery represents a once-in-a-generation opportunity to cement substantial change. While the country returns to some form of ‘new normal’, the mortgage industry should be more ambitious and look to create something exciting and new that improves the way the industry works, for the benefit of all involved.
