Seismic technological changes

The mortgage industry and wider financial landscape are in the midst of seismic technological changes. According to a survey commissioned by the Council of Mortgage Lenders (CML), for example, over 40% of respondents now believe that robo-advice is likely to be faster and more convenient than speaking to a mortgage adviser, with a similar proportion of people indicating that a ‘hybrid’ blend of digital and human elements would provide a preferable template for future industry practice.

Some critics have suggested that the ‘rise of the robo’ constitutes a threat, but the vast majority of advisers believe that the sheer variety of products and options within the UK mortgage market are too complex for a single-handed reliance upon technology and are choosing, instead, to embrace the richly supportive role that it provides. Indeed, fully integrated consumer credit files are already helping to eliminate the deluge of administrative and compliance work.

Which brings us to the alternative and complementary means by which lenders and brokers can keep pace and remain competitive with these technological innovations over the coming years – namely, the increasingly key role of intermediary support within the specialist industry (and beyond). Many brokers have reported that their workloads and responsibilities changed dramatically in the wake of the 2014 Mortgage Market Review, with new regulatory and training standards, as well as the enduring need to attract sufficient volumes of business, placing enormous pressure on financial resources, requisite staffing levels and time management.

And thus outsourcing essential services from compliance to tech support became the natural next step. This idea was driven by the rise in cost-to-income ratios that many lenders experienced in the aftermath of the financial crisis (despite substantial reductions in branch numbers), the upswing in customer service expectations and the increase in sector competition exemplified by the emergence of specialist lenders, fintech companies and challenger banks.

By reducing expenditure in relation to recruitment, training and other operating costs firms can refocus their energies on their core business.

Indeed, given the inherent benefits and savings afforded by third party providers, it should come as no surprise to learn that the number of lenders who have chosen to outsource their mortgage administration has risen substantially in the past two or three years, from around 5% of market assets in 2016 to a projected 15% (or over £200 billion) by 2020.

By partnering up, companies can approach the future with confidence and guile and in a time efficient manner. This is the key to gaining new clients and to growing a business for the long-term.