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A new era of innovation?

The community should embrace post-pandemic efficiencies

John Goodall ChiefExecutiveOfficer Landbay

It is without doubt that the current pandemic has changed the way we work. At hardly any other time in history has the rate of change been what it has been over the past few months.

Landbay was in a very fortunate position in that it has state-of-the-art technological platforms on which to run the business. So, we made the transition to home working relatively easily and brokers should have noticed little or no difference, but I know that for many banks and lenders this was an altogether more challenging time.

The challenge for the industry was that we hit a period of economic stress at the same time that people were being told to put their business continuity plans in place, which may not have been tested to anywhere near this extent.

Lenders were in a completely unprecedented situation with staff working from home, often with reduced staff numbers if some were unwell. At the same time, there was unparalleled demand from borrowers to access the different government schemes, not least of which was payment holidays for both homeowners and buy-to-let landlords. On top of this they needed to ensure they still complied with all FCA and Treating Customers Fairly regulations.

As a regulated business it is harder to comply with all the rules with staff working from home. For example, being able to carry out remote call recording as seamlessly as you can if you are doing it from one central place. Early in lockdown, several reasonably significant lenders had a lot of problems, just being able to enable home working with the lack of technology and, while everyone’s got there now, it’s not ideal for many.

Positives from the pandemic

However, many companies, not just in financial services, had the unexpected surprise that staff performance did not drop off in the way most expected with staff working from home. In fact, many companies have changed their future plans as a result with some, such as Twitter, declaring they may keep staff working from home indefinitely.

Whilst I suspect, long-term, the default option for many lenders will be working from the office, there may be some exceptions and there will be changes. “ We will see new initiatives from existing specialist lenders and also other providers to the industry. If anything, COVID-19 is going to stimulate these to come onboard more quickly

We will see innovation which should make the mortgage process both quicker and more efficient. We have seen significant developments with property valuations in the last few weeks and there are mortgage innovations in the pipeline that are likely to catapult into place.

The pandemic is accelerating the shift to digital which had been happening before in a lot of places but incredibly slowly. This will streamline processes, leading to a more digital process.

Market agility

The innovations will come, but those innovations are unlikely to come out of the larger banks and companies. The innovation is likely to be linked predominately to specialist and wholesale-funded lenders, as, if you look back at the history of the mortgage market, that tends to be where the innovation arises. It does not come out of the large systemic banks because it does not really suit their wholesale industrialised models.

So, we will see new initiatives from existing specialist lenders and other providers to the industry. If anything, COVID-19 is going to stimulate these to come onboard more quickly.

For example, at Landbay, we brought in a new application process days before lockdown. A Decision in Principle now only takes two minutes and uses intuitive technology. The buy-to-let mortgage application to completion is now just nine simple steps and the whole process is completely paperless end-to-end.

It was designed to be better, faster, and more intuitive, using broker focus groups to test the system and recommend changes such as the order and flow they thought the application process should go through. This will make brokers’ lives easier and dramatically speed up the application process.

“Borrowers may no longer want to meet brokers face-to-face and brokers will need to have the technology in place to embrace this

Raising expectations

What we did by choice, through months of broker workshops, I think we will see other lenders now doing out of necessity. Lenders do not have teams of people sitting together any more so will need to find ways for efficient mortgage processing even if people cannot work together in the same way.

But it will not only be lenders that will need to become more efficient it will affect brokers too. Borrowers will now also be used to doing everything remotely, researching and buying things online and having things happen seamlessly and quickly. They will increasingly expect the same from the mortgage process, including advice.

Borrowers may no longer want to meet brokers face-to-face and brokers will need to have the technology in place to embrace this. For those that do, lenders with a seamless end-to-end process will be a necessity. And all will want to know what is happening at every step of the process. Online tracking of everything from a mortgage decision to searches and conveyancing will become the new normal.