By Travis Scholes, Commercial Director, LMS
2022 has been a particularly interesting year for the financial services sector and industry experts have had to navigate their way through several changes and challenges. But while factors like the cost of living crisis will affect our decisions in the nearer-term, there are longer term changes we must keep abreast of too.
The rise of fintech over the last decade, for example, has radically transformed the way in which end customers expect their services to be delivered. A prime example of this is the rise of challenger banks, with firms such as Monzo, Revolut and Starling Bank grabbing the attention of the younger generation. A recent survey by Kearney found that two-thirds of their traditional banking respondents aged under the age of 22 thought these firms delivered advantages such as ease of use, compatibility with other apps, and, most importantly, convenience.
This demand for almost instant gratification is being reflected across the wider financial services sector too, and it includes the mortgage market. But with brokers, lenders and law firms all under significant pressure to respond to current high levels of demand, particularly as many borrowers seek to remortgage, how can we keep up? The answer is technology.
The last year in particular has brought a return to base rate rises by the Bank of England after more than a decade of low interest rates. The most recent decision in December saw the rate rise again to 3.5%, the highest it has been in 14 years, with another rise expected in January. It had caused mortgage rates to hit nearly 6% for a two-year fixed product. These rates have started to fall again, which is good news for borrowers, but 2023 will be a year in which we will see increasing demand for remortgaging.
While on the face of it this level of demand seems like an issue, the reality is that the technology does exist in the market now to help all stakeholders address this problem. The availability and integration of things like law firm identity checking and anti-money laundering technology, CMS providers and digital proof of ID checks has massively improved, helping drive efficiencies in the mortgage journey and remove manual processes. The completion of the very first automated remortgage has also been made possible thanks to the cross-industry collaboration seen first-hand by LMS, with a customer’s remortgage journey reaching completion in just four days from submission – a huge breakthrough for the industry when it comes to delivering on customer certainty and efficiency.
Across the remortgage market, there is no shortage of appetite for this tech innovation, but it now needs to be accessible to all. Industry stakeholders lag behind when it comes to adopting technology, often because it is perceived as too time consuming, complicated or expensive to adopt for the return on investment (ROI) that it delivers. The temptation to assume that technology only exists in silos also remains, with the expectation that different tools are unable to complement each other.
Busting these myths is down to the providers. The onus is on them to ease these issues and prove the value of the technology in delivering efficient processes and reduced workloads.
The same can be said of ensuring value for money and a return on investment. For technology to have a really transformational role for our entire market, we need to see smaller players enjoy the same benefits to adoption as their larger counterparts. Driving return on investment at all levels as well as the opportunity for stakeholders to benefit from long-term collaboration with the tech provider will deliver the best possible results for all.
With InfoTrack launching its Digital Conveyancing Maturity Index earlier this year, showing the level of digitalisation among law firms, it is clear there is a lot to be done across the board – the industry had an overall score of 43%, meaning less than half of the industry had an adequate level of technology adoption.
Technology can drive huge improvements and efficiencies for our customers when it comes to their mortgage journey, but it must be adopted across the board, from small businesses to larger firms, and from brokers to lenders to solicitors. To achieve this, we must improve accessibility and prove the value of collaborative technology in terms of ROI, allowing us all to harness its power for our sector.