At FTT Building Societies on 21st October, Alex Beavis, Head of Mortgage Products at Skipton Building Society and Matt Lowndes, Innovation Director at the Mortgage Advice Bureau discussed the Changing Landscape of Lending. In this fireside chat they talked about the potential impact of everything from Machine Learning to Distributed Ledger, to Open Banking and Speech Analytics, in shaking up the long unchanged mortgage process.
It became clear that the ability to make very human assessments and see each customer as unique, is a great strength of the Building Society model. It is likely that many customers will come to a mortgage advisor because their situation is not clear-cut. This is why Building Societies are looking to use technology as an enabler, rather than a replacement. If the tech can take on tasks such as document collection, data entry and categorising expenditure, this makes more time for underwriters to prioritise complex cases. In Alex’s words, “If the computer does say no, we have people there to take a look at your case too.”
Open Banking has been widely predicted to have a significant impact on the lending process. There could be huge value for Building Societies looking to adopt Open Banking for eligibility assessments. They would work alongside trained mortgage advisors and create a better journey for customers, brokers and lenders. But both Matt and Alex agreed that there is still a long way to go before the true potential can be realised.
In order to improve the journey for borrowers, it would need to be adopted at every stage of the mortgage process. As Matt Lowndes noted, there is no use in an intermediary utilising Open Banking to get a customer’s income and expenditure information if they later have to provide bank statements to meet the lenders requirements.
But adoption also needs to come from the customer side, and Alex Beavis recalled that when Skipton adopted Open Banking for decision making this wasn’t the case. From a lender perspective it allowed for quicker and more accurate affordability assessments, but customers didn’t trust or understand the value of giving access to their information in this way. Until customers readily embrace Open Banking as an option, the mortgage decisioning process will continue to rely on physical documentation.
Discover more about the promises and pitfalls of Open Banking at FTT Virtual Open Finance on 9th December.
Watch the full recording of this session ‘The Changing Landscape of Lending’ below.