"At the start of the Covid-19 pandemic, my revenue stream evaporated in six days," says Sara Taylor. Ms Taylor runs an events management company. It's been voted the worst industry to be working in during 2020 by the website Reddit, because of the impact of the lockdown. She did not qualify for any of the government support for people who had lost their incomes during the pandemic, so she took a mortgage holiday - a payment deferral - to cut her outgoings as much as possible. Ms Taylor is far from alone.
Global banks that have a large mortgage business are facing pressure internally and externally to upgrade their operating model to save money, decrease processing times and enhance the customer experience – today it can take more than 60 days to complete a mortgage transaction. The pressure is particularly strong with FinTechs like US online lender Rocket Mortgage and UK digital mortgage broker Trussle creating a completely digital experience for prospective home buyers. Banks, therefore, are exploring everything from mature technologies like Optical Character Recognition (OCR) to more leading edge and high-tech solutions based on blockchain and artificial intelligence. While some of these solutions could dramatically impact day-to-day business for lenders and their brokers and customers, blockchain has the potential to completely transform the entire mortgage financing industry. The financial services industry is all about trust – whether relationship based, reputational, authoritative (legal) or transactional – banking today is built on trust.
All of this information would be impossible to manage or process without machines capable of learning and making decisions about data on a large scale. So far, humans have only been able to create machines that can grasp information, make decisions and act as the machines are told. Consider the fact that the IRS has been letting consumers file taxes electronically for nearly 30 years. Because tax filing takes much less time and effort than buying a house – for most of us, anyway – I find it unlikely that most borrowers will trust their home purchase to a website any time in the near future.
The'always on' digital age in which we live means consumers now expect companies to be able to communicate in a fast, accurate and relevant manner. The challenge for mortgage lenders is keeping pace with this technological change to ensure they remain competitive. It is with this in mind that companies are pushing technology boundaries. New digital advancements are being reported every week in the media, from Santander's '30 minute' online remortgage application, which is enabled by Hometrack's AVM, to Habito's artificial intelligence-based mortgage advice service. The purpose of both these offerings essentially, is to streamline the mortgage application process and reduce the time to offer.