25 February 2014
Capita Mortgage Software Solutions Chief Executive Officer Chris Thompson says customers are set to benefit from renewed focus under the MMR and providers that are prepared for this will reap the benefits.
Things are certainly looking up for the consumer this year. House prices are strong – they are rocketing in some parts of London and the growth, although not as rapid, is reflected in other parts of the country.
In terms of mortgages, this increased stability and buoyancy in the market could bring about a far better balance between rate and product offering for the consumer.
The prospect of a base rate rise may now be slightly closer than was once predicted, but it is still unlikely to happen in 2014.
However, the consumer is also set to benefit from a renewed focus on customer service under Mortgage Market Review, as the customer experience becomes of paramount importance for service providers.
With the widespread use of social media, the voice of the customer is louder than ever, and first-class customer service has never been more crucial to upholding brand reputation.
With a customer base that is more educated, demanding and vocal than it has ever been, and regulation making the process of acquiring and managing a mortgage potentially longer and more complex, lenders will need to ensure they provide more guidance and clarity to customers than ever before.
Service providers will need systems in place to feed back customer comments in order to achieve efficiency and improve the customer experience. Also, channels and point-of-sale have diversified: lenders now need to compete via brokers, branches, in-store, telephony and direct.
Greater demand for outsourcing
There can be no question that regulators’ focus on the financial services sector has intensified in recent years.
After the global credit crunch in 2008, it was inevitable that authorities would respond by tightening regulation, but this is creating an environment in which many businesses struggle to find the breathing space to focus on their core activities.
As the non-advised sales channel is replaced by an execution-only process, every lender will need to ensure its customer-facing employees hold the relevant mortgage qualifications, making training a key requirement for 2014.
For those lenders who are yet to put training programmes in place, outsourcing business support will most likely become crucial.
The MMR may also create a short term hiccup for lenders as they get to grips with new system and administrative requirements, which may manifest itself in lower volume ambitions.
Meanwhile, for some lenders, outsourcing technology can be an appropriate way to achieve efficient processing of all types of financial products and to ensure compliance, helping to take the strain of MMR.
Technology can also improve the customer experience, for example, during loan origination.
An intuitive and flexible platform can simplify this process from initial enquiry to release of funds, assisting agents in the delivery of effective customer service.
More time can be devoted to advising the customer as the right platform can streamline the administration process.
Challenges for knowledgeable customers
The challenge of MMR is not beyond our industry and the emphasis will simply be on how we adapt.
There will be a lot of business coming through lenders’ doors and those that ensure their processes are crisp, slick and customer-focused will continue to thrive.
There is one challenge for which a solution has not yet been found – namely, finding ways to deal efficiently with customers who have a good knowledge of the sector and who do not want to go through a lengthy advised process, yet who do not wish to waive the rights that they would lose if they opt for an execution-only channel.
People who are genuinely savvy enough to choose the products they want without guidance.
For these, there is currently no alternative and it will be important that the industry can find ways to keep those customers engaged and satisfied, while remaining compliant, and again it is likely to be a focus on efficient, effective and customer-friendly systems that will help here.
We could, though, see a rush from customers pre-April to buy products before they are obliged to go through the advice process.
2014 is set to be a prosperous and opportunity-filled year for the consumer and the mortgage industry as a whole.
While the consumer can access transparent and well informed mortgage advice, those lenders that are prepared for the MMR will reap the benefits throughout the year.