25 February 2014
Chris Thompson, Chief Information Officer at Capita Mortgage Software Solutions, discusses the technological requirements of lenders originating new lending in 2013.
As 2013 sees new lending begin to creep back into what has been a hard-hit and cautious market, so too has the demand intensified for innovative technology and servicing solutions to meet this new demand.
Lenders big and small; new entrants and established players, are all falling over one another to compete and to differentiate themselves from their competitors. One thing they all share is a common requirement for the best systems to support customer relationship management, product innovation and operational efficiency.
In the rapidly-evolving outsourcing industry, where such systems are often bespoke, built for each lender’s needs, we see the full spectrum of client requirements. Here we have tried to summarise what our clients ask for in 2013.
Different channels to market can include online execution only, non-advised sales process, advised sales process, branch/store, direct-to-customer or broker. Technology systems need to support all of these (indeed, post-Mortgage Market Review it has to) without costly re-engineering. Though we must remember the need to maintain lender brand identity without eroding each lender’s own way of differentiating in the market.
Any lender’s set-up must not only be fully compliant, but must also be flexible enough to support new and emerging Financial Conduct Authority/Prudential Regulation Authority requirements, as time to market can be critical. A software sale, therefore, should not stop at point of purchase: clients requires a partner that will support them along the compliance continuum. Also, compliance doesn’t have to mean a universal approach – it shouldn’t compromise brand or customer experience and a lender’s ability to differentiate.
No matter how small the lender, it requires its outsourced system to allow it to think big. It must be big on functionality, and also allow the lender to extend its reach. Big functionality therefore means multiple, integrated customer contact and point-of-sale channels. It means flexibility to adapt to future lending and regulatory requirements. It means giving the client a better handle on their growing customer databases, and of course should allow the client to reach out to a bigger audience.
This can mean both configurable to the lender, and personalised to the customer. A system can be not only branded with the lender’s company name, but also tailored to reflect each individual customer journey. It is also possible for lenders to further tailor and control the set-up themselves.
Meanwhile, at the customer end, it is important that technology gives the individual the reassurance that they are not just a number: that their confidential financial transactions are being handled securely and sensitively. Ultimately, this is where a good system delivers on the lender’s brand promise.
A good IT solution in a fast-moving industry needs to be quick to implement and quick to operate. Whether migrating existing mortgage books onto the system, or using it to market and originate new loans, it needs to be agile and fast.
Speed is also required in making the customer journey as quick and painless as possible, for example by streamlining complex back office processes, automating as many as possible, reducing complexity and making every case as efficient as it can be.
Even the off-the-shelf packages offered by a modern provider still offer a tremendous menu of functions. If these systems are not user-friendly and easy to operate, much of this functionality will never be unlocked and harnessed. The best systems offer an attractive and engaging customer interface at the front end, while the back office allows staff to focus on the customer rather than the admin.
Perhaps the most important box on the checklist as far as niche lender clients are concerned, implementation costs are king here. As with every lender’s outsourced provision, it will only be viable if it saves money in the long term - but the difference to a client will be how transparent the initial set-up investment is. This also includes the cost of processing each new loan: this process must be made as efficient as it can be at the earliest possible stage.
We know from long experience that regardless of their scale many lenders seek a BPO or tech provider for similar reasons. Today’s successful servicer will be the one that understands and caters to all niches in the market and puts operational flexibility and customer experience at the heart of the proposition.