We have a tendency when talking about mortgage technology to start with what it can automate.
How many documents can it process, how quickly can it reach a decision and, increasingly, what can AI do that somebody previously had to do manually?
They are perfectly reasonable questions, but I wonder whether we are starting at the wrong end.
The better question is whether technology makes it easier for a broker and lender to deal with a real customer whose circumstances do not fit neatly into boxes.
WHEN CRITERIA MATTERS
I was reminded of this recently by a case involving a building society and its new Ohpen powered platform. The applicants wanted an expat residential remortgage. The husband worked in Saudi Arabia and was paid in Saudi Riyals while his wife remained in the UK.
They also wanted to consolidate just under six figures of unsecured debt across around 12 accounts, much of which had accumulated while renovating their property.
Immediately, the number of potential lenders narrowed. Saudi Arabia is not an acceptable jurisdiction for every lender and many also place absolute monetary limits on debt consolidation, often around £50,000.
The Society was able to consider the jurisdiction and, rather than imposing the same absolute limit on consolidation, controlled additional finance through loan to value. So technology did not solve the case. Lending appetite did.
TECHNOLOGY DID NOT REPLACE THE BROKER
The broker also had work to do. With around 12 accounts being consolidated, he produced a detailed letter explaining the case and setting out the accounts, amounts and relevant information so the underwriter could reconcile everything against the documents supplied.
Technology did not replace the broker nor did it replace the underwriter. Yet the application was submitted on 26 June and ready for offer on 9 July. Thirteen days for an expat case involving foreign currency income and substantial debt consolidation.
What the technology appears to have done particularly well was make everything around the judgement easier.
The broker involved described the new system as “a much more user-friendly system to use”.
Requirements were clearer, there was less manual work and the platform coped better with the foreign addresses, currencies and circumstances that can expose the limitations of older mortgage systems.
REMOVE THE ADMINISTRATION, NOT THE JUDGEMENT
There is a lesson here as the industry becomes increasingly excited about automation and AI.
Perhaps the destination should not be the automated mortgage. It should be the removal of unnecessary administration from the mortgage and these are different things.
A complicated mortgage application may genuinely need a human being to understand why somebody has accumulated almost six figures of unsecured debt.
It may need another human being to explain that properly and it will need an underwriter to decide whether the circumstances make sense and fit the lender’s appetite.
Why would we want to automate that judgement away? What we should want to eliminate is everything that prevents those people exercising it efficiently.
Repeated document requests, information being entered several times, systems unable to accommodate foreign addresses, unclear requirements and brokers chasing lenders simply to discover what is happening.
CREATING SPACE FOR BETTER DECISIONS
The really interesting technology is therefore not necessarily the technology that makes the decision. It is technology that creates the space for people to make better decisions.
In this case, the Society’s criteria got this particular case through the door.
The broker’s packaging allowed the underwriter to understand it. Human judgement provided the answer. But the technology made the journey between those things easier.
As mortgages become more complex, perhaps there is a better definition of progress which is not about removing people from the process, but removing the things that stop people doing what they are actually there to do.
