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For every purported ‘digital revolution’ to genuinely change the way we live, there are hundreds of tech ideas laying by the wayside. For all the hard work and ingenuity that goes into bringing these revolutions to fruition, sometimes it becomes all too apparent that some things are traditional for a reason: because they work.
There’s been a few potential ‘digital revolutions’ in the financial space and the world of mortgage brokering. Open Banking is a recent example. Open Banking will allow companies access to individuals’ bank and building society data, providing the customer has given permission. Nine big UK lenders (including Lloyds, RBS, Barclays, Santander and the Nationwide Building Society) will be required to share this bank account transaction history data. Services will then be able to analyse financial history, and recommend financial options—including mortgages—as a result.
Applicants will theoretically be able to receive almost instant mortgage offers, because the system will have access to everything about their financial history and can make a decision on this basis. The technology should give individuals greater power to compare products on their own, based on their financial history. This is all well and good, but the banking industries seem to have been slow to react to the changes—less of a revolution than a small trickle of information and half-hearted implementation.
And more importantly, this particular revolution only really applies to a certain demographic of clients. For many—particularly the sort of clients we deal with at Enness—Open Banking will likely not have much of an impact at all. It’s difficult to imagine how this technology would be effective for clients with complex profiles and global wealth, or those whose financial history on paper does not reflect their true situation.
Open Banking also raises significant privacy concerns, with greater scope for data breaches but no clear delineation of where responsibility for such a breach would sit. So yes, perhaps a revolution for some—but for many, not so much.
The same can be said for one of the more significant revolutions in the world of mortgages: the advent of digital brokering. There’s no denying that digital brokerages do pose a real threat to traditional mainstream brokers, and they absolutely shouldn’t be dismissed out of hand.
Compared to the traditional system, an online mortgage application is undoubtedly quicker and easier, and can be much cheaper. But this really does only apply if your profile is very vanilla, and the loan you need is straightforward in nature.
Enness focuses on large loans and clients with complex profiles, so we know first-hand how many cases which have seemed ‘unplaceable’ can be solved the old-fashioned way: a broker and a lender, with an established professional relationship, having a conversation about a client. The human touch cannot be understated here. A lender’s criteria on paper isn’t always the be all and end all. Presenting the right client in the best light to an appropriate lender can have a very different outcome than a list of eligibility criteria might suggest.
Say you’re an entrepreneur with only one years’ business accounts to your name—someone who has poured all your energy and capital into your venture, and has fantastic business projections as a result. You’d likely struggle to secure a large loan. But by meeting with a traditional broker—who can in turn carefully analyse your situation, and introduce you favourably to an appropriate lender—you’re much more likely to secure the finance you need.
Open Banking and digital brokering certainly have their merits, and traditional brokers should never rest on their laurels. Any new technology can be concerning for businesses inhabiting a traditional space in the market, and rightly so; innovation from competitors forces us to reassess our own offering. But some aspects of our industry are traditional for a reason, and when it comes to brokering complex mortgages for global clients, the human touch has an irreplaceable value that will always outclass any digital revolution.