I’m a little surprised to be the one having to write this – I was expecting a vociferous response to recent criticism of sourcing systems from one of our more established competitors. But alas, the silence to date has been rather deafening.
It didn’t used to be this way of course. Up until a couple of years ago, the duopoly that existed in the market ensured very little debate around the virtues of sourcing systems. Everybody had their favourite and, unless your Network said otherwise (And sometimes even when they did), you stuck with it. It was very much a case of ‘better the devil you know’.
So why are we finally debating the role that sourcing systems have to play in how effectively we service the end client? Simply put, the industry has woken up to how woefully inadequate legacy sourcing technology is in helping an intermediary deliver the right consumer outcomes.
Historically, sourcing systems were viewed as a necessary evil, a compliance tick box exercise. The broker relied more on their own skill and knowledge, as well as their relationships with local BDM’s to help place a case. At best, a sourcing system was a list of available products, ordered typically by rate, that gave the average intermediary a place to start their research from. As soon as a client’s circumstance strayed away from the ‘vanilla’, legacy sourcing technology was arguably about as much use in assisting the broker in finding the right product as a chocolate fire guard.
Such has been the level of criticism of the lack of development in sourcing technology in the last 10 years that many have questioned what, if any real improvements have been made in that time, and perhaps rightly so.
But playing devil’s advocate for a moment, what possible incentive did the duopoly have to invest in their sourcing systems in the last 10 years? If you believed the hype, and excused their poor grasp of maths, both systems had 70% market share, a core base of devoted users, and a nice cash flow coming in every month from both intermediaries and lenders (Even during the economic downturn). For those of you who studied business at school and are familiar with the Boston Matrix (And even those of you that aren’t), sourcing systems were your archetypal ‘Cash Cow’.
The reality of course is that intemediaries weren’t demanding more from sourcing systems either. They accepted their failures, ignored their quirks, and found workarounds which enabled them to do the minimum required to process a case. As an industry, we got stuck in a rut, confusing ‘good enough’ with good.
Personally, aside from our own involvement, I credit regulation with highlighting the failings of legacy sourcing technology. With MCD on the horizon, a number of specialist distributors quickly identified the need for a far more robust sourcing system that looked in detail at all solutions in the market, not just first charges. Many, by partnering with third party technology experts such as ourselves, have created robust and accurate sourcing systems that consider a client’s entire circumstance, and are able to recommend the appropriate product, be that a mortgage, second charge or even bridging loan.
I’m not suggesting for one moment that these, or indeed our own sourcing technology is perfect. It’s simply never going to be possible to build a system that is able to take into account every nuance in a Lenders criteria or understand and calculate around every possible variance of personal circumstance. And besides, would you really want it to? Isn’t that level of ‘Robo advice’ in itself the beginning of the end for mortgage brokers as we know them?
But even the most experienced broker in the country can’t be expected to know, or keep up to date, with the 9.2 million pieces of lending criteria that a good sourcing system will hold, and source against. A good sourcing system should be capable of applying all of a client’s personal details across a huge array of Lender criteria, helping you to make the right recommendation first time around. It should also take into account different lending options, including second charges, accurately assessing the right product type for your client’s circumstance.
A sourcing system will never be a replacement for your skill or knowledge. It will never replace the relationships that you have with your clients, and indeed the Lenders themselves. But if used to its full potential, a good sourcing system really can help you service your clients efficiently and effectively, and to the very best of your ability.
If you’ve been reading in the trade press the recent critique of sourcing systems, and found yourself nodding along in agreement with the general theme and comments, then it’s time to do something about it. Whether that’s to encourage your existing provider to invest in their system, or to look to find a new provider, don’t sit on your hands any longer. When it comes to sourcing systems, ‘good enough’, just isn’t good enough anymore.