APIs expected to transform the market

Half of lenders expect application programming interfaces (APIs) to have the biggest transformational effect over the market in the next three to five years, IRESS’s Mortgage Efficiency Survey has found.

APIs should enable third parties, such as online income verification and electronic valuations, to link directly into lenders’ mortgage platforms. Open APIs will also reduce re-keying of information and reliance on paper documentation while delivering real-time data validation.

After APIs 29% of lenders expected digitalisation of the whole mortgage journey to be the most transformational emerging technology, while 14% said open banking.

Henry Woodcock, IRESS’ principal mortgage consultant, said: “Emerging technologies like mortgage hub connectivity, open banking and APIs are driving the market away from stand-alone systems to a more connected mortgage ecosystem, plugging in different systems to create a paper-free straight through process.

“Greater integration with intermediary software, sourcing services and other third-parties will increase efficiency, reduce risk, remove friction and provide better outcomes for consumers.

“With the FCA calling for more innovation and competition, we look forward to seeing what impact new specialist entrants and challengers have on the market in 2019 and beyond.”

The survey also found that the time it takes applications to go to offer is shortening after dipping considerably after the introduction of the Mortgage Market Review. A number of lenders are using automated valuation models to increase the speed.

Mortgage hub technology, which connects lenders and brokers, is seeing more traction, with three fifths (62%) of lenders investing in that technology.

Woodcock claimed this will democratise the industry, by allowing building societies and specialist lenders to bridge the gap with the big lenders.