The darker side of innovation…

Phil Bailey

May 3, 2019

Phil Bailey (pictured), sales and marketing director at Twenty7Tec.

Change, and especially thought-provoking innovation can often materialise as a double-edged blade. Advances in technology that on the one hand are of great benefit to you can also be of huge value to others. Allies, partners, competitors. Within every opportunity is a threat.

How you adopt, adapt and utilise innovation will be critical in how the mortgage landscape evolves over the next few of years. Where will you fit into this 2000 piece puzzle of regulation, innovation and change?

There has been plenty of noise around the FCA’s statements on their Mortgage Market Study. The darker side of innovation has started to show, uncovering some of the reasons why we are wary of change and disruption.

Some 500 years ago, Nicola Machiavelli outlined this predicament perfectly in his book on the art of politics, ‘The Prince’: “There is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful in its success, than to be a leader in the introduction of changes. For he who innovates will have for enemies all those who are well off under the old order of things, and only lukewarm supporters in those who might be better off under the new.”

In other words, innovation isn’t easy and don’t expect to please everyone.

Many things need improving in our industry. Single data entry, application submission, the black hole that is conveyancing, the removal of wet signatures and the need to print anything, all desperately need sorting. Luckily… there are a few firms working to better the industry in these areas.

Advice is valuable

I’m confident that customers gain huge value from the mortgage advice they receive. Have you ever noticed that even mortgage brokers deal with mortgage brokers…? Surely if mortgage advice is good enough for a knowledgeable and qualified mortgage professional, it’s valuable for the average borrower too.

Plenty of focus at the moment on upfront eligibility, calculators and credit scores. Why the hurry to start treating mortgages as credit cards?

Over the past few weeks, I have lost count the number of times ‘Multi-DIP’, ‘Execution Only’ and ‘Guided Advice’ have come up in conversation. Aggregators, traditional, digital and hybrid brokers, all fall into the industry’s definition of ‘Intermediary’, and yet all will have very different wish lists when it comes to change and the regulator’s view on Innovation. Some will see the threats, others the opportunities.

Customers are rightly demanding more from the mortgage world. The regulator is suggesting potential changes to the advice rules, investigating changes for a more accommodating, technology led execution only models labelled as “innovation”.

As an industry we have been lacking in innovation for some time. From the depths of the downturn the mortgage industry, regardless of the number of products, gross lending levels and lending appetite, survived and recovered rather well. But this new challenge by the regulator could mean more competitive change is coming, and coming fast.

So I ask myself, have those that have stifled innovation or have shown a lack of appetite to embrace technology and change brought this demand in innovation, unwittingly to their own doorstep…?

Like many, I’m equally intrigued and apprehensive of what happens next with ‘innovation’ for mortgages, especially regarding advice. My thoughts to the industry, be you traditional broker, digital guru or even the regulator – be careful what you wish for, as innovation has a way of suddenly changing an entire landscape, when all you really wanted was a new signpost.

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