Steve Carruthers is head of business development at Iress
The impact that technology solutions are having on financial services firms is nothing short of breath-taking. However, every decision comes with compromises and demands detailed understanding if boardrooms are even to hope they get it right. The right technology, the right partner, the internal cultural change, operational challenges, and business benefits need to be thoroughly understood.
There is no silver bullet because individual lenders are exactly that. No two lenders are the same. They share similar problems but, in reality, the term ‘lender’ covers a myriad of funding and operational and distribution models which all require distinct consideration. Not all parts are equally broken nor all lenders in the same boat or at the same point in their digital journey.
As part of our annual Mortgage Efficiency Survey (MES), I spend a lot of time talking to lenders as well as brokers about the technology they use to run their businesses. While there is undoubtedly a huge opportunity to achieve something really meaningful, the reality is that everyone in the value chain is trying to knit together systems that do not often interconnect well at all. This invariably means more risk, more costs and results in patchy service for everyone in addition to the headaches for those using the system and those tasked with trying to fix them.
Acknowledging this problem is the start. This year’s MES reminds me that awareness of the need to modernise is rarely the issue. What to do about it and who to turn to for advice is more problematic.
We hear close-up how organisations are very different in their needs and ability to inject efficiency into every process.
For many the entire change process can feel akin to trying to eat an elephant. For others, funding or operational constraints can mean a piece-meal approach is the only solution. Shared platforms or bespoke solutions loom large and rarely do buyers seem content with any of the route they select and yet they know too well they cannot do for themselves.
Financial services businesses are, however, increasingly tech businesses. IT ‘projects’ are becoming a thing of the past. The thinking that technology is a project with a beginning and end has been consigned to the dustbin of management thinking from the 1990s. Technology is a constant work in progress, an integral part of the business, and an investment requirement in much the same way that we have long considered people to be. If you’re in any doubt look at the tech giants of today.
It’s so important to analyse the moving parts and understand their relative value because technology evolves as our lifestyles change. A good example of this, even now, is the way it is evolving to accommodate new users. The pandemic has taught everyone new lessons. According to 2019 ONS figures on internet users, almost half the UK population of people at 75 and over (47%) were recent internet users.
There are more older people who have had to turn to and rely upon using the internet for the very first time during the COVID-19 pandemic. This brings its own challenges for some lenders who are now having to consider how to simplify their authentication processes easier, especially for first time digital shoppers. It’s a small example but you can see why the project mentality is not right when 12 months ago this phenomenon might never have been an issue.
Building a road map is a critical part of the process – no matter how big or small your technology aspiration because for every technology change you undertake something else changes.
We have heard many times about how building societies need to innovate but fear of losing the personal touch which is so beloved of many members. Understanding value is sometimes about acknowledging what tech will not deliver in previous ways and whether new formats are appropriate for your markets.
Historically, many lenders have worried about closing branches because so many members have valued the footprint of local branches. Now, as we have seen, the older generations are quite happy to use the internet for a lot of their daily business.
Understanding what is right for you is not about following well-trodden ground. It is about knowing what is necessary for the markets in which you currently operate and may want to do so in the future. The right partner is important to navigate the issues that go beyond ‘which tech’ to the heart of what type of business you need to deliver.