The marriage that will last
Bob Hunt is chief executive of Paradigm Mortgage Services
Marrying up the huge benefits of quality technology with the principles of quality advice has always presented certain housing market-facing businesses with a challenge.
For some however, there is no challenge, or dare I say it, consideration of how borrowers access their mortgage products and the advice they feel is absolutely imperative to that decision.
Instead for them, the market is a direct-to-consumer one, or if it’s not at the moment then it surely will be in the future?
I read a recent survey which suggested more than 80% of consumers said they would prefer a fully online mortgage application process.
It’s statistics like this which are clearly giving confidence to those, mainly tech-focused businesses – although this is as relevant to certain new lenders as well – to place their investment and resources into direct-channel offerings.
My view is that it’s a somewhat naive take on our sector, perhaps even wishful-thinking on their part, and doesn’t really take into account how mortgage distribution has developed over the last 10 years, and certainly since the Mortgage Market Review was established in 2014.
It might also seem to suggest a lack of understanding about the importance of advice and one also wonders if such surveys aren’t conflating a desire for a more tech-focused, efficient and timely house purchase process, with the mortgage process itself which, from a technology point of view, works pretty well.
But, let’s try to understand the thinking behind that determination to use direct channels. It seemingly comes from a viewpoint based on consumers being comfortable buying all manner of goods/products/services – financial as well as others – direct and online, often using comparison sites to get what they need.
However, how many of those goods/services will ‘cost‘ hundreds of thousands pounds over a multi-year term?
How many of those may potentially come with hundreds of other options which could be far more suitable to that individual, given their needs and circumstances?
Where choosing the wrong option could ultimately cost hundreds or thousands of pounds each and every month, let alone each and every year?
That is the difference with the mortgage market and those that understand this recognise the value of advice and the highly important role advisers play in the whole process.
Not only do they provide peace of mind for borrowers who are confronted with a highly complex and competitive market, but they also deliver a series of protections that are simply not available to the individual in going direct.
You do not get to 75%-plus of all mortgage product sales by being niche distribution channel. You get to that level of transaction by being an absolutely key part of the whole housing decision-making process, adding real value and ensuring clients are not left with unsuitable and costly products.
In that sense, technology that is designed to help the consumer, with the consumer’s interest at its it heart – as opposed to those of the manufacturer or distributor – has for too long been overlooked.
And, in my opinion it’s those businesses that understand this that are going to thrive and are going to offer services to advisers rather than operating against them.
It’s why Paradigm has partnered with the Dashly platform, which offers mortgage-switching tech always working behind the scenes for advisers and constantly updating them on potentially ’better‘ mortgage options for borrowers, that they can review and, if they feel are relevant can present to their clients.
It would have been very easy at the start of the journey for the Dashly management team to decide this was a direct/consumer-facing proposition – after all, there are a growing number of propositions which offer this type of service in other areas of financial services, utilities, and the like.
But having grown a deeper understanding of the mortgage market and the pivotal role intermediaries play in it, there was no question that this would be technology designed to aid advisers and borrowers.
This is how we continue to thrive as a sector, advisers utilising the technology available to provide a better, more accurate service in an increasingly complex market, and fintech companies recognising that advice tends to be a non-negotiable for the vast majority of borrowers in the UK.
This is the marriage that will last.