"With some forward planning, and an understanding of where the challenges are coming from, advisers can remain in a pre-eminent position."
Those of us who are always thinking of the next stage for our businesses, will no doubt be putting our plans for 2017 together and trying to ensure we are fully prepared for what is likely to come over the horizon. In a general sense, the greater intervention we have seen in the market is unlikely to cease anytime soon; indeed, it is likely to get greater. The mortgage and housing markets are far too important for UK plc to be left to their own devices and, from a regulatory sense, the powers that be have been charged with ensuring the market remains sustainable and doesn’t get anywhere close to pre-Credit Crunch activity levels. In that sense, don’t expect to see a drop in scrutiny or ongoing changes.
Looking ahead to what might be coming next year, from a technology standpoint, is very difficult. I’m certainly not the mortgage market’s answer to Arthur C. Clarke and therefore I’ll focus on potential developments that are already underway and may be more prominent next year. I’ll leave the predictions of what might be coming in 10/20 years to those who have a more competent crystal ball.
From an adviser point of view, you may well find that the technology, systems, online processes, etc, you use have changed little in 12 months. Invariably, there will be tweaks and updates – I know for example that we are always looking at ways to improve and modify Revolution – but the large scale developments may not have been so evident in 2016.
That doesn’t mean that the technological evolution of the mortgage market has stood still, but (unsurprisingly) given all the uncertainty generated by the Brexit vote, how this might play out, and the forthcoming impact of President Trump on the world and the UK’s economy, there might have been some caution. Even so, we have seen the launch of ‘online advisers’ using algorithms and matrixes to help consumers through their ‘advice’ journey, and the big news across the adviser world has been the growth in robo-advice.
This has predominantly focused on the investment sphere but there’s little doubting that ‘robo advice’ models will become much more prevalent in the mortgage space. I don’t believe there is anything to fear from these systems as long as advisers are in a position to respond, are utilising quality tech themselves, and can keep service levels high. My belief is that, on the whole, the general public want to take their mortgage advice from a human being however this doesn’t mean that the use of robo mortgage advice won’t grow. I do though wonder whether it will still need a level of human interaction in order to be successful. You might suggest that this isn’t truly ‘robo advice’ and I would probably agree with you.
This type of competition will be more of a threat to advisers in 2017, and I can also see lenders (who operate in both direct and intermediary spaces) putting more investment and resources into the technology they use to secure clients via direct channels. We’re already aware of video interviewing in some branches, and given that the level of business written continues to move in the intermediary’s favour, there will be a part of the lender community who will want to fight back in order to regain some direct share.
The MMR has undoubtedly made it more difficult for lenders to write direct business but when you have significant branch and telephone/web channels, you have to feed them. So there is much more focus on the tech available to do that, and one of the ways is via video-links in-branch which helps you get over the lack of actual advisers many banks/building societies have in those very same branches.
The other point advisers need to be aware of is that lender’s technology utilisation is not just about pulling in more direct customers; it is being used to interact and communicate with those existing borrowers in order to secure their remortgage business. We must understand that lenders are going to be increasingly using tech to mine their existing client banks, to offer them deals directly in order to get them to stay on board and cut out their adviser. It has been a fact of life for the mortgage market since Noah was a boy, but lenders now have much more sophisticated means of taking this business. We need to be on our guard and make sure the client is aware of the benefits of using adviser services even if they receive an offer from their existing lender.
‘Fintech’ has been something of a buzz word over the last 12 months, and I don’t expect this to change in 2017. In fact, as lenders re-evaluate the markets they are most active in we may well see different fintech propositions emerge to fill any gaps – I’m thinking specifically of the buy-to-let market given the level of change here. My expectation is that lenders will not only pull back from the market, but some may leave it altogether, and one can’t help wondering if there will be a move from ‘fintech’ propositions designed to provide this sort of finance.
Overall, therefore, there is plenty for advisers to be keenly aware of as we motor into the new year. You’ll notice I didn’t say ‘wary of’ because I believe that with some forward planning, and an understanding of where the challenges are coming from, advisers can remain in a pre-eminent position. The point is to utilise the technology and systems you have, and to make the most of all their features, particularly in areas such as marketing and ongoing client communication. If you can do that, then regardless of what others are doing, the future should be rosy.
