"Firms need to ensure that they are always providing fair and reasonable advice to consumers, even though the deadline has passed."
FR: What does your role as chief revenue officer at finova entail?
As finova’s chief revenue officer, I am responsible for all group revenue across various functions of the business. This includes our core banking solution, broker CRM software, and finova Connect – our Mortgage Club and Payments service. I am primarily focused on generating new business for finova but alongside my team, I also manage our existing accounts, including 60 clients using our core banking solution.
FR: What would you say are the current challenges facing brokers, lenders and consumers?
It’s widely acknowledged that the mortgage market is currently navigating a variety of challenges, but as ever, this industry shows great resilience by finding solutions to these problems and expanding through innovation.
For the end consumer, affordability is undoubtedly the main concern. We have experienced what feels like a seismic increase in rates, from nearly zero to over five percent. This high-rate environment naturally impacts first-time buyers who may suddenly be unable to borrow as much as they initially planned, as well as those remortgaging who could struggle to meet repayments after their fixed-rate terms end. People often ask me when I think the rates will go back to “normal”, but the reality is that we’re now in a ‘new normal’.
The market remains as competitive as ever for lenders. However, with well over a hundred still vying for around 10-15% of all lending, excluding the big six lenders, the need to stay ahead of the curve has become more important against a backdrop of heightened regulation and the aforementioned increase in rates. These rate hikes have resulted in a large administrative burden for lenders over the last 12 months, and adversely affected the valuation of their assets and equities, therefore reducing their collateral and lending capacity. All of this squeezes the overall market, and moving forward, lenders need to be clever about how they allocate funds, and strategic about the risks in each deal they undertake.
The main challenge for brokers is regulation, with the Financial Conduct Authority’s (FCA) Consumer Duty becoming a key focus this year. Firms need to ensure that they are always providing fair and reasonable advice to consumers, even though the deadline has passed. Brokers must ensure that consumers are fully aware of alternative options and that any conflicts of interest are avoided. On top of this, compliance procedures must be auditable back to the FCA, as firms will face increased fines or even potential closing orders if they cannot show evidence that they’re meeting the guidelines.
FR: How can finova’s services, such as its core banking platform, help brokers and lenders navigate these challenges?
finova offers various technology platforms to lenders and brokers that can alleviate some of the issues I have mentioned. Apprivo2, for example, is a SaaS platform centred around mortgage origination. The platform simplifies the application process, and being 100% digital, it is also very helpful in meeting the auditing requirements of Consumer Duty.
The engine is dynamic to ensure that questions in the application process can be easily amended without the need to code. This significantly simplifies changes typically required in this part of the mortgage journey.
Perhaps our most powerful technology is our recently launched decision engine – Optimo. Optimo is designed to assess the affordability of a product on a case-by-case basis. In the past, lenders faced operational challenges when determining the appropriate rate to offer borrowers. To remedy this, the tool uses a data-led approach to consider each customer’s personal circumstances carefully and fairly before making a formal product offer or denial.
FR: With new legislation in place, such as Consumer Duty, how can technology support lenders in building compliant and efficient savings platforms for modern customers?
Consumer Duty has an impact across the financial services spectrum to ensure customers get fair treatment. Linking this to savings specifically, it is about trying to ensure that savers get access to the best rates and are communicated with effectively such that they understand all the options available to them.
Recently, in a study conducted by the FCA, it was found that many of the UK’s largest lenders had not passed on the base rate increases to their customers. Only around 28% of them had passed on the base rate increases to their easy access deposits. Clearly that needs to change and where technology can help is with the communications and product switch processes. By offering end to end digital channels like the finova savings platform, banks and building societies can send push notifications via a smart phone app or web channel to inform customers when a better rate is available via another product. These institutions can then use this technology to offer seamless product switch processes.
FR: In the current market, customers’ expectations are always evolving. What do customer demand of a contemporary digital savings platform in 2023?
I think it’s critical in today’s fast paced lifestyle that the on-boarding process for new savers is as seamless and efficient as possible. I recently tried to open some savings accounts, and whilst the initial process started online, the moment I had to start printing out bank statements or proof of residence, I gave up and found an alternate provider. It’s critical the process is digital end-to-end – both the account opening process and the ongoing management. Platforms need to cater for EID tools to verify personas and need to start to leverage open banking APIs for linking to existing current accounts. Having a mobile app for the management of the account on an ongoing basis is also crucial: whilst people won’t necessarily fill out the application on mobile, people expect instant access to their accounts to manage their money.
FR: What does 2024 look like for finova?
2024 holds plenty in store for the team here at finova. We have some key announcements on the horizon that will spotlight the advancements in our technology and several key clients will be going live with our technology.
Winning new business is great, but seeing clients actually start to benefit from our technology in the market is most rewarding. finova has recently doubled down on delivery capabilities, both onshore and with wider off-shore partnerships, and we are already starting to see the fruits of that. We’re also excited to be launching new digital solutions in some adjacent areas where our technology operates, such as the savings market. We expect to see considerable growth and expansion in that area given the new rate climate.