The smartphone revolution
As mobile banking becomes more prevalent, Barry Yager and John Corr discuss how smartphone technology can eliminate 15-25 per cent of costs in mortgage processing
In the past few months, lenders ability to communicate and do business with their customers – both intermediaries and borrowers – has been transformed, surprisingly for some, through the use of smartphones.
Previously thought of as emerging technology, here are some statistics which highlight the very serious part that smartphone technology has to play in lender operations:
1. Smartphone technology can enable 15-25 per cent of costs to be eliminated from mortgage application processing for lenders.
2. Smartphones enable customers and the complete supply chain to be integrated into a lender's workflow system quickly and easily within 30 to 90 days.
3. Smartphones enable significant improvements in customer service both to intermediaries and the customer.
4. Smartphones can be used as a highly effective platform for cross-selling and upselling opportunities with lenders’ customer base.
The latest smartphone technology was developed due to Barry Yager’s negative experience moving house. When getting a mortgage for a new flat, the lender held up completion as they had lost track of the copies of my P60 somewhere between my mortgage adviser and the lender office. The mortgage adviser was on holiday and the lender wouldn't release the funds without full proof of income and hence the transaction was delayed.
Smartphone technology has changed this situation to such an extent that this issue just doesn’t arise for the lenders that use smartphones as a means of communicating with their customers. Now all that would have been needed in the situation above would have been for me to take a photo of the P60 on my smartphone and the documents would be captured and transmitted in real time into the lender’s workflow system, solving the issue in minutes rather than the days it can take with some current technology and enabling the house purchase to be completed.
Mobile devices are effectively the new end point of computing. It wasn’t so long ago that the finance world was pretty horrified at the thought of having email and the internet at all. However, none will now deny that this technology has transformed the way that banking works.
Systems have become more decentralised as a result of the ability to communicate online; it starts with communication and culminates in the distribution of work, the logical next steps meaning that lenders need to do less, their costs are lower and at the same time their processes are quicker and more efficient.
It was not so long ago that if someone wanted a mortgage they went into their local bank or building society branch, spoke to the adviser in the branch, applied for the mortgage in the branch and each mortgage was processed by staff there individually. The internet has made it possible for mortgage processing to be centralised, performed by a team of specialists in a location away from where the application was completed, already in a much shorter time by fewer staff.
Now it is obviously possible for a borrower to apply online; mortgage advisers submit their client’s applications and other documentation via email and for signatures to be scanned. By enabling people to apply in this way, lenders can cut costs, improve efficiency and do this in a more co-ordinated way that means that the core work can be centralised.
The next step in electronic communication has meant that a lender can achieve economies of scale without having to have everything in one place so you can distribute functions to the locations it works best for you to have them.
Smartphones take this one step further by requiring the client to do the work rather than the lender’s staff; with smartphone technology, the lender can communicate instantly with the client telling them what they need to provide, the consumer can now use their phones to answer questions directly from the lender, provide information, send document and key in other text and numerical data.
For example, if a lender needs a piece of information from a client, such as clarifying address details, or their partner’s wage information, the request can be sent to the client instantly via their phone, reaching them wherever they are. Just as quickly the client can respond, keying the required information into their phone, not via a text, but on a secure area that goes straight into the lender’s system, the information is updated instantly.
Previously such a request would have been sent by post and the response would also be by post with days and sometimes weeks elapsing in the request for simple information; or there would be repeat phone calls and chains of information. Until now 30 per cent to 40 per cent of a lender’s mortgage costs would be handling those enquiries. This time and expenditure can now be saved, revolutionising the way a mortgage is handled. Now everything can be done electronically, so the call centre can focus on more complex issues that need solving.
What is revolutionary is the ability to allow the client to get involved in the process. The client likes it because they feel that they are in control, they can help the process along and do not feel like their information is disappearing into a black hole.
The intermediary likes it because the process is completely transparent as it enables both intermediary and client to see exactly what is happening with a case, what stage of the process it’s at and what information is still outstanding. It also enables the intermediary to submit information on their client’s behalf, knowing they can do it from the office or on the road and that it will be updated instantly, saving them time and enabling them to see more clients and also to provide a better service.
Finally lenders like it because it saves time, money and hassle. Cases can be processed more quickly with fewer staff and at less cost.
What is also key for lenders is that the smartphone used in this way also provides a very powerful method of cross selling products or other services to the client. By the end of the mortgage process a lender has a wealth of information on the client gathered from credit searches, wage slips and details of savings accounts etc.
The smartphone system enables you to offer savings, insurance products or any service you feel is appropriate to that individual client at the stage of the process that you feel is most pertinent. The offer can be tailored to the individual but at little time expense or cost to the lender. Then, once you have the client’s interest, you can also process the new transaction electronically via the smartphone.
Finally, if a consumer still has a question or query about any stage of the process, they can click a button on their smartphone and be put straight through to the call centre; but because they will be phoning about a particular issue they had a challenge dealing with on their phone, the particular concern can appear on the screen of the call centre staff, together with the client’s name, details and full file before the member of staff even answers the phone, providing a better service and enabling you to deal with calls much more quickly.
How it works
A smartphone comes with all the ingredients to be fully integrated into a lender's workflow system rapidly and at minimal cost and effort, that’s because the smartphone contains all the key ingredients to expedite the mortgage process including internet access, ability to download and install 'apps' in seconds and a high definition camera for photographing key documents so that they can be instantly sent through to the lender.
Smartphones are now ubiquitous, there is no need to worry about whether a customer or supply chain partner has expensive equipment and software to be integrated into your workflow system as everybody has a phone and the UK has one of the highest adoption rates for consumer smartphones in the world. By the end of 2011, over 50 per cent of phones in use in the UK were smartphones and 90-95 per cent of new phone purchases are now of smartphones.
People love their phones and giving them the ability to participate in their mortgage process via their phone means they can engage with the process, can track and monitor progress 24/7 and can easily and efficiently provide you with additional information, all using their smartphone.
The benefit to the customer, both the intermediary and the end borrower is that they can track and monitor progress on their mortgage application and completion process 24/7. They can also respond immediately and easily to requests for information and documentation.
A unique feature of the smartphone technology is its ability for the lender to send notifications to the consumer which come through to the customer’s phone similarly to a text message, but which are actually from the lender’s secure server and enable the customer to act on the information instantly or to set reminders for a later date.
As a result customers save a lot of time and effort engaging with the mortgage process compared to manual or web based approaches, and notifications such as the fact that the mortgage has been approved can be sent and received instantly in a way that is completely secure.
What does the future hold?
The future is moving so quickly that it is hard to predict. What I can say is that there will be many different models of working and of selling and the way that we bank or take out a mortgage is likely to change significantly. Technology will continue to develop, if anything, gathering pace still further. These developments will spawn new ways of working and new business models.
It is easy to see the transformation that the internet and online transactions have had already; without it companies such as Amazon, Ebay and Pingit would have been unable to exist. These companies have all been developed on the back of new technology and other business models will continue to be born as the technology evolves still further.
This will, of course, have an effect on the way financial services products are bought and sold; pressure from the Financial Services Authority, from consumers and from government will increase the demands on lenders to become more transparent, create efficiencies and reduce their cost bases and all of these things will naturally come from technological solutions. Business people will also become more familiar with different forms of technology which will make it easier for organisations to adopt new technology and for it to be embraced.
These new developments will not just be about the internet, but about integration; integration with intermediaries and client facing software. It will also mean integration with other services, such as location services. Companies will increasingly use client information to communicate with them and will market to them in a way that is more personal, and, being personal, it is increasingly likely that the mobile phone will be at the heart of this.
For example, it’s highly likely in the next year or two that when you walk down the street past your favourite shop or restaurant you will get a text telling you what offers are on today and inviting you in. Similarly it is likely that when you enter the shop or restaurant you will no longer need a credit card to pay with but you will complete the transaction with your phone instead. This is the sort of service that financial services companies will have to catch up and compete with.
Current smartphone technology for lenders is the logical next step in technological advancements that you have already embraced and it is the equivalent of providing a client with their own adviser in their room at all times: via their phone the “adviser” can tell them what information is needed, when it’s needed by and what the client can do to facilitate this or push the case along. The virtual adviser will also be selling your other products and services on your behalf.
All information from the client goes straight into the lender system making the client’s phone an extension of the lender’s system.
The successful businesses of the next few years will be those who can embrace this technology, and take advantage of the cost benefits and greater customer engagement that this affords.
Barry Yager is the founding director of iState Systems and John Corr is managing director of Close Quarter