Improving systems and embracing consumer technology will be key to driving new growth
The second mortgage industry has continued to respond to growing consumer demand, as it gears up for the FCA regulation from 21st March 2016.
The number of lenders and lending products has shot-up in the last 18 months and the funds available to lend with the secured arena have more than doubled.
This increased appetite to lend has brought more competition, better rates and more innovative products for customers.
We are also seeing larger brokers in the market establishing consumer brands and working better to position second mortgages alongside mainstream borrowing options like unsecond mortgages, car loans and remortgages.
Under the FCA regime there will be a need to enhance transparency and choice, ensuring consumers have the right information at the right time to make educated decisions when borrowing money.
By adopting such an approach to their customers, brokers will be in better position to meet the compliance guidelines of the FCA, whilst building trust with consumers.
Despite this growth and positive response, I feel the industry needs to improve how it communicates with customers and manages the application process.
This will require brokers and lenders working together, to ensure the customer experience is a smooth and hassle free one when borrowing money.
We do most of our communication through smartphones and tablets, but the majority of the industry is still using a paper based system when it comes to processing a loan or mortgage application.
My research has shown that people want borrowing money to be a simple and straightforward process, and developing digital consumer technology will be at the heart of this consumer experience in the future.
Of course, this will take significant time, planning and investment and will pose a challenge to the industry as a whole.
But it is a challenge we should embrace.
I meet with brokers and IFAs every day and they keep telling me that they want a more interactive and transparent system from lenders when processing applications.
They will increasingly demand a paperless system, which will enhance the speed and efficiency of the application process and provide a better platform to give more regular and responsive updates to the customer.
We as an industry must meet this demand, supporting our partners in growing sales and complying with the strict regulatory guidelines of the FCA. We should however, never forget that this business is also about people, the personal touch and customer service, so whilst the process becomes more digitally driven and more efficient, we must ensure that we provide accessibility to real, experienced and knowledgeable people when the need is there.
It’s also reassuring to see that lenders are now taking the opportunity to invest in and improve their IT systems and infrastructure ahead of April next year.
These improvements will improve the broker and customer experience, ensure legislation is followed and provide a better digital experience for customers.
Taking this approach will ensure the industry keeps pace with technology development, whilst building on the current growth curve.