Metrics Monthly Q3 | 21

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METRICS MONTHLY Are we heading for a bumper Xmas?

Q3 /21 30 Sept 2021

Time for tech? No going back Conferences making a come-back?


Christmas spending could be set to return to something like pre- Covid levels, according to data analysed by LendingMetrics.


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Editor's letter


Welcome to your Q3 edition of Metrics Monthly! After a less than tropical summer, Autumn is officially here, marking the turning point to colder nights and the much anticipated build-up to Christ- mas. This year, I'm embracing the new season: looking forward to those cosy evenings spent by a fireplace at the pub, getting the scarves out of the cupboard, putting pumpkin spice in everything and looking to make the most of the times ahead.

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as interest rates remain low. There are, however, warnings this winter than financial predators could prey on those facing financial vulnerability as millions could struggle to make ends meet in the coming months. Read all of this, and more, in our 'in the news' section. Our main feature this issue asks: 'is it the beginning of the end for claims chasers?', as our CEO David Wylie con- siders the impact of claims chasing on financial services, and discusses whether we could soon be witnessing the practice coming to an end as new technology allows digital audit trails that are able to stand up to even the most intense scrutiny. Read the full story on page 10. With our exciting end of year issue coming up next, make sure you don’t miss our Q4 edition by subscribing here to get it delivered straight to your inbox. In the meantime, you'll find me at the nearest coffee shop with a pumpkin spiced latte.

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I'm not alone, either, according to our headline piece 'are we heading for a bumper Xmas?', which sees Managing Director of LendingMetrics, Neil Wil- liams, analyse exclusive data to predict whether Christmas spending will rebound to pre-pandemic levels. We're expecting consumers to really make the most of this upcoming festive season, after 18 months of missed opportunities, and you can read about what sort of trajectory we're predicting on page 06. In this news this month is more posi- tivity, as house prices hit a record high

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Metrics Monthly | 03

In this issue

03 Editor's letter 04 In this issue 06 A bumper Xmas?

Christmas spending could be set to return to something like pre-Covid levels, according to data analysed by LendingMetrics.


07 Your questions, answered!

You asked: 'what exactly do your solutions do and how do they work together?' and we have the answers.

08 In the news

Some of the top recent stories, including whether lenders should remove pandemic-related criteria.

10 The beginning of the end?


CEO David Wylie asks whether the financial services sector can finally see claims chasing coming to an end.



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Q3 | 2021

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12 LendingMetrics updates

Our end of summer event, our recent customer satisfaction survey results and a big awards win.

14 No going back

The commercial lending sector is set to ride a wave of growth on the back of new technology. Wave goodbye to "Calendar Tetris" and say hello to in-person events this Autumn. 16 Conferences making a come-back


18 Customer stories

Darlington Building Society retain personal touch in their underwriting with assisted decisioning.

20 Time for tech?

David Wylie asks why some buy-to-let lenders are wedded to outdated back-office systems.

22 ADP: Instant changes

Time is money, and ADP can save you both! Find out how by watching our video.




Metrics Monthly | 05


A bumper Xmas?

Christmas spending could be set to return to something like pre-Covid levels, according to data analysed by LendingMetrics

The volume of transactions that pass through the financial technology com- pany’s ADP, OBV and LMX platforms have steadily increased month-on- month since the relaxing of restrictions in July. Third quarter volumes were up 18.9% on the same period in 2020, and this came on top of a 55.4% jump during the second quarter compared to the same three months a year earlier. This upward trajectory, says Lending- Metrics, suggests lenders will experi- ence demand significantly higher than 2020 levels. Consumer borrowing may even peak at - or even exceed - the level reached during the Christmas period of 2019. Managing Director of LendingMetrics, Neil Williams, said: ‘The data suggests lenders may be in line for a significant

uplift in demand as we move towards the end of the year. Additionally, feed- back from core clients confirms that the vast majority have plans for increased transactions during Q4 and into the first quarter of the New Year. Whether spending beats 2019 levels is going to be the key question.’ "Whether spending beats 2019 levels is going to be the key question." LendingMetrics’ MD points to a number of factors buoying spending. Along- side the relaxation of pandemic restric- tions and increased travel, the average consumer is starting to see a notable increase in disposable income due to the prominent topic of wage inflation which will likely outstrip retail inflation.

However, any re-introduction of restric- tions will likely derail the bounce-back. Mr Williams added: ‘Whilst the mood and wider industry are optimistic, prag- matically we have to remember that the picture remains uncertain. Mainstream media is warning of a possible return to some restrictions during the coming winter, despite there being no confirmed government plans for this.’ LendingMetrics saw a 7.2% drop in loan volumes in Q4 2020 compared to the previous quarter that was triggered by the start of last winter’s lockdown, so it’s not unlikely that the same dip may occur again this year. Regardless, a national mood of growing employment stability and record levels of job vacan- cies will almost certainly lead to a wider use of credit to achieve consumer aims.

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Your questions, answered!

One of the biggest questions our Busi- ness Development Team get is: what exactly do your solutions do and how do they work together? Well, you asked, and we have the answers. We've put together this short video

to explain how our three key products - ADP, OBV and LMX - can work as standalone platforms or be integrated with each other based on your specific requirements. It's a concise yet clear overview of our multi-award-winning solutions, that

explains why we're leading the way in financial technology and what makes our products so unique. To find out more about our award-win- ning products and solutions, visit our website or book an exploratory call today.

Check out our brand new video below!

eye OpenBankVision Categorised bank statement data View transactions in real-time 100% free, forever Find out more

The events of the past 15 months have been tough on us all, but many indus- tries have weathered the storm and the end of restrictions is in sight.

Now, it's your time to go on that much needed summer break; it's your time to hug your loved ones; it's your time to finance that new car you've had your

Metrics Monthly | 07


In the news

Should lenders remove pandemic-related criteria? The support offered to people who became financially vulnerable as a result of the pandemic has been a life- line for some, but as many Government backed schemes - such as payment holidays and the furlough scheme - begin to wind down, it's becoming clear that this support can't last forever.

Almost 70% of respondants - who are most likely made up of mortgage inter- mediaries - opting for "as soon as pos- sible". A further 16% voted "the end of this year" and 14% said "no earlier than next year". This shows an obvious desire for lending criteria to return to how it was pre-pandemic, however as the results of the past 18 months have shown us, lenders are keen to continue providing adequate support and not leave bor- rowers without a paddle.

In a recent poll, Mortgage Solutions, asked: "when should lenders start considering the removal of pandem- ic-based criteria?" and the results pointed in one clear direction.

LendingMetrics’ ADP and Credit Kudos integrations enhanced Finance providers are now able to use LendingMetrics’ Auto Decision Platform to call Credit Kudos data for use with assisted decisioning. integration will give our customer base an unrivalled and ever increasing range of data sources. Once they have gained the necessary authorisations, they’ll be able to seamlessly include more award-winning technology in their deci- sion making and, in doing so, take their businesses to the next level.’

Thanks to an enhanced integration by ADP, its users can tap into a range of Credit Kudos data. Providers can now utilise ADP to use the data available to them from Credit Kudos’ suite of prod- ucts appropriately in their decision- ing, such as Open Banking data which includes credit scoring, effectively using financial behaviour to measure creditworthiness. Clients are already seeing the benefits of the complex integrations and are combining them with LendingMetrics’ own CRA data platform The Lending- Metrics Exchange (LMX) to include multi-bureau credit search information in their decisioning. With all of this facil- itated within ADP, the multi-award-win- ning intelligent solution is now more comprehensive than ever. David Wylie, Commercial Director of LendingMetrics, said: ‘This enhanced

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The demise of doorstep lenders has left a dangerous vacuum This winter there are warnings of finan - cial predators preying on those facing financial vulnerability.

House prices hit a record high Data from Rightmove shows a monthly increase of 0.3% for September, with the average house price on the market at £15 higher than July's previous record.

ed lenders could prey on families with fewer options, according to Fair For You's Interim CEO James Wilkinson. Fair For You are an affordable credit provider that enables people to buy home essentials like beds and cookers. Mr Wilkinson said: 'There are millions who can’t get mainstream credit and they’ve not stopped needing to borrow money for emergencies. We’ve never been busier, but we can’t fill a £1.6billion hole overnight. There are unregulated lenders preying on families with fewer options. Signposting people to fair alter- natives is an urgent challenge.'

Millions could struggle to make ends meet in the coming months, due to potential unemployment after the Fur- lough Scheme ends, removal of the Uni- versal Credit uplift, rising prices and the expensive Christmas period. The warnings come after High Cost Short Term Credit saw a fall of £1.6 billion since 2016, resulting in the col- lapse of many "doorstop" lenders. With fewer HCSTC options, unregulat-

Whilst interest rates remain at record lows, buyers are borrowing more at an affordable level. This has stabilised the market after the fluctuation caused by the pandem - ic, beginning the start of what is traditionally a busy Autumn period. The first two weeks of September saw 14% more new listings than the two weeks prior, increasing the annual rise of average house prices to to 5.8%. Director of Property Data at Right- move, Tim Bannister, commented: 'The frenetic pace of this year’s market may also have put some potential movers off, but there are signs of a return of some normality'.

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The beginning of the end?

David Wylie asks whether the financial services sector can finally see claims chasing coming to an end There can’t be many industries that have been as badly impacted by claims chasing as financial services.

evaporate when it became apparent that the claims industry had no inten- tion of going away quietly. New areas of mis-selling such as subscription current accounts, short term credit, and point-of-sale finance were to be mined to provide new streams of income. "Claims chasers are an albatross that is im- possible for the industry to shake off. " Cleverly, many of the 1,500 firms that had grown fat on the claims business had ensured their clients included details of other financial products they had bought when they filled out their applications for PPI compensation.

Although changes to the law have slightly restricted the scope for such claims, still the Ombudsman regime remains there as a sort of ‘heads you win, tails they lose’ for claimants. Inves- tigated companies have had to pay a fixed admin fee irrespective of whether the claimant wins or loses. The result being that there is every incentive to pursue a dubious claim and firms are pushed to settle before referral to the Ombudsman. Anyone could be forgiven for thinking that claims chasers are destined to per- manently hang around financial servic- es. An albatross that is impossible for the industry to shake off. Well, thankfully, I think such pessimism is wrong. I believe we are witnessing the beginning of the end of claims chasing.

The total cost of PPI mis-selling is reck- oned to be £53 billion in the UK. To put it into perspective – that’s £900 for every man, woman and child in the country. The hit to the sector has helped suffo- cate bank profits for most of the past decade and the threat of compensation claims has loomed large on the horizon for every lender and intermediary. When a moratorium on PPI claims was introduced at the end of August 2019, the industry briefly breathed a sigh of relief, only for that relief to

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Why my optimism? For the first time ever, the back office systems that lenders have been intro- ducing are going to make it much, much, more difficult to get a claim to stick. We all know how assisted decisioning APIs – the Open Banking-based plat- forms that automate much of a lender’s underwriting process – have improved the application process. There can’t be many who are still unaware of how they ensure rapid, optimal outcomes for both the lender and the borrower. Plat- forms such as LendingMetrics’ Auto Decision Platform (ADP) have been quietly working in the background for some years now, generating the right decisions from both the consumer and credit risk perspective. There will not be as many, however, who are aware that the technology has a welcome extra benefit. It means lenders no longer have to rely on patchy

due diligence documentation – often amounting only to a disparate mix of paper proofs – when trying to defend mis-selling claims. They now have a robust decision-mak- ing process, not susceptible to human error, that generates a digital audit trail able to stand up to the most intense scrutiny. All of the data elements that go towards making every decision are stored and an audit is kept of how they are used. The lender has a lending policy that is signed off by their compliance team and it is diligently enforced by technol- ogy. Compare this to the past where its implementation was to some extent based upon the subjective interpreta- tion of the underwriters. The decision making is 100% consistent and backed- up by a digital footprint. Going forward, if a mis-selling claim is made, a lender has a watertight justi- fication for its decision to present to a regulator.

Furthermore, claims chasing compa- nies have a known ruthlessness for targeting those lenders that they think have weaker systems. Utilising assist- ed underwriting technology is going to act like installing a burglar alarm on a house. Why target that house when next door is alarm free? Predictably, we are going to see chasers going for those lenders who are deemed to be the most susceptible. Those who are wedded to their analogue underwrit- ing regime. But for those with the assisted deci- sioning in place, they now have what could even be seen as a silver bullet. There will still be the historic cases made under their old-style decisioning that remain more vulnerable to claims, but that number will dwindle over time. Going forward, they can at last allow themselves the thought that the clouds of claims chasing are finally parting.

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LendingMetrics updates

The LM team take to the water for their end-of-summer event After the past years' restrictions making company events difficult, the UK team were pleased for their quarterley get-to- gethers to return, starting with an evening spent kayaking on the Hamble river.

They were fortunate to have good weather, and only one pair capsized, luckily close to the shore, being able to see the funny side and dry off at the local pub. The rest of the team joined shortly afterwards and enjoyed a three- course meal along with a few drinks. It was a fun occasion, with many of the team glad to see the end of restric- tions and the beginnings of a return to normality.

The team dressed for the occasion, sporting workout clothes and water shoes, and took to the water in single and double kayaks.

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Customer service survey feedback Here at LendingMetrics, customer service is a major factor in everything we do. From the moment you engage with us, throughout implementa- tion stages and then with continued ongoing support for the length of contract; we want to ensure that we provide the best possible service.

For the question 'On a scale of 1-10, how quickly are you responded to when you raise an issue with LendingMet- rics?', the average score was an impres- sive 9.24, which we were delighted with as our support ticket system is some- thing we're particularly proud of. Our dedicated team of support engineers are on hand to respond to any query, large or small, and we also have an out- of-hours support line, ensuring there's always someone on hand to deal with your request. We like to ensure our software stays ahead of the game and that our clients needs are being fulfilled, which is why continued R&D is so important to us. The feedback we received in the survey will contribute to our future roadmaps and help us prioritise our upcoming changes. If you left us a comment about what you'd like to see more of, be sure to keep an eye out for your sugges- tions in our future plans.

Part of this promise involves conducting an annual customer satisfaction survey, which uses ISO approved scoring and questions to provide an opportunity for our customers to give us open and honest feedback. Now in their fifth year, the surveys enable us to continually improve, and this has been reflected in each years' results, as the scores have improved across the board year-on-year. This Autumn, we're pleased to announce our highest ever scores, with customers rating the overall service received from LendingMetrics as 9.06 out of 10 on average.

We also some received some great praise for the company and our proprie- tary platforms. Here are some of our favourites: • 'We have monthly contact with Lend- ingMetrics, they are incredibly friend- ly, always willing to help and any queries they have are clear.' • 'LendingMetrics are always very responsive to our requests.' • '[We're] really happy with the move to ADP and we have realised significant business benefits as a result.'

LendingMetrics wins at the Consumer Credit Awards

exemplary customer service, and always strives to improve by encourag- ing open communication with clients. As a result, the company has built an enviable reputation as a positively disruptive force in the Fintech sector, bringing its customers and connec- tions innovative software solutions in a range of lending spheres. Commenting on the news, Head of Operations Paul Brown said: "We're thrilled to have won Technology Partner of the Year as it shows the effort and dedication we put into good customer service has paid off. I'd like to thank all of our clients and partners who voted for us, and look forward to seeing some of you in person in the coming months.'

LendingMetrics is delighted to have been awarded 'Technology Partner of the Year" at the 2021 Consumer Credit Awards. It is the third time the company has won a Consumer Credit Award, and the second consecutive year that they have achieved the title. The awards, run by Smart Money People, are one of the few awards of its kind that are entirely voted for by customers, and this year an impres-

sive 30,000 people voted. Putting customers at the heart of the industry, the organisation aims to increase trust and transparency in financial servic - es. LendingMetrics required a large number of votes in order to reach the final stage of the awards process, and even more to be crowned winners on 23rd September 2021 in a live digital event. LendingMetrics takes pride in its

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No going back

David Wylie, Director of LendingMetrics, says that, as the UK finally emerges from restrictions caused by the pandemic, the commercial lending sector is set to ride a wave of growth on the back of new technology. The commercial and business banking sector has never exactly been an early adopter of technology. The prevailing feeling has always been that businesses prefer a closer relation- ship with their bank over adoption of new technology and ease-of-interface. Unlike retail, the commercial lending infrastructure in place at most of our major lenders is designed around that fundamental truth: relationship trumps most other factors, and sometimes even surpass the cost of finance. Although some will say that close rela- tionships are its strength - especially those intermediaries for whom this is

their USP - it has obviously also been a fault line. It has led to sub-optimal systems remaining in place in this sector when they should have really disappeared years ago. There are, of course, new-en- trant exceptions such as Capify, Iwoca and Ondeck, who have brought fresh new approaches to the sector, but the default has been paper trails, in-person visits, lengthy decisioning, and unre- alistic demands placed on business owners’ time. If the pandemic has shown us any- thing, it’s that when we have to, we are able and more than willing to embrace technology to make our business and working lives much easier. The government’s multi-billion-pound SME business support package has been delivered in record time via swift online application and decisioning. There has been a tremendous effort involved in delivering this volume of finance to recipients in the shortest

possible timeframe. Infrastructure hurdles, such as build- ing API integration and digitizing the front-end for borrowers, have now been overcome. FinTechs have worked with banking executives and civil servants, applying their expertise so that funds can be distributed to as many business- es as quickly as possible. This pace simply couldn’t have been achieved without new technology. "The pandemic, and the resulting inability to conduct traditionally paper-driven, face-to-face loans, has forced commercial lenders to embrace the digital transformation." I’m not sure many of the enterprises now bouncing back would have been able to rebound quite so quickly, had

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Related articles Time for tech?

they had to rely on booking an appoint- ment with their bank’s business devel- opment manager. The pandemic, and the resulting inabil- ity to conduct traditionally paper-driv- en, face-to-face loans, has forced commercial lenders to embrace the digital transformation. They all now recognize the long-term implication of the shift and understand that it is an imperative. Commercial finance providers know just how much it is going to transform traditional lending models. For clients, it is going to mean easier, more self-service loan applications and faster, optimised approvals. For lenders, it will mean slimmed down back offices (focused on intervention that adds value rather than process),

the ability to scale-up rapidly, and profit-maximising lending. They will be focusing on data as never before and be encouraged into ‘housekeep- ing’ their legacy data, benchmarking it against that of third party provid- ers. This will provide them with more effective databases that can optimise their lending. Because of this, I can see rapid advancement for commercial lenders and their FinTech partners in the years ahead. The rebounding of the economy is going to lead to a lot of SMEs looking for easy-to-access finance as they plan to meet growing demand. They are likely to prefer those channels that offer the quickest and best-value route. Something that just won’t be possible with more manual- ly-driven processing.

David Wylie asks why some buy-to- let lenders are wedded to outdated back-office systems.

Take me there

Customer service survey feedback Here at LendingMetrics, customer service is a major factor in everything we do, which is why we conduct an annual customer service survey and, in this issue, share with you the results!

Read now

ADP: Instant Changes

Time is money, and ADP can save you both! Find out how by watching our video.

Find out more

Metrics Monthly | 15


Conferences making a come-back

Wave goodbye to "Calendar Tetris" and say hello to in- person events this Autumn. During the past 18 months, face-to-face conferences almost completely died out. The pandemic stopped organisers in their tracks, with many events being moved online or canceled altogether. The uncertainty surrounding restric- tions in the UK made it difficult for coor- dinators to arrange anything concrete, without fear of another lockdown or more last-minute changes. Here at LendingMetrics, we under- stand the importance of face-to-face meetings, and conferences in particu- lar, as they give our Business Devel-

opment Team a chance to shine, and to best express their passion for our multi-award-winning platforms, some- thing that - we're sure you'll agree - just doesn't come across in the same way when hiding behind a screen. Confer- ences provide an unrivalled opportunity to meet likeminded people, make new connections and give potential part- ners an overview of what we do without the need to play Calendar Tetris to try arrange yet another Teams meeting. That's why, when we heard that confer- ences were making a come-back this Autumn, we were thrilled for our team to get back on the road, starting with the Consumer Credit Association's Annual Convention at the Titanic Hotel in Liver-

pool. Armed with a brand new banner stand and plenty of pent-up energy, our Business Development Managers headed North with the convention as their first stop before a week of in-per- son meetings and discovery sessions. The event hosted a range of delegates largely from the consumer lending sphere, and provided networking oppor- tunities as well as a way for attendees to learn more about the industry. Our very own Hamish MacCormick gave a presentation about the benefits of Open Banking at the convention, focusing on use cases surrounding the hot-topic of affordability, and followed by a lively Q&A session.

Above: LendingMetrics Business Development Managers enjoyed hosting a stand at the CCA Annual Convention in Liverpool

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Above: The brand new ADP conference stand, complete with QR code that takes users to an exclusive webpage About the conference, Hamish said: 'The CCA Annual Convention was a great way to mark the beginning of the return to in-person events and we were pleased to be able to attend. The Peaky Blinders themed gala dinner that fol- lowed the convention was a particular highlight, with great food and entertain- ment, and the Covid-safe measures in place were well considered. The events of the past year and a half have remind- ed us how important face-to-face com- munication is, whether that's when it comes to building rapport with clients or demonstrating the cutting-edge abili- ties of our products and services. We're looking forward to spending more time out of the office in the coming months and a gradual return to pre-Covid normality.' The eventmarked the start of what looks like a busy few months ahead, as award season commences and a number of

networking events are already in the diary. Among them is the NACFB Com- mercial Finance Expo, a one-of-a-kind flagship event that sees brokers, lenders and funders all in one place. Hosted at the NEC in Birmingham, the event will be held on the 30 th September 2021, We look forward to meeting more potential partners in-person and bidding farewell to conversations through the screen, hopefully once and for all.

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Customer stories Darlington Building Society retain personal touch in their underwriting with assisted decisioning

About Darlington Building Society is a spe- cialist lender who operate in both the standard and more specialist areas of the mortgage sector. They pride them- selves on taking a personal approach to their members, and being a building society allows them to turn their profits into cost savings for their customers, as well as support for the local community. Why LendingMetrics? Darlington had decided to utilise finan- cial services provider Iress’ software, and, in doing so, were introduced to the benefits of assisted underwriting

technology. LendingMetrics was rec- ommended by Iress, who commended how flexible the company’s solutions are and how they are able to cater to individual needs rather than being a static “out of the box” system. Darlington’s main motivation was to maintain their ability to review individual applications whilst removing the unnec- essarily manual parts of the process. LendingMetrics’ ADP allows for assist- ed decisioning, meaning that Darling- ton could continue to take a personal approach to their decision making. Dar- lington aim to listen to the story behind the application, ensuring they fully

understand the context and complexity of any situation before making a lending decision. ADP allows Darlington to con- centrate on making those assessments without losing their personal touch. The experience When establishing the relationship with LendingMetrics, the lender felt it was important that they fully understood their requirements and business model, and LendingMetrics’ dedicated Project Manager and team of Business Ana- lysts factored this in from the start

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The project was structured around the client, with their goals at the forefront, and LendingMetrics’ personalised approach allowed them to be effective- ly delivered. The result Darlington values their underwriters’ knowledge of policies and, as a result, their first class decision making. By using ADP to assist this approach, Dar- lington could reduce the time to deci- sion without having to standardise their lending, providing their brokers with a more efficient route. This allows their underwriters to focus on the areas that need more consideration, without the need to use credit scoring. Another benefit is that brokers will receive imme- diate feedback, establishing better relationships and further speeding up processes. The building society is currently in the final UAT stage of the project, following an efficient implementation process, which has been the turning point for the provider as their team have started to really get to grips with the system and are beginning to reap the rewards.

Darlington’s full integration with ADP will soon be live and they are excited to see what the future holds when the system is rolled out completely. About the project, Chief Technology Officer Neil Williams said: 'working with Darlington has been enjoyable and has provided us with a great opportunity to really see how ADP can be effective- ly used for assisted - as well as auto- mated – decisioning, alongside manual underwriting. We’re looking forward to seeing the integration go live and for Darlington to fully utilise the benefits of our multi-award-winning solutions'.

Darren Ditchburn, Chief Customer Officer at Darlington Building Society, added: ‘when we first started to work with LendingMetrics we saw the poten- tial of assisted decision engines and the benefits they would bring our busi- ness. We pride ourselves on the level of service and personal approach we have on each case and, with the help of the LendingMetrics team, believe we have developed a solution that will allow us to focus on the details of the case and arrive at a decision quickly, in a way that maintains our quality of service’.

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Metrics Monthly | 19


Time for tech?

David Wylie asks why some buy-to-let lenders are wedded to outdated back-office systems.

The buy-to-let market has never been so potentially problematic for lenders. I started my career in the mortgage industry back in the heady days of the early nineties, so can remember when it was undergoing a dizzying rate of expansion on the back of high-and-ris- ing demand for rental property. For the landlord, making a decent return on their investment was relatively straightforward. Light touch regulation was the order of the day and there was a plentiful supply of suitable proper- ty and good tenants. Even if net rental returns fell, large gains from capital appreciation more than made up for the shortfall. From the lender’s perspective, caveat emptor - or “buyer beware” - was the regulatory stance, and if a loan fell into arrears there was always an appreciat- ing asset to act as security. Given such a benign backdrop, the screening of borrowers was pretty rudi- mentary in comparison to what it is today. Unsurprisingly, the product that came to symbolise the period was the ‘self-certification’ mortgage, where the lender largely relied on the say-so of the borrower. Contrast this with the picture today. For landlords, it is nowhere near as easy to make such a good return. Much heavier regulation means adherence to a range of health and safety and tenancy tenure requirements that have dramatically increased costs. Add to this the fact that there is a smaller pool of suitable property to buy, and many more landlords all looking for a decent tenant, and it is no surprise that returns have become slimmer and risks greater.

As a consequence, for lenders, the mar- ket’s risk profile has undergone consid- erable change. There are nowhere near the same number of quality applica- tions as there used to be, and, following the regulation of consumer buy-to-let lending and the FCA’s Treating Custom- er Fairly initiative, the downside costs of poor lending decisions have become much greater. So, given this much more demanding environment, you would imagine that buy-to-let lenders would have been rushing to utilise digital tools that make lending far less risky for them; tools

that have been available for the last five years or so thanks to enhanced tech- nology and initiatives such as Open Banking; tools that can provide granu- lar insight into prospective borrowers in seconds by interrogating line-by-line their finances. Well, I have to say that in most cases they have not been doing this. By and large there has been no rush. Most have stuck to the sort of analogue systems they were using back in the nineties when market conditions were so very different.

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Heavily dependent on manual input and legacy infrastructure, they still rely on historic data sources and paper proofs. Buy-to-let back-offices remain stuck in the slow lane when it comes to deliv- ering speedy outcomes and reaching optimal underwriting decisions. Rather than being energised by their systems, many lenders are hobbled by them. So, why is this the case? My answer to this question is that it is down to a combination of reluctance to give up the old ways of doing things, and disbelief at how effective new tech- nology can be. The “why fix something when it isn’t broken” mindset pervades, alongside an inability to see how easy it is to implement platforms, such as our Auto Decision Platform, which deliver more optimal lending decisions at the same time as reducing costs. As the early adopters of this technology (who are steadily increasing in number) garner larger shares of the market on the back of their new-found flexibility, I can’t see this situation lasting for much longer. If anything, borrowers will make the decision for them as they migrate increasingly to online portals that require almost instant decision making. Soon, even themost reluctant to change will be forced to, if they want to continue to thrive.

In the next quarterley issue.... In our next issue of Metrics Monthly, released at the end of Q4, you can expect your usual dose of news, industry highlights and thinkpieces, as well as:

• Did Q4 lending rates rebound as expected and were they higher than Q4-2019? • Catch up customer stories: find out how our clients have found their experience with LendingMet- rics one year down the line. • Our end of year summary looks back on an interesting 12 months of lending, and predicts what we expect for 2022.

• Why do some lenders delay making timely changes to their scorecards? • Unsecured loan specialist Credit- star recommends ADP to anyone that would benefit from it in our new customer story. • LendingMetrics' A Year in Review: we look back at some of our high- lights and big moments from 2021.

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Above: LendingMetrics Commercial Director and co-founder David Wylie

Metrics Monthly | 21


ADP: Instant changes Time is money, and ADP can save you both! Find out how by watching our video below.

Frequently Asked Questions Who is ADP integrated with? All of the major credit bureaus including Equifax, Experian and Illion/Proviso. We are also integrated with Open Banking, Machine Learning, SME–Business data and various other fraud and ID solutions, so you can easily switch bureau or go “multi-bureau” without any fuss. How will ADP save my business money? • More lending with fewer new staff • Better credit decisions = better loan book performance • Trade 24/7 = convert more customers What if I want to retain that human touch to my underwriting? The degree of automation is totally within your control. You can provide fully binding decisions or simply an approval in principle. You can even give binding answers to people above a certain credit threshold and an AIP to others requiring more in-depth investigation. The choice is yours.

How will ADP improve my compliance and credit risk processes? By removing human subjectivity and error from those criti- cal aspects of the decision making process and instead making consistent decisions based upon data and evidence, your clients will be consistently checked and verified exactly in accordance with your policies. This makes your systems more robust and enables you to assess performance on a known benchmark rather than unquantifiable “underwriter intuition”. Can I see it for myself? Of course! We can’t wait to show you a virtual demo. Please get in touch via our enquiry form here or email us.

22 | Metrics Monthly

Q3 | 2021

It's your time to find out why we're winning awards for our cutting-edge financial technology products! Whether it's for intelligent assisted

decisioning, multi-bureau credit refer- ence data or fully categorised Open Banking statements, our solutions can save you time and money, and work

across all sectors, from consumer lending to online gambling. Get in touch to book an exploratory call today! +44 (0) 2394 211010

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