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As someone who spent much of his early working life in financial servic - es, I can see uncomfortable analogue versus digital parallels for our own sector. Aside from the obvious one that some lenders have expensive high street presences, I can see another: failure to change with the customer. Specifically, too many lenders are stick - ing to what are still basically analogue back-office systems that lead to service delivery standards that fall way short of today’s customer expectations. The industry is hobbled by systems for assessing risk and processing applica- tions that have not really changed much in the past 30 years. We’re still living with paper proofs, historic records and long lead times. While this has not dramatically impact- ed lenders until recently, we are now moving into an era when this will no longer be the case. Shifts that have been latent are going to be moving at light speed before long, thanks to the massive changes that we have seen to all of our lives over the past 12 months. Age-old buying habits are going out the window. Whether lenders like it or not, we are moving into an era of ultra-fast deci- sioning and instant gratification. While we as consumers are familiar with this in fast moving consumer goods, it is also beginning to be expected in finance. Already, long gone are the days when anyone would have to wait days for a decision on their personal loan application. Now, if they go to the right provider, they can get a final decision in minutes thanks to real-time data mining and automated decisioning platforms such as LendingMetrics’ ADP. For consumers, speed of final decision is going to become much more impor- tant in all areas of finance, including mortgages.

Much like those businesses men- tioned, many lenders are oblivious to this seismic change in the terrain. They figure that their almost captive and lit - tle-changing customer base is going to be there for them year-in year-out. Market share and success, they believe, is mostly a function of having compet- itive products and, to a lesser extent, customer service. Tinker the interest rate, the fees-free element, qualifying criteria, or LTV, etc, and you win yourself more business. If your pipeline of cases dips, you just adjust one or more of these variables to get it back to where you want it to be. "The future is going to belong to those lenders who, via new technolo- gy, can process appli- cations electronically using real-time refer- encing and deliver final bespoke decisions in seconds." They are looking through the wrong end of the telescope. Their attention should be where their service standards are experienced by borrowers. And getting prospects to spend hours on paperwork, trawl for their P60s, and put up with a backwards and forwards paper chase with their intermediary, is not going to cut it for much longer. Not when consumers will be able to go to sourcing sites to send out multiple applications that don’t appear on any credit search radar. The future is going to belong to those lenders who, via new technology, can process applications electronically using real-time referencing and deliver final bespoke decisions in seconds. They’ll be the only ones able to scale

their businesses rapidly, because they will have no processing capacity con- straints. They will also be the ones able to run multiple decisions on single appli- cants simultaneously, while running a live retro analysis from a credit refer- ence agency; and they will have the soft- ware able to learn hundreds of times faster than their analogue competitors. Additionally, because the majority of the heavy lifting will be carried out by the automated technology, this will leave the underwriters free to focus on better customer service by intervening quickly on those cases requiringmanual review. Because many borrowers will be emerging with patchy credit files, it is these lenders who will have the ability to make accurate risk assessments and dial-in the ongoing and frequent modifi - cations to scorecards that will no doubt be needed. The present uncertainty has amplified the need for agility. Already, there are lenders leading the way by automating their back office processing so that they can meet and exceed customer expectations. At present, they are in still a minority, but I am counting on some of them becom- ing industry leaders in five years’ time.

Above: LendingMetrics Commercial Director and co-founder David Wylie

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