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Technology Mortgage Trading Exchange CEO Mark Lofthouse says the pace of electronic trading is picking up all the time to the benefit of everybody in mortgages and he sets out his vision of a common trading platform to integrate online business.

Every so often, someone has an idea, a great idea, an idea which changes the way that people work, think and live.

This happened a few years ago in the mortgage industry when the idea of conducting and transacting mortgage business electronically was born and then started to become reality. At the time, the key players, from the few companies involved, knew that electronic trading would be big and had the potential to revolutionise the marketplace but they did not know just how much of an impact it would have or what exactly would be required for it to become accepted and a success.

The vision, which itself has not really changed that much, was to enable all mortgage intermediaries to complete and transact mortgage applications electronically with all lenders – a process that enabled AIPs and full applications to be completed on screen, sent to the lender at the touch of a button and a response received in seconds.

With technology advancing at a rate of knots, the ingredients to turn the idea into reality were there, t was just a matter of having the capabilities, seizing the opportunity, and making sure it was an industrywide acceptable solution.

The introduction of electronic trading has eliminated the slow processes involving paper, postage and, perhaps more important, incomplete application forms. It is widely known and accepted that regulation is eating away at the time that intermediaries have available to spend with customers and electronic trading provides the perfect solution as it allows for a faster and more efficient mortgage application transaction. The time saved in completing an application with one customer can now be spent with another one.

Electronic trading platforms provide a distinct advantage to intermediaries, offering a huge increase in the levels of service and efficiency they put forward to their clients.

By processing applications electronically, intermediaries can use information already on their system or entered as part of the sourcing process and avoid the need to fill in forms by hand and rely upon the postal service to deliver and receive decisions on mortgage applications. The entire process of selling a mort- gage product can now be conducted electronically and all done within the parameters of the FSA’s regulations.

Initially, lenders elected to build their own electronic links with big introducers and then moved on to build individual online services so that all introducers could submit business electronically to them. This was an excellent first step but it soon became apparent that introducers did not want to work with lots of lenders in different ways but wanted to work in the same way with lots of lenders through a common trading platform.

Furthermore, intermediaries use many different point-of-sale and compliance solutions and integrating these to lots of lenders would have been very costly in time and money. A common trading platform would mean that one integration would open up electronic trading capability with lots of lenders at once.

Essentially, a true common trading platform needs to meet the needs of everyone involved. It should be available to all intermediaries and all lenders, use the same account number and password for many lenders, it should have the same look and feel and input format but also accommodate the differences in information required, underwriting and decision-making processes between lenders. It should have a comprehensive form-validation process to ensure that all information is included to turn around on a mortgage request first time to enable a mortgage decision or response from lenders to be received in less than a minute and have the capability to track the case through to completion.

All this sounds reasonable but it is a tall order, so where are we now?

The majority of lenders now have their own online services for introducers to use and lenders, accounting for the majority of mortgages sold ,also deliver services through a common trading platform. Any true electronic trading platform must meet the requirements detailed earlier but the Mortgage Trading Exchange is now considered as the industry’s only true electronic trading platform being used and adopted by intermediaries in their thousands. When the Mortgage Trading Exchange was launched. the vision was to enable every mortgage intermediary to complete and transact mortgages electronically with all lenders and this vision is well on the way to being achieved.

The true success of a common trading platform can be seen by the level of adoption by introducers and lenders and the acid test of the number of mortgages being transacted.

Without electronic trading, mortgage intermediaries and lenders would be back to paper. Applications would have to be made in the old fashioned way and sales would be slower so it is no wonder why electronic trading is being embraced by so many. The biggest issue is to continue to meet the ever changing needs of intermediaries and lenders.

The adoption of electronic trading by introducers is now the norm for many and this will rapidly become the norm for all. The move from lenders’ online services to common trading platforms has already started, with 15 to 20 per cent already being transacted this way and this will continue at a pace as an intermed- iary can work with many lenders in a similar and easy to use manner from one place.

The move to differentiate procuration fees positively for electronically submitted business is just starting and over the next few years I believe we will see a rapid move by lenders to pay lower fees to introducers for applications submitted on paper and some lenders will not accept paper applications at all.

In parallel to this, the technological advances will support the delivery of new services using these platforms including, for example, insurance and conveyancing, to name but two.

The overriding message is that electronic trading is here to stay and is fast becoming the norm. Everyone should secure the benefits early and realise the potential.

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