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On track online

The role of the internet has for some time provided a forum for up to date comment, opinion and speculation about technology and the mortgage market. Are we on the verge of a technical revolution or have we simply lost our way on the information super highway?

Whatever the answer, a business which chooses not to embrace the online challenge does so at its peril. But where are we heading? Surely it is a good time for some published research to help provide the answers.

The Council of Mortgage Lenders last month published its research, entitled, The Changing Structure of the UK Mortgage Market.

This concluded that while the internet is highly popular with customers for gathering information and comparing products, the number of online mortgage applications is low.

However, the advent of the secure electronic signature could trigger a signifi-cant increase.

Recent Datamonitor reports have also looked at internet penetration and assessed the role of new technologies in financial services.

One report asks whether the market has reached maturity. The other highlights that although the channels have so far failed to meet expectations both in terms of functionality and consumer usage, there is no reason to give up on them entirely.

While these give us much food for thought, where do they leave us on the ground? The internet is certainly bec-oming one of a consumer&#39s first ports of call when looking for a mortgage and this can provide significant leadgeneration. I am aware of more than one company which is marketing its generated consumer leads for sale to brokers and lenders.

What is the quality of these leads? When a consumer walks into an office or branch, you know they want face-to-face advice and conversion to a sale is far more likely.

Alternatively, when a customer phones a call centre, you can assume they are happy dealing over the phone.

However, the internet route is more difficult to predict or understand and therefore poses a problem as to what level and type of service will meet or exceed a customer&#39s expectations. Often, this is not something that systems can solve because if the consumer does not quite know what to expect, how can you?

What of digital signatures? Well, last week, I attended a seminar with a group of law-yers explaining where the law is on this point. Yes, it is possible and, yes, legislation is being introduced to make this happen and for online property transactions to be possible.

However, the current enc-ryption methods look horrendously complicated and I bel-ieve that culturally we are not ready to make this leap so it is unlikely to have a significant impact for quite a while.

In my opinion, the biggest benefit the internet has provided in the mortgage market has been lenders&#39 development of online intermediary business services.

Britannic Money was one of the first to provide an online agreement in principle and the first to offer a full online conditional mortgage offer in the UK in September 2000.

A number of lenders have developed sites that can offer these services plus literature (to download and print), mortgage calculators, case tracking and commission statements. Many lenders report growing demand and usage in this area. What is next?

Whether it is via the internet or electronic links, it will not be long before lenders and brokers are working together to produce the first online mortgage offer with system-based valuation and credit assessments happening simultaneously.

The next phases will also see the development of dynamic credit and individual price/risk assessments. The last 12 months have seen in a growth in correspondent lending and the internet can provide a mechanism for writing loans back to the lenders&#39 system and allowing them greater control of the process.

Let us not also forget that, with greater regulation around the corner, the broker will increasingly rely on systems such as those available through the internet to provide up to date compliance solutions and disciplines. How else will they be able to afford to do business and compete going forward?

The internet is certainly changing the way we do business in the mortgage market. We are probably now at a crossroads in terms of future developments, whether that is via the internet or bespoke one-to-one electronic links.


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