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Support in a storm

Lending growth reached record levels last year, presenting great opportunities for lenders and intermediaries. But the survival of players in the mortgage arena was threatened by competition from new entrants coupled with the pressures of the sub-1 per cent world, the ongoing regulation malaise and the need to launch new products quickly.

Despite the Treasury&#39s decision to postpone N3, this year will see many of these pressures intensify and no doubt more will emerge. New tactics will have to be deployed if intermediaries and lenders are to fend off the threats.

Part of the challenge is that selling mortgages is not an easy process. Even if a sale goes to plan, a mortgage application entails getting initial quotes, selecting a lender, completing application documents, chasing references, organising valuations, presenting documents to the chosen lender, chasing offers, selecting solicitors and chasing completion from all parties. That is before an intermediary can even think about chasing the lender for fees.

From the lender&#39s point of view, keeping track of the paper trail is a challenge that diverts too much time away from the core business of lending.

It is hardly surprising that lenders can struggle to provide optimum levels of customer service to intermediaries. However, it is not just a lack of resourcing that is to blame for lenders&#39 perceived poor servicing of intermediaries. A common grievance is when, after the initial introduction, the lender bypasses the intermediary and goes direct to the customer to catch up on its admin backlogs.

This makes it confusing for the customer, who suddenly has another party to deal with. Typically, the lender will ask for information that has already been given to the intermediary, which frustrates the customer and makes the intermediary look inefficient.

Other lenders make the process more protracted by committing unnecessary admin errors. Such errors are commonplace and are often caused by a combination of outdated and disparate IT systems, hea-vily paper-based processing and human error.

Lenders clearly cannot afford such inefficiencies. It is evident that a new business model is required to achieve best practice in customer service.

There are several options open to lenders looking to achieve best practice. They can improve their existing processing and admin systems so they are capable of the levels of efficiency required to operate in the volatile markets that currently exist. To keep pace with changes in the market, lenders must ensure these systems are capable of responding quickly to market fluctuations and must be prepared to make regular investment in their IT systems to meet the requirements of the business.

Many lenders are benefiting from using third-party administrators, which take responsibility for elements of the mortgage supply chain. But there is also the option of using a business service provider.

Business service providers offer managed services, application service provision and third-party admin services as well as thin layer management, mortgage consultancy, business implementation services and technology solutions. Like IT consultancies, they can help to strip out supply chain inefficiencies, reducing the time it takes to process an application from approval to completion and helping to improve the customer service offered.

As companies increasingly choose to specialise or offer best of breed solutions, lenders and intermediaries alike will be forced to stick to the knitting and focus on their core competencies to flourish.

If lenders are confident that intermediaries are meeting the customer service challenge, both parties will be able to focus their resources on exploiting new market opportunities.

Two fundamental aspects of success are choosing and deriving efficiencies from an appropriate common trading platform and adding value to customers by improving aggregation capabilities.

Neither lenders nor intermediaries can afford to bury their head in the sand and simply hope that their existing operational infrastructure will cope. As the mortgage market gets increasingly competitive, lenders and intermediaries will come to rely on the support provided by third-party administrators and business service providers for their survival.

If the lending community becomes bogged down with admin, the time spent selling will be reduced, so lenders and intermediaries will not survive to see the fruits of the new world&#39s market opportunities.

The core business of lending must be kept in house. Pretty much everything else can be outsourced. If service levels both to intermediaries and customers are to exceed expectations, some form of process outsourcing is essential.

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