The path of the mortgage industry towards electronic trading has not been smooth. It is not so many years ago that the Council of Mortgage Lenders was trying to put together its industry electronic trading initiative only to find that the two biggest players, Halifax and Abbey National, did not want to join the party.
At the time, the two giants of the mortgage market believed that the right approach to e-commerce was to create their own extranet sites that only offered access to each lenders' own products. In effect, they wanted mortgage brokers to conveniently forget that they were actually trying to find the best deal for the customer and limit their search to the range of products offered by a single lender. In reality, this was never a strategy that was going to work but it is good to see that both organisations have now adopted a far more realistic approach.
Last year, the Halifax and other lenders acquired a majority share in the Mortgage Brain business with a stated intention of turning this into an electronic trading platform.
In recent months, Abbey National identified IFonline/ Trigold as its trading platform of choice and have recently added some powerful connectivity to link the Trigold desktop mortgage-sourcing soft- ware with its adviser extranet for advisers to get client-specific decision-in-principle (DIP) confirmations.
Like an increasing number of the most efficient e-commerce solutions, this is based on the use of XML messaging rather than earlier technologies that created visual representations of lenders docu- mentation. The service has been live with selected brokers since April and the early trials show the system as capable of giving specific decisions, positive or negative, for 72 per cent of the cases submitted in this way. The remaining 28 per cent are handled by the adviser making direct contact with an Abbey underwriter.
The process begins with the adviser entering client information, including personal, income and property details into the Trigold desktop software and carrying out a product search based on the whole market or the adviser's selected panel of lenders.
If the product they want to recommend comes from Abbey National, they can request a DIP. This will then link their system to the Abbey National adviser extranet. Having entered their ID and password, the adviser selects the retrieve DIP option and is presented with a menu with all the cases they have submitted for DIP. Once created, DIPs are retained on the system for 60 days.
By the time the extranet has loaded, the XML message will have been passed from the Trigold system to the Abbey extranet and show on the list when this page appears. This happened with each of the test cases I submitted.
The adviser enters information about the client into the Trigold system and the Abbey service prompts for any additional information needed to give the DIP while online. It is probably worth entering as much as you can in case approval cannot be obtained from Abbey and details need to be entered on an alternative application.
It will automatically validate details such as postcode. It will drill down into information in more detail so if the occupation entered is manager it will give a detailed drop-down choice for a wide rage of managerial occupations to select the right one for credit-scoring.
One of the advantages of this service is that it delivers a DIP that has taken full account of all Abbey National's credit-scoring and any third-party credit searches that the lender will need. The chances of being turned down are greatly reduced. This is valuable to the broker because if the case is not suitable they will know virtually on the spot and can guide the applicant towards another lender.
Having submitted the case, assuming it is approved, a DIP document can be printed and handed to the client. This has a strong role in creating consumer confidence that the customer has an agreed advance subject to references and survey and should reduce the risk of customers continuing to pursue alternative loans.
The next stage, due this year, will prepopulate the Abbey online form. Currently, all details held in the Trigold system can be pre-populated but not the additional information populated online to Abbey during the DIP process.
Shortly thereafter, it will be possible for an XML message to be delivered as an extract from an application. This will provide Abbey with what is seen by so many financial institutions as a Nirvana – straight-through processing – so the application information is populated straight to their processing systems, avoiding rekeying, the risk of errors and speeding up processing.
Although this capacity is currently only live with Abbey National , I understand it can be extended to any other lender that wants to build the appropriate integration.
The Trigold software has over 5,000 users and costs Â£25 a month plus VAT although there are a number of different promotional offers involving Abbey National and mort- gage clubs. Use of the Abbey National extranet is free.
Technology solutions that allow advisers to reuse data they have already entered into systems must be a good thing. Once these services are taken up by a wider range of lend-ers there will be benefits for all concerned.
It should be possible to demonstrate clear commercial benefits for the advisers to make it attractive to start submitting all applications electronically rather than on paper.
Ian McKenna is a consultant and director of the Financial Technology Research Centre, which works for a wide range of industry organisations, life offices and technology companies, including Microsoft and The Exchange. He can be contacted by email at email@example.com
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