Property Tech (PropTech)

UK Mortgage Market: The top 3 trends in 2020

In the ever-changing landscape of the UK Mortgage Market, the Gross lending doubled to more than £268bn in the last decade with limited product innovation, but net lending is still low at around £50bn.

With Millennial First Time Buyers as the biggest purchasers and older households (65+) underserved, the growth in house prices has led to growth in housing equity to more than £6tn.  Navigating the mortgage market in 2020 will require a blend of flexibility and patience from both borrowers and lenders.

We’re going to decode the top 3 trends in the UK mortgage market (2020) to watch out for.

Role of Artificial Intelligence in the UK Mortgage Industry

Artificial intelligence” (AI) is the new buzzword in the 21st century. Organizations have started exploring avenues to automate or perform tasks with precision and elevate their revenues. AI has percolated every aspect of human life and aims to do it even more in the coming years.

According to a survey conducted by Gartner, organizations that have deployed artificial intelligence grew from 4% to a whopping 14%. This rapid wave of transformation in the organizations from “Non-AI” to “All – AI” has not left the UK mortgage market or global market untouched.

There are huge implications of AI in the Mortgage Industry like eliminating lengthy documentation by focussing solely on customer/intermediary experience.

But all of this is easier said than done. 
 
There are multiple challenges faced by lenders to embrace AI in their current process. Many firms are reluctant to bring a change in their existing process and rely on traditional paper-based manual processes. Only 40% of the banks are “digitalised” and more than 50% are “paper-based”.
 
Hence, it’s imperative for C-level executives to assess the need for change and make amendments.

Massive upskilling/reskilling of employees related to emerging technologies, recruiting more – hunting out and reaching out to the right set of candidates coupled with increased investment in artificial intelligence will help in streamlining the lending process.

UK Mortgage Market

Automation is important! If not now, then when?

Most of the lending process in the mortgage industry is paper-based and time-consuming. The faster we can get paper out of the process, the better it will be for everyone. Digital transactions and automated processes in the lending journey uphold massive advantages for underwriters.

Reduces processing time

With automated machine learning-based document classification, most of the non-value add tasks reduce significantly – such as physical transfer of files, piling up of files/cases thereby saving printing costs, loss or misplacement of the file and handwritten notes.

Streamline process and task allocation 

With artificial intelligence, each team can have a defined set of activities for each persona stage, avoid duplication of efforts across each stage, with clear-cut control and audit for user accountability, and use of data entry/validation

Time saver for repetitive manual tasks

Artificial intelligence in the UK mortgage market and the global mortgage market for that matter has the potential to save time on repeated, redundant and mundane manual tasks clubbed with a system intelligent automated system for easy decision-based cases 

UK Mortgage Market

Providing a seamless customer experience in the UK mortgage market

The world is evolving with new technology, but the current origination process across lenders in the mortgage industry is cumbersome, lengthy and frustrating. Finding, providing, and sharing insights for smooth customer experience is quintessential.

Just looking at the origination process, borrowers’ preferences may include completing an online application, walking into a branch, reaching out to a call center or using a chatbot

As they move through a different process, they may switch from one channel to the next hence, every channel must deliver a rich, digital experience (application to funding journey experience)

  • Collect Application & Documents
  • Underwrite Application
  • Make Offer
  • Exchange Contracts

With the right mix of approach and strategy, artificial intelligence, if implemented properly can do wonders for your business. The financial industries can use various technologies like machine learning, OCR, image classification to speed up banking operations. It’s likely we will see an increased use of these technologies in the UK mortgage market in the future.

Combining highspeed automation with AI, most of the tasks can be streamlined thereby reducing the overall operational costs – printing costs, saving time in sorting or arranging files, clear visibility of tasks, and streamlining processes due to different personas.

Author

  • Reetwija Chakraborty

    Woking as a Business Change Management Specialist at Digilytics AI, an economics grad from King’s College London and a business consultant with 3 years of experience in Strategy & Risk Consulting, Business Development in investment strategy projects for Albright Stonebridge Group & the United Nations. At present, Reetwija is involved with change management for a specialist lender in the UK to support their transformation roadmap and pursue growth.

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